earlier this month, we noticed that many popular US fintech companies were seeing faster revenue growth due to higher interest rates. Basically, the interest-driven revenue was helping to offset a decline in consumer trading activity at Coinbase and Robinhood as people retreated from active trading when the economy turned sour.
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Part of that economic decline was caused by rising interest rates around the world, but with countries taking a more measured approach to raising interest rates, you could argue that we are nearing the peak rate environment of the current economic cycle. . Regardless, this rise in interest rates has created a massive growth opportunity for fintechs, both public and private.
Enter Sterling, a UK-based neobank, which has raised $1.1 billion to date according to Crunchbase. The company is in the news today because of the stepping down of its longtime CEO and founder, Anne Bowden. As TechCrunch’s own Ingrid Lunden pointed out in her piece, “if there is an underlying story behind the timing of the departure, it’s not entirely clear what it is.”
But I have a hypothesis. By reading the latest annual report of the company, it is clear that Neobank is improving the financial condition. For a longtime founder, building your company to a point of apparent success is a good time to take a break. my guess is.
And what’s driving Starling’s strong results? There are many contributing factors, but chief among them is — you guessed it — rising interest-based income. Let’s look at the numbers this morning to see if we can expect other neobanks to make similar gains.
starling takes flight
In the financial year ended 31 March, Sterling reported total income of £414.8 million on revenue of £452.8 million. If you’re wondering about the accuracy of those numbers, rest assured that they are correct. Sterling’s net income is the sum of net interest income, net fees and commissions, and other income. Net revenue, meanwhile, is the combination of net interest income, fees and commissions, and other income.
In sum, revenue does not discount fee and commission expense, which stood at £38 million in the year.