Digital banks and credit services are helping retail fintech dealmaking reverse a declining trajectory, contributing a 75% YoY increase in venture funding.
Companies in the segment have gained traction among younger and underbanked communities. And these startups are raking in big venture checks, such as Canadian online bank KOHO’s C$190 million (around $132 million) round in October.
The overall fintech vertical’s funding improved 55% YoY in 2024 after reaching a nine-year low in 2023.
PitchBook’s latest market map explores the credit and banking segment, highlighting the startups propelling the vertical forward and attracting investor interest. Explore the sector by clicking on the teal tile below.
To go deeper, read our Q4 2024 Retail Fintech VC Trends Report. PitchBook subscribers can also explore the full market map with more than 2,100 companies.
Spotlight: Credit and Banking
PitchBook analysts have divided the credit and banking segment into two parts:
- Digital banking: Often referred to as neobanks or challenger banks, these startups offer retail banking services entirely online, usually through a mobile application. Companies in this category include Chime, Monzo and Revolut.
- Credit & BNPL: These companies offer credit products like cards, point-of-sale services, lending and, perhaps most popularly, buy now, pay later (BNPL) options like Klarna, Tabby and Mission Lane.
In Q4, investment in the credit and banking segment rose only slightly to $1.1 billion from $1 billion in Q3. The broader retail fintech vertical saw funding decline slightly from $2.9 billion in Q3 to $2.7 billion. Overall, though, it raised more capital in 2024 than 2023, hitting $12.1 billion, up from $7.8 billion in 2023.
Notable deals in Q4 include Canadian digital bank Neo, which offers savings accounts and credit cards and which secured a Series D round of C$360 (around $251 million) led by angel investors including Slack co-founder Stewart Butterfield and Tobi Lütke, the founder and CEO of Shopify. Also in November, the Argentine neobank startup Ualá netted a $300 million Series E round led by Allianz X.
Exit activity in retail fintech, while muted like much of the VC landscape, has seen some bright spots and is primed for a busy 2025. In December, the Upbound Group bought Brigit, a financial wellness monitoring app, for $460 million. Additionally, Indian payments platform startup MobiKwik took advantage of the IPO boom in the country to go public on the National Stock Exchange of India.
Looking ahead to 2025, several high-profile companies have already made plans to go public. In late 2024 the BNPL company Klarna filed the initial documents to go public while the neobank Chime also filed paperwork to go public in 2025.
Featured image by Jenna O’Malley/PitchBook News
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