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QZ&A

We are “very close” to peak fintech, with more than 10,000 startups jumping into the boom

By John Detrixhe

Financial technology startups are booming. How long will it last?

Many venture capitalists are still convinced that the financial sector, despite the vast moat of regulation surrounding it, is due for the kind of disruption that has swept through things like retail and television, according to Curve’s Shachar Bialick. The founder and CEO of Curve, an app that lets customers to link all their credit and debit cards to just one card, says there are more than 10,000 fintech startups around the world, and even he can’t keep track of them all. Some, or even most, aren’t going to make it.

Many fintech entrepreneurs want to create a Spotify or Amazon for money: that is, a global platform that brings together everything from payments to investments. Curve hit a snag in this quest earlier this year, when American Express blocked the company from letting customers use its card. The London-based startup has pushed back both legally and in the media, arguing that the credit card company’s decision was contrary to rules meant to increase competition.

Curve says the company has around 500,000 customers, up from 300,000 in October. Quartz spoke with Bialick at the company’s offices in London about life after American Express, Brexit, and his vision for how the industry will evolve. The conversation has been edited and condensed for clarity.

Quartz: It’s been about four months since Amex blocked Curve. What are your plans now?

Bialick: Amex was never a critical part of Curve. It was always an opportunity to solve a big problem Amex has in the UK and Europe, which is access.

When it comes to Curve, we saw an opportunity to access Amex’s cardmembers, solve a problem for them and free their money. At the moment Amex decided to terminate the merchant agreement with Curve, they stopped looking after their customers’ interests, and potentially frustrated European and UK regulations. We want to make sure that the regulator takes note of the case, to ensure that no incumbent can frustrate the regulations we worked so hard to introduce to promote a level playing field.

What does Amex’s decision mean for Curve’s growth?

Curve has continued to grow in Europe without Amex. We have a lot of great plans to introduce to the product. We’re building the first OTT—over-the-top—banking platform.

The endgame, we believe, is basically to create a platform that allows you to rebundle and connect all your financial world into one place. If you want to use Monzo then use Monzo. If you want to use Barclays then use Barclays. But connect everything to one platform. That platform, with the access you give to data, will allow you to identify new products and services that can make you better off. Basically, the endgame we want to work on and are striving towards is that I don’t really want you to think about your finances. I want you to un-think about money.

Have we reached the peak in terms of new fintech startups?

I don’t know if we reached the peak, but we definitely are very close, because today there are over 10,000 fintechs globally. I don’t know over 90% of them. And when we present the unbundled market of fintech to shareholders and our team, we just pick the leading ones. They likely will continue, and the rest will either die—and we are seeing some going out of business—or they will be bought.

I have no doubt, it’s inevitable, that eventually we will have a platform connecting you to all your money, and there’s no doubt this platform has to be agnostic about what tools you’re be using.

Are we in a hyper growth phase, where neobanks and challenger banks have to reach scale as fast as they can or they might not make it long term?

There aren’t many companies that can become scale-up companies.

Is there enough venture capital in Europe to pursue those strategies?

It’s no longer just European money. The money comes all the way from Japan, China, and the US. All eyes are on the key players globally. Funding sizes are big, there are a lot of big players. They understand this space very well. They do believe, all of them individually, that eventually there’s going to be a banking platform. Whether it’s going to be a challenger bank paradigm, whether it’s going to be a wallet, whether it’s going to be OTT paradigm—it’s all a subjective view.

They saw what happened in commerce with Amazon, with fashion with the likes of Asos, with linear TV with the likes of Netflix, with music with Spotify… they’ve seen it happening again and again.

This is why you see a lot of money going there. But I don’t believe this market is a winner takes all—ie, one company, like Facebook—and the reason is because there’s going to be a winner across every region. There’s going to be four or five regions globally, so there’s going to be a total or four or five category kings. And the reason for that is because in every region, you have different regulations. It’s hard to just scale up. You have to change the product, change the compliance, change the team a bit.

Lastly, are you concerned about Brexit?

The impact of Brexit already happened. I don’t think there’s going to be further impact from that. Why? Because businesses cannot operate in uncertainty. Or, more specifically, every business, and especially startups, operate in constant uncertainty and our job is to bring more certainty to the business. So all the investment banks moved some of their operations outside the UK to France or Luxembourg or any other country in Europe. They’ve already done that. People already moved their jobs elsewhere. The impact on real estate, for example, already happened.

Financial companies already created their entities outside the UK. We’re one of them. We started operating certain entities outside the UK because I can’t wait and see what will happen with Brexit. I have to make a decision.

This story has been corrected in the fourth paragraph to show that Curve has around 500,000 users, instead of more than 500,000. 

John Detrixhe
Future of Finance Reporter
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