Dutch challenger bank, Bunq, has announced its first quarterly profit, marking a significant milestone for the fintech company.
The neobank generated a pre-tax profit of €2.3 million during the fourth quarter of 2022, a substantial increase from the previous year.
This comes just months after the company broke even for the first time in December 2021.
Structural Profitability
In a press statement on Tuesday, Bunq reported that it has reached “structural profitability,” meaning that its business model is generating a consistent profit.
The neobank’s net fee income also increased 37% between September and December 2022 compared to the same period in 2021, and its user deposits shot up 64% to €1.8 billion at the end of 2022.
Ali Niknam, Bunq’s Founder and CEO, attributed the company’s success to its “service-oriented” business model, which has proven to be profitable just 10 years after its founding. Niknam personally financed the company until 2021 when it secured €193 million from a Series A funding round led by British private equity firm Pollen Street Capital.
Tumultuous Year for Fintech Industry
Bunq’s first quarterly profit comes amidst a tumultuous year for the fintech industry, as several startups exit the industry.
In April 2022, checkout startup Fast shut down its business, citing slow growth and high cash burn. Another US-based startup, Nirvana Money, packed up only 22 days after launching.
Additionally, other startups closed down their services in 2022, including the German carbon-accounting startup, Planetly, the UK challenger banking app, Dozens and Australia’s first online bank, Volt Bank.
According to CB Insights’ 2022 State of Fintech Report, global fintech funding suffered in 2022, with investment into fintech slumping by almost half (46%) to $75.2 billion.
Final Thoughts
Bunq’s success is a testament to its “service-oriented” business model and the company’s dedication to providing innovative banking solutions to its customers.
Its profitability is particularly notable in the current climate of the fintech industry, where many companies are struggling to generate consistent profits.
As Bunq continues to grow and expand, it will be interesting to see how it continues to innovate and differentiate itself from its competitors.
