It’s safe to say that fintech has so far had a better 2024 than 2023, but challenges remain — at least according to the mood at last week’s Sifted summit.
It’s true we’ve seen some recovery after the funding slump of last year. There’ve been banner fundraises from Monzo and SumUp, action in the secondary market with Revolut’s August employee share sale, and companies that we saw rise up in the 2010s are now profitable.
“We are starting to turn a corner,” said Roxana Mohammadian-Molina, chief strategy officer of real estate credit platform Blend, during a panel on Wednesday. Blend, which makes its money by lending to property developers, has noticed an uptick in activity as interest rates slowly fall and the housing market picks up.
But that doesn’t mean it wasn’t bruised by 2023. As interest rates rose and the housing market ground to a halt, there was a period of up to 18 months when Blend felt it was too risky to lend.
“We were very, very quiet and of course, the business suffered because of that,” she said.
Fintech’s flop era continues?
Europe’s fintechs are still facing up against many of the issues that plagued the sector last year. And that’s not exactly made it the most enticing sector for founders to build in.
Co-CEO of business banking fintech Anna Money Boris Diakonov, for instance, had one piece of advice for founders looking to build in B2B fintech 2024: don’t.
“I can’t imagine an investor in their right mind who’d invest in yet another banking solution for B2B,” he said. “They would have to come up with a product that’s better than the players that have been around for the past seven years — it’s going to be very tough.”
There’s also regulation — some fintech investors previously told Sifted that the recently implemented APP fraud reimbursement measure could drive some smaller fintechs “to go bankrupt overnight”.
A new normal
As founders adjust to today’s market, even Starling Bank founder Anne Boden has no plans to start another fintech.
“I’m not going to start another bank,” Boden told an audience at Sifted Summit. Instead, she cited healthtech, AI or publishing as possible new ventures for her.
And perhaps, here lies fintech’s problem — it’s not exactly the sexiest sector for startups at the moment (that accolade largely goes to AI and climate tech). And even though interest rates are creeping down and funding is ticking up compared to last year, the downturn’s impact on fintech is still being felt.
VCs are still pushing for profitability and exits, regulation is stricter and interest rates remain comparatively high — the sector has just gotten better at dealing with the new status quo.