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The Green Sheet Online Edition

February 26, 2024 • Issue 24:02:02

Readers Speak: Shifting tides in fintech: from B2C to B2B

Serial entrepreneur Norris Koppel, founder of Monese, a British-Estonia company offering alternatives to traditional bank services, shared his views on why fintechs are shifting focus from business-to-consumer to business-to-business services. He speaks from personal experience. Monese, Koppel noted, was launched as a B2C play offering checking accounts and money transfer services, and like many other fintech enterprises, the company expanded into B2B tech to achieve additional growth in its drive toward profitability.

"There's a significant shift within the fintech landscape that could reshape the industry's future," he wrote. "In 2023, fintech activity underwent a remarkable pivot from consumer-oriented ventures to business-focused propositions." He cited data from Dealroom.co, stating that "an astonishing 58 percent of fintech funding was directed toward business-to-business (B2B) software-as-a-service (SaaS) startups by the end of November 2023, overshadowing the 20 percent allocated to business-to-consumer (B2C) startups, dealroom.co/guides/fintech-guide. This represents a substantial departure from the scenario in 2016 when over 50 percent of funding favored B2C ventures, a noteworthy trend." The pivot from B2C to B2B, he pointed out, is being driven "by the changing financial landscape and the challenges faced by consumer-focused startups.

As rising interest rates tightened the capital flow, many B2C fintech companies found themselves at a crossroads: either demonstrate a viable path to profitability or face failure. In response, a growing number of these companies are repurposing the technology originally designed for consumers and redirecting it toward businesses, particularly financial institutions."

He additionally stated that this B2C to B2B transition holds the potential to redefine the fintech landscape significantly and is an approach being used by others—notably challenger bank Starling, which indicated it will need to sell its software to other banks to fulfill its global ambitions.

Expanding into B2B

Have you noticed fintechs in your sphere expanding from a base of B2C transactions into more B2B transactions? How successful have these efforts been? Have you observed common pitfalls to avoid? Please share your thoughts on this or other topics of interest to the payments industry at greensheet@greensheet.com. end of article

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