On Tuesday, the fintech startup Zilch announced operating profit for July 2024. This is the first time the company has hit profitability since its inception four years ago. According to CNBC, Zilch has hit profitability faster than most consumer fintechs that have broken even.

Against the Odds

Zilch reported a $130 million annual revenue run rate. This is double the run rate the fintech reported last year. According to the company CEO, Zilch turned profitable and grew its business despite the prevailing high-interest environment.

“If you think of the last two and a half, three years, a lot of VC-backed companies, especially high growth fintech businesses have had to cut their way to profitability. It’s not been easy. And, for Zilch, we took a different approach. We looked at this and said let’s grow our way to profitability,” Zilch’s Co-founder and CEO, Philip Belamant said.

Competition Landscape

In the buy now, pay later fintech space, Zilch faces stiff competition from Klarna. Just recently, Klarna launched two new products– a cashback offering and a personal checking account.

Other competitors include Monzo, Starling, and Revolut. Monzo and Starling took over four and three years respectively to realize an initial profit. This wasn’t the case for Revolut. The digital banking startup took a shorter time, breaking even in just two years after launching.

Revolut’s growth has been remarkable. Last month, the company hit the $45 billion valuation mark to become the most valuable fintech startup in Europe. Revolut realized this major milestone just weeks after receiving a UK banking license following a three-year struggle.

Zilch IPO

Zilch’s profitability announcement comes at a time when the company is planning to list publicly in the UK. In June, Belamant told CNBC that the startup was planning an IPO over the next one to two years.

The fintech startup raised $125 million in debt financing from Deutsche Bank the same month. This deal gives Zilch access to a maximum credit of $315 million from Deutsche Bank and other banks. This credit leeway allows Zilch to triple its overall sales in the coming years.

Zilch’s rival, Klarna is also planning to list on the UK stock market in the medium term. Zilch appointed ex-Aviva CEO, Mark Wilson as a non-executive director. Wilson expressed excitement to join the fintech startup and committed to steer it towards sustainable success.

The post Zilch Declares Initial Profit as It Breaks Even appeared first on Tech Research Online.

Prior to the UK license, Revolut held a European banking license through its Lithuanian entity. This has helped Revolut to position itself as a bank within the European Union. Earlier this year, the fintech company got another license from Mexico.

However, its prospects were strongly hinged on getting the UK banking license.

Expanded Offerings

The Revolut banking license opens new opportunities for the startup company. The Prudential Regulation Authority (PRA) stamp of approval serves as a vote of confidence for the fintech company. It significantly increases chances of Revolut to be a regulated bank in major markets like the U.S.

“We are incredibly proud to reach this important milestone in the journey of the company and we will ensure we deliver on making Revolut the bank of choice for UK customers,” Nik Storonsky, Revolut’s Chief Executive said.

With the Revolut UK license, the fintech company can expand its product and service offerings it offers clients.

Consistent Growth

Revolut started as a travel finance app in 2015. Since then, it has launched other services including kids bank accounts, business banking, share and stock trading products, insurance, and hotel and flight booking. This year, the fintech company added Revolut X, a crypto exchange platform for professional traders.

“In the world of fintech, it’s sometimes not so easy to explain what Revolut is to our customers,” Antoine Le Nel, Chief Growth Officer at Revolut said.

Currently, Revolut’s EU operations account for about 70% of its revenue, which points to the kind of offerings the fintech startup will be rolling out in the UK if it sails through the mobilization phase.

For instance, Revolut users in Ireland can deposit cash in interest-earning accounts, and access loans and credit cards. Le Nel said that Revolut plans to introduce mortgage plans in the coming year. The mortgage plans will first be tested in Lithuania this year.

Restrictions

Revolut’s banking license in the UK comes with a set of restrictions. Despite getting the license, Revolut remains on the radar of UK regulators. Previously, the PRA found the fintech’s financial audits for 2020 to be inadequate. In 2021, auditors could not verify a portion of 2021 revenue. This issue was resolved afterwards. In 2022, Revolut experienced delays in posting its accounts; its 2023 results were posted early.

With 9 million UK clients and 45 million global clients, Revolut has gotten into the mobilization phase. This phase will involve building its banking operations and strengthening its senior management team. The mobilization period lasts for about 12 months. During this period, not much will change for UK customers.

