Personal Finance and ‘Niche’ FinTechs Face Headwinds as Some Shut Down

“Build it and they will come.”

The sentiment behind that iconic line might be apropos of the startup world, and for FinTechs in particular.

Drill down into a particular subset of FinTechs – in this case, personal finance-focused FinTechs – and we see that headwinds have been massing. Time, funding and even end-user demand have not coalesced to help those businesses meet their (hoped for) potential. These headwinds have proven so strong that, in some cases, shutting down has become the only option.

A few casualties litter the FinTech stage, having fallen in recent weeks.

As FinTech Futures reported Monday (Sept. 2), Hardbacon, a Canadian personal finance app, shut down. The company offered budgeting tools and comparisons of various financial products such as savings accounts and loans to help consumers plan their financial lives.

A Few Say Goodbye

In a post titled “It’s time to say goodbye,” CEO Julien Brault wrote that the company would declare bankruptcy. The company had sought to trim expenses and had been cutting headcount (the final employees were just let go). The firm pointed to a Google update that caused Hardbacon’s traffic to plummet.

“Despite extensive SEO and content optimization work, our traffic continued to decline, and each Google update since September has accelerated our traffic loss…,” the CEO noted, adding that “in total, we lost 97% of our traffic from Google.”

The company estimated that it had 200,000 monthly active users. FinTech Futures noted in its report that the company raised more than $1.5 million through the past few years.

Elsewhere, as PYMNTS reported last month, U.S. neobank PrizePool is making moves to shut down its consumer app amid an acquisition from an as-yet-unnamed suitor. PrizePool has told customers they have until Sept. 19 to move their funds to an outside bank account, per media reports. Notably, the startup had also worked with Evolve Bank & Trust.

“Thankfully, PrizePool works directly with Evolve and does not appear to have relied on an intermediary platform to support critical tasks like ledgering — though it is unclear if Evolve’s direct partners suffer from the same kinds of reconciliation challenges exposed by the ongoing meltdown of Synapse,” wrote Fintech Business Weekly’s Jason Mikula.

PrizePool has stated on its site that “only funds deposited into PrizePool Accounts provided by Evolve Bank & Trust are covered by the FDIC standard deposit insurance amount. The standard deposit insurance amount is $250,000 per depositor, per insured bank, for each account.”

PrizePool offered rewards for spending and for saving money tied to its PrizePool accounts. The company raised about $18.6 million across seed and Series A rounds through 2020 and 2021.

Also last month, Totem, which focused on providing banking services to indigenous people, and which was founded two years ago, reached, in the words of CEO Amber Buker, “the end of its road.”

In a LinkedIn post, the CEO added that “businesses looking to serve Indian Country can only do so at the speed of trust. And that comes much, much more slowly than the pace at which a venture-backed company is expected to move.”

The read across here is that despite the millions raised, amid external pressures and a tight fundraising environment — where total global FinTech investment slipped to $51.8 billion in the first half of this year from $62.3 billion a year ago — capital is not easy to come by.

And capital is the dry powder helping these firms grab revenues and momentum in the first place.

In the meantime, regulators continue to look at the risks inherent in tie-ups between traditional finance firms and FinTechs. Niche platforms and personal finance-focused FinTechs may find it, as Bette Davis promised long ago, to be a bumpy ride.