2021 in Fintech and Alternative Finance: Part 1

By John Reynolds on Wednesday 29 December 2021

FeaturesAlternative LendingDigital BankingSavings and Investment

Fintechs brushed aside Covid and got on, as best they could, with the day-to-day running of their businesses in the first half of the year.

2021 in Fintech and Alternative Finance: Part 1
Image source: Pexels.

As the fintech industry—and the world—learnt to deal with the reality of Covid, the sector adapted its working practices, most noticeably in shifting to new working models.

But 2021 also saw headline-grabbing fintech news outside of Covid, with high-profile exits, appointments, closures, fundraises and reviews.

In this article, we take a look back at the stories that grabbed the headlines over the first six months of 2021.

January

Following a Covid-dominated 2020, it was perhaps surprising that there was a rush of fintech news in January-most of it non-Covid related.

Many in the industry were shocked to hear that Tom Blomfield, who co-founded Monzo in 2014, was leaving the neobank, citing personal pressures heightened by the pandemic among other reasons.

Also exiting fintech were two fintech businesses, which were shuttered: Simple, one of the first digital banks on the market, closed down following the purchase of the US division of its parent company by a US bank; while Scalable Capital, one of the first digital disruptors in wealth management, axed its direct UK retail wealth management business.  

Other big news in January included Plaid and Visa pulling the plug on their $5.3bn takeover deal amid concern from regulators that it would limit competition in the payments sector. 

US alternative lender SoFi agreed to go public at an $8.65bn valuation through a SPAC merger while Checkout.com became Europe’s most valuable fintech again, following a $450m fundraise. 

If that wasn’t enough January news, Revolut submitted an application for a UK banking licence while the launch of the much-heralded Pensions Dashboard was put back again until 2023.

February

Klarna and other buy now, pay later firms discovered in January they were set for a UK regulatory clampdown. A long-awaited review by the FCA called for tighter regulation of buy-now-pay-later (BNPL) firms.

Later in the month, the long-awaited government-initiated Kalifa review warned the UK risks losing its dominance in financial services unless the government backs fintech.

In Covid-related news, Revolut announced a permanent move to flexible working in one of the first prominent UK fintechs to announce its future working plans.

Revolut rival Monzo, meanwhile, appointed a new US CEO Carol Nelson, a strategic adviser to the neobank while Stripe appointed former Bank of England governor Mark Carney to its board.

In funding news, upmarket digital bank Monument closed a £28m Series A funding round ahead of its launch.

March

March saw three mega funding rounds, led by Klarna which confirmed a billion-dollar funding round, making the Swedish buy now, pay later fintech the second-highest valued fintech in the world with a valuation of $31bn.

Another big fundraiser was Starling Bank which scooped a £272m investment as it finally reached unicorn status, valuing it at  £1.1bn, with the capital being earmarked for domestic and overseas expansion.

Meanwhile, London-based payment provider SumUp raised a €750m debt facility from both new and existing investors. 

March saw bad news coming out of NatWest, which shuttered Esme Loans, its standalone lending platform it launched in 2017.

And the UK watchdog had bad news for Seedrs and Crowdcube, who agreed to terminate a deal to merge their equity crowdfunding platforms, following intervention from the FCA which raised concerns the merger would lead to a “substantial lessening of competition”.

In other news, Revolut submitted a draft application for its US banking licence while Robinhood confidentially submitted a draft application with the Securities and Exchange Commission (SEC) for its initial public offering (IPO).

April

PensionBee grabbed fintech headlines in April, announcing it was looking to raise £55m in its upcoming Initial Public Offering (IPO), implying a  £346m valuation. 

On the funding front, API provider TrueLayer secured a $70m Series D funding round, earmarked for global expansion, Starling Bank has received a £50m investment from Goldman Sachs. 

In personnel news, it was announced Charlotte Crosswell was to step down from the top job at industry body Innovate Finance. Crosswell was succeeded by Janine Hirt, COO of Innovate Finance.

May

Lanistar, the startup with big ambitions- and which also attracted controversy- got the nod from the Financial Conduct Authority to provide payments services.  The news followed Lanistar creating waves with an attention-grabbing social media campaign but the FCA warned the startup might be a scam. 

A report emerged that Goldman Sachs was to launch its much-hyped Marcus app in the “next few weeks” while ex-Monzo CEO Tom Blomfield was among angels backing a fundraise for payroll startup Pento.

Meanwhile, Canadian money management platform Wealthsimple raised C$750m in one of the biggest Canadian tech investment rounds ever. Adding a touch of Hollywood glamour to the Canadian tech scene, A-list actors Ryan Reynolds, Michael J. Fox, rapper Drake and basketball players Kelly Olynyk and Dwight Powell joined the round.

June

One of the biggest stories emanating out of June was JPMorgan Chase’s planned purchase of UK fintech Nutmeg, ahead of the launch of the US’s digital bank in the UK.

Another headline-grabbing deal revealed in June was Visa making another Open Banking grab with €1.8bn purchase of Tink, the Swedish Open Banking platform.

Two big funding rounds saw German insurtech Wefox bag $650m for US and Asian expansion and Dutch fintech Mollie grab $800m in a Series C as it plotted rapid expansion.

Meanwhile, Wise, the fintech formerly known as Transferwise, announced its direct London listing.

In personnel news, news broke that Crowdcube’s Luke Lang was leaving the company he co-founded while Sebastian Siemiatkowski stepped down as CEO of Klarna to make way for… A$AP Rocky. But only for a day.

Come back tomorrow for Part 2, where we explore what happened in the second half of 2021.

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