Fintechs That Benefited From High Interest Rates Now Face a Crucial Test
Key Points
- In 2024, fintechs such as Robinhood, Revolut, and Monzo reported strong profits fueled by higher interest rates.
- A broad decline in rates now raises concerns about the long-term sustainability of that income stream.
- Industry experts say the rate shift could test the resilience and adaptability of fintech business models.
Several leading fintech firms that posted record profits in 2024 due to elevated interest rates are now confronting a major turning point. With global central banks signaling a broader retreat from high-rate policies, firms like Robinhood, Revolut, and Monzo may face pressure to prove the durability of their business models.
According to F.M.I.E Sources, the surge in profitability last year was largely attributed to net interest income—the spread between interest earned on loans and interest paid to savers. Robinhood, for instance, reported $1.4 billion in annual profit, driven by a 19% increase in net interest income, which reached $1.1 billion.
Revolut’s net interest income soared by 58%, lifting its profit to £1.1 billion ($1.45 billion). Monzo, in a major milestone, recorded its first-ever annual profit, thanks to a staggering 167% jump in net interest income.
But the tables are turning.
“An environment of falling interest rates may pose challenges for some fintech players with business models anchored to net interest income,” said Lindsey Naylor, partner at Bain & Company, in an interview with F.M.I.E Sources. She added that this could be “a test of the resilience of fintech firms’ business models.”
While some firms are still reporting growth — Robinhood saw a 14% year-over-year increase in net interest income to $290 million in Q1 2025 — the broader outlook remains uncertain. In the U.K., ClearBank, a payments infrastructure provider, swung to a £4.4 million pre-tax loss, shifting from interest income toward fee-based revenue amid rate declines and EU expansion costs.
“Our interest income will always be an important part of our income, but our strategic focus is on growing the fee income line,” ClearBank CEO Mark Fairless told F.M.I.E Sources. “We factor in the declining rates in our planning and so we’re expecting those rates to come down.”
Revenue Diversification Becomes Critical
In response to these shifts, many fintechs are ramping up efforts to diversify revenue beyond interest income. Revolut, for example, offers cryptocurrency and stock trading services alongside its core payments and foreign exchange features. The company recently revealed plans to introduce mobile phone plans in the U.K. and Germany as another revenue stream.
According to Naylor, fintechs that have “a more diversified mix of revenue streams or strong monetization of their customer base through non-interest services” are “better positioned to weather changes in the economy, including a lower rates environment.”
Dutch neobank Bunq, which caters to digital nomads and remote professionals, remains confident. The company reported a 65% jump in profit in 2024 and says it has long prioritized a balanced revenue model.
“We’ve always had a healthy, diverse income,” said Ali Niknam, CEO of Bunq, in an interview with F.M.I.E Sources. Bunq’s revenue is generated through subscriptions, card-based fees, and interest income.
He noted that conditions in continental Europe differ from the U.K., as the region had long dealt with negative interest rates, meaning banks had to pay to hold deposits.
The Road Ahead for Fintechs
As the rate environment evolves, analysts say that only those fintechs with diversified income models will thrive. Barun Singh, fintech analyst at investment bank Peel Hunt, told F.M.I.E Sources:
“Neobanks with a well-developed and diversified top line are structurally better positioned to manage the transition to a lower-rate environment.”
Singh warned that “those that remain heavily reliant on interest earned from customer deposits — without sufficient traction in alternative revenue streams — will face a more meaningful reset in income expectations.”
While the high-rate era brought a windfall to many fintechs, the next chapter will demand strategic adaptability, operational efficiency, and a strong focus on innovation beyond interest-driven models.