[Editor’s note: This is a guest post from Ryan Weeks, formerly with Dow Jones and AltFi, covering fintech. This is part two of a four part series (part one is here) he is writing for us on the UK fintech market in the run-up to LendIt Fintech Europe.]
Lockdowns in the UK and overseas have put a significant dent in their revenues, external investment suddenly looks far harder to come by, and, to top it all off, recent financial results painted an ugly picture of their financial position even before the pandemic.
To recap: in 2019 Starling lost £52m, Revolut lost £107.4m and Monzo lost £113.8m.
Yet optimism remains within the sector, with many hoping for a silver lining in the longer-term impact of the crisis on digitisation.
Take Zopa, for example. The UK’s oldest peer-to-peer lender officially became its newest bank in June, after finally being granted a full banking licence by regulators.
During times of uncertainty, the company tightens its lending criteria to focus only on borrowers with “a very high likelihood of being able to manage the debt and not suffer financial detriment”, and thus expects lower revenues, according to chief executive Jaidev Janardana.
“However, in the longer term we expect the events of 2020 to be an accelerator for Zopa as more customers embrace digital channels and providers,” he added.
This is typical of attitudes within the digital banking sector at present.
The long-term impact of the pandemic, however, is unclear; what is clear is that in the short-term it has wrought havoc on fintech firms.