Out of more than eight weeks of a health crisis, the fintech european are weakened. In the United States on the other hand, the young shoots become giants.
© Unsplash / Andy Beales Editors
They had promised us five years of exponential growth, is that the three largest neo-european banks have had to surrender to the evidence : the health crisis and the decline in consumption will ask them to tighten the belt and proceed to departures. This week, Revolut has reduced its workforce by at least 50 people, when Monzo would separate 120 employees because of ” the economic situation “. Choices coming in stride with the fintech German N26, which had chosen to delay its deployment in Brazil and set aside a portion of its workforce in the United States.
The health crisis has shown one thing well-known in Europe. In the midst of a transition on the banking and financial landscape, the millions of dollars raised by the new actors do their guarantees of security. This is even more the case when we know that the “valley of death” of these companies will not be easy : their business model is matching to find the balance that from tens of millions of customers, far from what could imagine reaching a traditional bank.
We could then rely on their product itself, and to keep aware that once out of the health crisis and, once the consumption will have returned to a more traditional, things will get better. Unfortunately, the momentum of the new banking digital guarantee may not be appropriate for neo-european banks, able to attract the same way, they who are not as mature as online banks traditional businesses. We’ve seen it on the credits, including professionals with the neo-French bank Qonto, embarrassed of not being able to help customers in urgent need of a loan.
If the hardest has definitely been done, the neo-european banks will continue to remain cautious. As for Revolut, the founder of Monzo, Tom Blomfield has decided to forgo his salary for a period of one year. With its new CEO, TS Anil, the two men wrote in an internal letter ” that the current economic situation is not expected to return quickly to normal “. The path will be long. But in the meantime, beyond the Atlantic, things are changing to a train is very different on the landscape fintech american.
A (first) neo-bank casualty of the health crisis
Wind in stern for the fintech american
This week, the industry for the fintech american has known very good news. Varo Money, a neo-bank of california, a million customers, has just raised not less than $ 241 million in series D to have the capital necessary and conducive to its new status as a credit institution, with all of the new products that result. In Marqueta, a unicorn in california who is working on the issuance and processing of payment cards, not less than $ 150 million of new money come to be acquired. Yet another series, bringing to $ 4.1 billion the valuation of the company.
Beyond the news of the fundraising, the good news is continuing with Mastercard. In the beginning of the week, the american group has extended its new funding programme called “Fintech Express” on the european market, to support and accelerate the launch of new products ” in the space of a few days “. The purpose of Mastercard is going to work with the maximum of seedlings in destiny, promising, while its competitor Visa is also part of the experience, and continues to appeal to many new banking solutions digital.
In a landscape of fintech, in which Europe seemed to have taken the lead on some products, where the banking market seemed to be less closed than the United States, where still prevail the ” Big Four “, the trends are reversed. To address the epidemic of coronavirus causing a demand of unprecedented unemployment, the fintech american has benefited from a bias of any individual, present in several countries. A characteristic that differs from these countries in Europe. And a situation more conducive to the emergence of fintech.
A situation that is more conducive
Let us move away from Us down in South America. In Brazil, a neo-bank is still relatively unknown in Europe has to pass a course has never been achieved before. It is called Nubank, and its 25 million customers to come to give him the title of the largest neo-bank in the world. Far behind, Revolut is around 10 million customers currently. A significant advantage for a bank is helped by the current situation in the country. Its success comes from a market that shows it to be fully able to trust in the fintech and subscribe to the neo-banks.
We mentioned this news in a previous article, in which some indicators could be easily explained the situation that is conducive within the country. Through its 110 million of assets, Brazil has only 50 million people are holders of a current account and holders of a credit card. At the same time, the country is in the fourth position of the best-connected throughout the world, and the proposals of the neo-banks – not expensive, fast and accessible from a smartphone – are shown as a means to help these people, not bancarisées.
As with Varo Money and Marqueta, the current momentum of the investors in the start-up fintech in the United States finds its explanation in the crisis and the characteristics intrinsic to the market . ” Since the beginning of 2020, Varo has seen an increase of nearly 350 % of deposits, an increase of 140 % of its expenses and its cost of acquisition of customers is down 40 % ” wrote Donna Fuscaldo, journalist fintech in Forbes. The attractiveness of the neo-bank, which has raised $ 241 million is part of this trend in America, where the crisis in health and economic has shifted the paradigm, and showed that fintech could become a very good tool to meet the economic solutions of an emergency.
This trend in America, where the crisis in health and economic has shifted the paradigm, has shown that fintech could provide very good tools to help the economic situations of emergency
Making himself indispensable
In the United States since April, the administration Trump and the Congress agreed to put in place a policy of helicopter money. For any person who has lost his job because of the crisis, an emergency assistance of $ 1,200 was sent, mostly in the form of a paper cheque. In the course of these past eight weeks, the stimulus package has attracted the fintech offer its services to the federal State, the point to be indispensable. As in Brazil, more than 14 million Americans without a bank account have experienced a journey, often difficult to reach them to help. Lately, thousands of cards debit prepaid have been sent, causing great confusion among people who were hoping to be able to switch through apps like Cash App to be able to receive easily and quickly the money.
In spite of that Revolut, Monzo and N26 will be installed on the u.s. market for hope to take their place, this crisis economic risk of redistributing the cards on the New Continent. Square, the fintech founder of Twitter Jack Dorsey, is in the process of converting a large portion of its customers for direct deposit, allowing them to use banking digital of the company to receive their salary. A sign that local players will take a lot of place on the territory, to the risk that the Europeans will eventually turn back.
The United States, a “quagmire” for the neo-european banks
