By 2023, fintech activity had migrated from consumer to commercial propositions. According to Dealroom.co, business-to-business SaaS businesses received 58% of fintech funding last year (until November 30), compared to 20% for business-to-consumer startups. This represents a significant reduction from over 50% for B2C in 2016, and is a trend to watch. However, a sub-trend is B2C companies’ shift to the B2B market.
When capital was plentiful, so were consumer startups. Neobanks, trading apps, budgeting tools, you name it; they were all raising massive funds. But many of these companies had one thing in common: a fantastic experience that they couldn’t commercialize. And, as the environment changed due to rising interest rates — global fintech funding fell to its lowest level since 2017 in Q3 2023, according to the dataset — many firms were confronted with a choice: demonstrate a feasible path to profitability or fail.
Enter the B2C-B2B shift. A lot of companies are addressing the profitability dilemma by selling the technology they developed for consumers to enterprises instead. More specifically, to financial institutions. For example, in November, consumer neobank HMBradley stated that it would discontinue consumer operations and instead focus on selling its technology to banks. More recently, HSBCHBA 0.0% developed its new fintech app, Zing, on Monese’s XYB platform. Greenlight, a kids banking app, also provides its technology directly to banks and credit unions through a collaboration program known as Greenlight for Banks. Here are only a few instances.