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Consumer fintech is entering in the profitability era

Is fintech finally becoming a very profitable business thanks to high interest rate?


In the last couple of weeks several consumer fintech companies announced monthly profitability.


Interest rate of 4%-5% could be a game changer for the consumer fintech players, allowing them to increase top line and delay the fundraising process to 2024.


- Starling Bank announced £195m of annual profit;

- Monzo achieved profitability in the first 2 months of 2023:

- Chip achieved profitability in May;

- Tandem Bank announced annual profitability;

- Allica Bank hits monthly profitability.

- On a portfolio perspective Moneybox announced that will achieve cash flow breakeven by June 2023 and Freetrade by end of 2023.


Interest rate of 4%-5% could be a game changer for the consumer fintech players, allowing them to increase top line and delay the fundraising process to 2024 with more friendly conditions.


Profitability is also possible thanks to the extreme cost cutting measures that some of the fintech players executed in 2022/2023 including hiring freeze and layoff.


For example Freetrade reduced the number of its employees from 300 in April 2022 to 160 in April 2023.


Considering that the interest rates are expected to stay high (4-5% region) in the next 24 months, the best fintech players could arrive in 2026 with a strong top line (£100m revenues) and positive EBITDA margin, and that would means a strong opportunity for a successful exit.


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