The cash that Revolut holds will be protected via the e-money safeguarding process. This means the UK’s Financial Services Compensation Scheme (FSCS) deposit protection does not apply. The FSCS provides a guaranteed compensation of $109,000 for bank failure.

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“Merchants want to get paid as fast as possible, as cheaply as possible, and with less effort. We are building a bunch of capabilities to maximize the timing when people get paid and minimize the cost of that,” Adfin co-founder and CTO, Ciprian Diaconasu said.

The startup has raised $4.9 million to develop the Adfin fix bill payments solution. Its seed funding round was led by Visionaries Club and Index Ventures. A number of angel investors also participated in the round. They include Adyen founder, Thijn Lamers, Checkout.com founder, Guillaume Pousaz, Mambu co-founder, Eugene Danilkis, and Tiller co-founder, Josef Bovet.

Payment Process

Small businesses and sole traders, including consultants, accountants, and lawyers, must invoice customers and provide bank details to get paid. They must keep tabs on incoming payments and reconcile them to ensure they get paid for all the services or products.

Some business owners choose to set up direct debit. But even with this, it’s difficult to convince customers to allow direct withdrawals from their bank accounts. Card payments also attract high processing fees.

“The average consumer only makes 21 e-commerce purchases a year. All the buzz has been around e-commerce, but for your average legal practice or accountancy firm, their payments are stuck in the ’90s — bank transfers, card payments taken over the phone, paying really high fees,” Tom Pope, Adfin co-founder and CEO said.

According to Adfin, sole proprietors and small businesses don’t want to spend time thinking about payment methods. All they want is to get paid fast.

Invoice Management

Adfin payment platform has been conceptualized as an invoice management and payment platform. It will simplify important business administration tasks and make getting paid seamless.

Once business owners upload invoices to the Adfin small companies payments platform, the system will automatically display the payment method. This decision will be determined by the invoice amount and whether it’s a new customer or a returning one.

“Our customers are not payment nerds. I think the fact that they are not payments nerds has probably led to them being a little bit taken advantage of, if I’m honest. With Adfin, we just offer you payments. We get you paid and we handle the payment mix. It’s in our interest to be trying to get your success rate as high as possible and your costs as low as possible,” Pope added.

The Adfin bill payments for sole traders solution also supports the pay-by-bank option via card and open banking payments. This means that customers can make payment through Google Pay and Apple Pay. Where customers fail to make immediate payment, businesses can automate reminders on the fintech platform.

Central Repository

Adfin serves as a central repository of all business invoices. Businesses can use it to track pending invoices to see whether they’ve been paid or not. Currently, the fintech platform charges 1% for every successful payment irrespective of the payment method used.

The post FinTech Startup, Adfin Builds An Invoice Payment Solution appeared first on Tech Research Online.

According to Yahoo Finance, Galileo’s wire service will help fintechs to attract and retain more customers. Galileo uses its wire transfer API to link fintechs that partner with the Community Federal Savings Bank with the Fedwire Funds Service.

Fueling FinTech Growth

Last year, Fedwire Funds Service reported that it processed upwards of 193 million wire transfers. Galileo is already boosting the growth of fintech startups by facilitating Fedwire transfers. Galileo’s money movement API provides a scalable solution for fintechs. It empowers them to cater to the growing demand for fast financial transactions.

Galileo’s CPO, David Feuer said, “Galileo continues to power most of the leading fintechs in the US and provide a one-stop-shop for a wide variety of payment methods. Adding wire transfer capabilities supports the demand for fast and secure money movement and integrates seamlessly with fintech’s existing financial infrastructures through API access.”

Galileo wire transfer capabilities enhance the efficiency of outgoing and incoming wire transfers. By doing so, it enables rapid and reliable movement of funds.

Same Day Transfer

Galileo financial technologies help fintechs to deliver funds to recipients the same day they are sent. Each transaction undergoes a thorough validation process to ensure safety and integrity. Demand for fast wire transfer services is high among businesses and individual consumers who seek instant, secure transactions. A good example is large transactions like home, vendor, or tuition payments.

“The demand for Fedwire transfers spans a broad range of use cases, from individual consumers managing personal financial needs to businesses handling large-scale, B2B financial operations,” Galileo said.

