The news: The valuations of both Revolut and Varo Bank have been slashed in a possible sign of dented investor confidence in the neobanks.
Revolut’s auditor casts doubt: Last week, the UK-based firm filed its long-overdue accounts showing 2021 was its first profitable year after revenues jumped threefold.
Pressure builds on Varo: The US challenger is reportedly seeking to raise $50 million at a 28% discount to its last valuation, according to Fintech Business Weekly, citing a term sheet it had seen.
Three key takeaways:
The bigger picture: Traditional banks and financial institutions can capitalize on their generally superior financial security and higher levels of customer trust to gain an edge over neobanks. Challengers can generate profits by cutting costs and focusing on more lucrative revenue streams like credit cards, lending products, and subscription fees. If they can successfully do this, they can emerge stronger this year and build trust with customers and investors.
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