Revolut rival Chime has become the latest fintech to slash its workforce due to market uncertainties.
Chime – which agreed with a Californian regulator last year that it would stop referring to itself as a bank as all of its banking services were handled by actual banks – is only the latest fintech firm to announce mass layoffs.
Australian BNPL company BizPay laid off 30% of its workforce in May, quoting tougher market conditions as the reason behind it. Then Mainstreet’s CEO announced on Twitter that about 30% of its workforce would be shown the door.
Layoffs aside, Chime is also not alone in being the only challenger bank to struggle Stateside. In November last year, German neobank N26 made the “disappointing” announcement that it would abandon its US operations, saying that it would be too costly for the digital lender to make its mark in the US.
Challenger banks were one of the hottest things in the fintech industry a few years ago. However, as outlined in the recent report Beyond the Hype: Insight into Digital Challenger Banks from research firm GlobalData, the hundreds of startups around the world that have been launched over the past decade have struggled to make ends meet. In other words, it’s only on rare occasions that neobanks make a profit.
GlobalData is the parent company of Verdict and its sister publications.