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Applications icons for Revolut and Monzo are displayed on a smartphone.
Betty Laura Zaprat | Bloomberg via Getty Images
Initially, financial technology firms were the largest lost interest rates in the World Central Bank in 2022, which led to assessment assessment.
Over time, this change in the interest rate has steadily increased profits for Fintechs. This is because higher rates increase what is called a pure income from interest – or the difference between rates, levy charges, and interest paid by the depositors.
In 2024, several fintechs – including Robinhood, Revolut and Monzo – seemed an incentive to their lower lines. Robinhood reported $ 1.4 billion in annual profit, increasing by 19% jump in pure interest income compared to last year, up to $ 1.1 billion.
Last year Revolut also saw a 58% jump in pure interest income that helped to accept profit up to 1.1 billion pounds ($ 1.45 billion). Meanwhile, Monzo reported its first annual profit per year, ending on March 31, 2024, which was enlarged by the 167%.
Now Fintechs – and especially digital banks – are faced with a key test, as a widespread decrease in interest rates is in doubt about the sustainability to rely on this elevated profit in the long run.
“The False rates’ environment can create problems for some Fintech players with a business model, enshrined in pure interest revenue,” said CNBC Lindsey Nahar, partner and head of the UK in Bain & Company.
Falling interest rates can be a “test of Fintech firms’ sustainability,” Nazi added.
“Low indicators can expose vulnerabilities in some fintechs – but they can also emphasize the adaptation and durability of others with broader income.”
It is unclear how significant influence the fall of interest rates on the sector as a whole. In the first quarter of 2025, Robinhood reported $ 290 million from interest revenue, which increased by 14% compared to last year.
However, the UK arises as a result of the launch of Clearbank’s payments, alluding to lower rates. Last year, Clearbank unfolded to the loss of taxation of £ 4.4 million at the back transition from interest revenues to income based on the fee, as well as the expenses associated with its expansion in the European Union.
“Our interest revenue will always be an important part of our income, but our strategic attention is paid to increasing the income line from the fee,” said Mark Ferles, Clearbank CEO, CNBC said in an interview last month. “We take into account the reduced rates in our planning, and so we expect these rates to decline.”
Income diversification
This happens when some fintech take action to try to diversify their revenue flows and reduce their dependence on cards and interest fees.
For example, Revolut offers crypto and shares that trade on their payment and foreign services, and recently announced plans to add mobile phones to their app in the UK and Germany.
Nahar said that “those who have a more diversified combination of revenue flow or strong monetization of their customer base through the interest services”, “are better placed in the weather in the economy, including a lower rate.”
The Dutch Neobank Bunq, which is mainly aimed at “digital nomads” who prefer not to work out of one place, is not backed up by the prospect of interest rates. Bunq saw a 65% jump annual profit in 2024.
“We have always had a healthy, diverse profit,” said Ali Nickno, CEO Bunq, CNBC last month. BunQ earns money from subscriptions as well as on payments and interest cards.
He added that in the UK everything “different in continental Europe”, given that the region “had negative interest rates” – therefore, in fact, the firm had to pay for deposits.
“Neobanks with a well-designed and diversified top line is better to manage the transition to a lower speed,” said CNBC Barun Singh, Fintech research analyst in the UK.
“Those who remain largely dependent on the interest received in customer deposits – without sufficient thrust in alternative revenue flows – will face a more significant reset waiting for income.”
