Drive to Survive 2024: Which FinTechs Will Pivot to Profitability?

PYMNTS asked industry executives across the payments and digital commerce landscape to give us their take on the pivotal shifts, technological advancements and strategies that have shaped business in 2023. Their responses show critical trendlines to watch in the new year. Jim McCarthy, CEO of Thredd, says FinTechs that focus on growth and frictionless access will come out on top.

If any trend has defined 2023, it has been the “FinTech winter” that caught many optimistic but unprofitable organizations off guard earlier this year. With unforeseen layoffs and missed earnings estimates dominating the headlines — even more than generative artificial intelligence — many in the FinTech space have had to rethink their once rosy growth aspirations. Even more challenging, as the winter frost did not thaw as hoped, many organizations did not survive the year (or will not next year).

Achieving profitability (or minimizing cash burn) is no longer a future aspiration but rather a near-term necessity for those organizations that want to be viable payments providers in the coming years. While the lofty days of the previous FinTech summers meant that a cocktail of speculation, hope and access to easy (and low-cost) capital could sustain a business, the reality of 2023 and beyond is that it takes real products with paying customers combining to drive sustainable revenue, and profits are table stakes.

As we look toward 2024 with continuing scarcity of available capital, there are many founders and leaders scratching their heads about achieving success in the coming years.

From my perspective, the future is bright for quality firms — those with a solid customer base, a clearly defined strategy and the ability to execute. I became CEO of Thredd, a U.K.-based leader in issuer processing services, this autumn, so I am keenly focused on our journey to continued success in the U.K., Europe, APAC and the U.S. My view is that organizations that maintain unwavering focus on profitable growth will emerge winners in 2024 and beyond.

I’m particularly optimistic (and anyone who knows me appreciates that this is not my default position) for FinTechs that don’t get out in front of their skis this year. I’m not using that winter analogy to be cute, but rather to drive home the point that the leaders of 2024 will be those that deliver, not those that overpromise. Quality organizations that are signing, implementing and retaining growth-oriented customers, rather than simply hoping for future success will create the foundations of long-term viability.

In 2024, the winners in the FinTech space will be those with depth — depth of reliable services, delivery and solid financial backing. 2023 culled the more obvious speculative firms, but space will be further winnowed this coming year by discerning buyers in the payments market. Firms providing real value to clients, consumers and shareholders will be well positioned. To win the larger, more strategic business means that even well-funded organizations must tighten their belts to keep their sights set on delivering a product roadmap that anticipates future payment trends but does not over-reach demand.

Specifically, payments FinTechs that provide cardholder and client experiences that exceed expectations in terms of frictionless global access and control will come out on top. The winners in this space will be able to balance the buzzwords of generative AI, etc., with investments that truly improve the payments experience through the eyes of the users.

Here’s to an amazing 2024 — a year in which the industry, funding and competitive pressures will create the lasting payments diamonds.