Shares in UK digital banking startup Fiinu have taken a significant hit following the withdrawal of its restricted banking license due to challenging market conditions.
Fiinu, known for providing short-term credit to consumers through arranged overdrafts, reported in April that its subsidiary, Fiinu 2, was facing difficulties in raising capital necessary to transition from the mobilisation period to a full banking license. The initial plan was to reapply after securing exit funding within two to three months.
In a recent statement, the company indicated that “due to the continuing challenging market conditions and limited timescale, it has not yet been able to secure the necessary exit funding to consider seeking re-application.”
To address this situation, Fiinu has initiated a cost reduction program that includes staff layoffs and renegotiations with technology suppliers, such as open banking provider TransUnion and core banking supplier Tuum.
The company added: “While Fiinu 2 Limited continues with a controlled scaling back of its operations, which may take several months, we will assess all available options regarding the business, including sourcing the additional funding required for a regulatory re-application for our banking license, as well as potentially changing our strategy or selling the Group’s technology assets.”
Fiinu currently holds unaudited cash resources of approximately £4.3 million, which they say is sufficient to scale back operations in Fiinu 2 Limited and Fiinu Holdings Limited and to fulfill financial obligations as they arise.
Chris Sweeney, CEO of Fiinu, expressed regret over the decision to scale back operations, stating, “It is with deep regret that we have had to scale back operations in Fiinu 2 Limited and Fiinu Holdings Limited, following the successful completion of the technology build of the Plugin Overdraft. The current general capital and market conditions are increasingly challenging for a business at Fiinu’s stage of development.”
In response to the news, shares in Fiinu plummeted by 67%.