Berlin-based fintech Vivid Money is shifting its strategy by phasing out its retail banking services and concentrating on business banking. Initially launched to compete with N26 and Revolut in the retail sector, the company is now prioritizing small and medium-sized enterprises (SMEs). Vivid Money had raised significant funding, including a $114 million round in 2022, and was once valued at €750 million. However, the competitive landscape in Germany’s retail banking sector has influenced its decision to refocus its efforts. The company’s leadership believes this move will enhance its business banking services while allowing them to expand into new markets.
In previous years, Vivid Money positioned itself as an all-in-one financial platform, gaining traction with retail customers. Its expansion efforts and funding rounds indicated an ambition to establish itself as a major player in the fintech space. However, compared to competitors like N26 and Revolut, Vivid Money has faced challenges in maintaining growth. Unlike these rivals, which have aggressively expanded their offerings, Vivid Money is now shifting its resources to serve SMEs, a segment it believes offers greater potential for long-term sustainability.
Why is Vivid Money shifting to business banking?
Vivid Money has been operating in a highly competitive retail banking market, where both traditional banks and digital challengers compete for customers. According to the company, its SME banking service already has 30,000 customers, and it sees more room for growth in this sector. The company has announced its plans to extend its business banking services beyond Germany to France, Spain, Luxembourg, and the Netherlands. This strategic shift is expected to reposition Vivid Money in a space where it sees less competition from dominant retail banking players.
What happens to Vivid Money’s retail customers?
Retail customers will still have access to Vivid Money’s current services, but the company will no longer introduce new products or marketing efforts for this segment. A spokesperson from Vivid Money confirmed this approach, indicating that the fintech’s primary focus will now be on developing and expanding its SME offerings. This shift in strategy suggests that the company intends to allocate more resources toward business clients rather than maintaining its presence in consumer banking.
The fintech’s leadership has made new executive hires as part of its business banking expansion. The company had initially begun offering SME banking services in early 2024 and has now accelerated its plans. Co-founder Alexander Emeshev stated,
“By combining B2C and B2B banking in one platform, we are creating a seamless financial ecosystem that supports both individuals and businesses.”
He also described Vivid Money as the “fastest-growing SME financial platform in Germany,” emphasizing its recent client acquisition rates.
Vivid Money’s decision mirrors broader trends in the fintech industry, where many digital banks are reassessing their strategies due to market saturation and regulatory challenges. By focusing on SMEs, Vivid Money is targeting a sector that requires specialized financial services, potentially offering more stability compared to the unpredictable retail market. The company’s expansion into new European markets further indicates its commitment to strengthening its presence in business banking rather than competing in an overcrowded retail sector.
For fintech firms, adapting to market demands is crucial for survival. Vivid Money’s pivot away from retail banking highlights the challenges of sustaining a competitive edge in a crowded digital banking industry. While retail customers will continue using its services, the firm’s long-term focus lies in SME banking, a sector with distinct financial needs and growth potential. Whether this strategy will yield sustained success remains to be seen, but it signals a significant shift in the company’s business model.