User Benefits

Galileo’s secure money movement solution offers users a range of benefits. These include enhanced security. Each financial transaction is subjected to a rigorous validation process to guarantee the safety of the funds transferred. Users enjoy speedy transactions. Notifications are sent to recipients and senders in real-time. This keeps them updated on the status of transactions at any given time.

Open API

As a fintech giant, Galileo leverages open APIs to power its fully integrated platform and fuel innovation across its financial and payment services. The company has earned the trust of digital banking heavyweights. It attracts enterprise clients and early-stage fintech innovators. The company supports virtual and physical payment cards for clients. It also supports digital push provisioning and customized financial products across industries and locations.

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2. Blockchain Applications

Cryptocurrency and blockchain have become highly controversial things to talk about these days. Some people are pro-crypto and will give you examples of people who’ve become rich overnight thanks to crypto-trading. While others who don’t like it will explain the absurdity of these currencies.

Regardless of your opinion on cryptocurrency, blockchain has huge potential to improve FinTech as it’s doing already. The blockchain enables distributed ledger technology (DLT) that allows you to record and share data across multiple data stores. Furthermore, blockchain enables other recent FinTech innovations like digital wallets, digital assets, decentralized finance (DeFi), and non-fungible tokens (NFT).

Things like smart contracts, digital wallets, and the blockchain make cross-border payments have faster settlement times, access to newer markets, lower costs, increased security, and greater transparency compared to traditional payment methods.

3. Voice-Enabled Payments

Voice assistants are becoming a part of daily lives. Regardless of the brand of your smartphone, there will be a smart assistant to help you navigate the phone and the web. Voice-enabled payments is a FinTech innovation that allows users to make payments using voice commands. This can be done through a variety of devices, such as smartphones, smart speakers, and even point-of-sale (POS) systems.

To make a voice-enabled payment, you need to have a linked payment method, such as a credit or debit card, or a mobile wallet. When you initiate a payment, the voice assistant will verify and authenticate it using your linked payment method.

Voice-enabled payments offer a number of benefits to both users and merchants. For users, voice-enabled payments are convenient and hands-free. They can be made without having to type or enter any information, which can be especially useful when users are multitasking or in situations where they cannot use their hands, such as when driving or cooking. Voice-enabled payments can also be more secure than traditional payment methods, such as credit cards, as they use biometric authentication to verify the user’s identity.

For merchants, voice-enabled payments can help to improve the customer experience and increase sales. They can also help to reduce fraud and improve operational efficiency.

4. Virtual/Online Cards

Cashless payments have been the primary mode of transaction for consumers. It is by and large better, faster, and easier than handing over cash. Some primary modes of cashless payments include online payments, debit cards, and credit cards.

The use of virtual cards is an emerging FinTech innovation that is making it easier for consumers to apply for new cards and use them conveniently. Since online shopping has become common, users relying on it completely don’t need to use their physical cards at all. Which begs the question, what if new users don’t ever need a physical card?

Virtual cards bring more to the table than just the convenience of applying and using them. They’re great for protection against fraud by limiting the amount of information shared during a transaction. They also offer spending control features like setting amount limits and choosing specific vendors only. As online shopping becomes even more mainstream than it already is, virtual cards will become better.

5. Robotic Process Automation

Automation is a major trend this decade in every industry. Businesses want to maximize efficiency and reduce labor costs using automation in every possible part of the process. Robotic Process Automation (RTA) uses AI, computers, or any machine to perform specific tasks. These tasks can range from copy and paste to filling or moving forms.

Now, this isn’t exactly a ground-breaking FinTech innovation. However, it solves mundane problems and improves general tasks. In FinTech, RPA promises to improve customer experience, increase productivity, and make the accounting process better.

Some other important applications of RPA are KYC and AML procedures where RPA automates manual tasks and helps with abnormal activity detection. It also supports banks with tedious processes like mortgage lending and loan underwriting.

Some people fear that RPA is a major threat to many jobs. That concern has its merits but the fact remains; If banks and finance institutions want to offer better customer services, they need RPA in some capacity.

The post Next-Gen Finance With 7 Exciting Fintech Innovations in 2024 appeared first on Tech Research Online.