In the rapidly evolving world of fintech, questions often arise about the legitimacy and capabilities of emerging players. One such inquiry is, “Is this startup a real bank?” For a French fintech company, the answer has been a resounding no—until now. The company has recently announced its intention to apply for a banking license in France, a move that could significantly alter its operational landscape.
Current Operations and Future Aspirations
This fintech startup primarily serves freelancers and small to medium-sized businesses (SMBs) across Europe. Since obtaining a payment institution license in 2018, it has successfully introduced various financial services, including a buy now, pay later (BNPL) option. However, acquiring a credit institution license would enable the company to expand its offerings to include a wider range of lending, savings, and investment products tailored to its customer base.
Expansion and Customer Milestones
With its existing license valid throughout the European Union, the startup has made significant strides in expanding its reach, recently celebrating the achievement of 600,000 customers. However, the absence of a credit license poses challenges to its ambitious goal of attracting 2 million customers by 2030.
Competitive Landscape and Strategic Moves
As the fintech sector becomes increasingly competitive, the need for a comprehensive service offering is more pressing than ever. While some competitors have taken different paths to secure their licenses, this startup is strategically positioning itself to enhance its service portfolio. For instance, some rivals have opted for electronic money institution licenses, while others have pursued full banking licenses from the outset.
Profitability and Future Funding
Interestingly, the CEO of the startup revealed that the decision to pursue a banking license was influenced by achieving profitability ahead of schedule in 2023. This financial stability alleviates the need for additional fundraising, which could have been a significant hurdle in the past. The company has previously raised substantial capital, and its current financial health allows it to focus on strategic growth rather than immediate funding needs.
Acquisitions and Integrated Financial Solutions
Over its eight-year journey, the startup has made notable acquisitions, including a German competitor and a financial automation platform. These strategic moves reflect its ambition to position itself as a comprehensive financial management solution, offering tools that extend beyond traditional banking services.
Market Presence and Customer Insights
While the company has not disclosed detailed customer demographics, it has indicated that Germany has emerged as its largest market after France, followed by Spain and Italy. This geographical diversification is crucial for its growth strategy, especially as it continues to explore new markets.
Customer Demand for Credit Services
Recognizing the demand for credit among its customer base, the startup has launched a Pay Later service, which has already facilitated significant financing. However, the limitations of its current license restrict its lending capabilities, prompting the need for a credit institution license to fully meet customer needs.
Future Growth and Product Development
Becoming a credit institution would not only unlock new revenue streams but also allow the startup to innovate more rapidly and reduce reliance on external partners. With a growing team, the company is poised to enhance its product offerings, including the development of an AI-driven financial management layer.
Preparing for Regulatory Approval
As the startup embarks on this journey to secure a banking license, it is committed to working closely with regulatory authorities to ensure compliance and readiness. This process may take time, but it is part of a broader strategy to solidify its position in the market and potentially lay the groundwork for a future public offering.