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Fiinu on the ropes as banking licence withdrawn

Fiinu on the ropes as banking licence withdrawn

Shares in UK digital banking startup Fiinu have plunged after the lender had its restricted banking licence withdrawn in the face of challenging market conditions.

Fiinu, which offers short-term credit to consumers via an arranged overdraft, in April said its subsidiary Fiinu 2 was struggling to raise capital to meet the requirements for exiting the mobilisation period and moving to a full banking licence. Initially, the aim was to re-apply after a short period of two to three months once exit funding had been secured.

In a statement, the company now says: "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."

In a last-ditch bid to meet the requirements, Fiinu has embarked on a cost reduction programme, terminating staff and renegotiating agreements with technology suppliers, including open banking provider TransUnion and core banking supplier Tuum.

The company states: "Whilst Fiinu 2 Limited proceeds with the controlled scaling back of its operations, which may take a number of months, the Company will continue to review all its options in respect of the business, including trying to source the additional funding required for it to re-apply to the regulators to re-start its banking licence application, but also other options, which may include a change of strategy and/or a sale of the Group's technology assets."

The firm currently has available unaudited cash resources of approximately £4.3m. It says this represents enough funds to scale back its current operations in Fiinu 2 Limited and Fiinu Holdings Limited and to meet its financial obligations as they fall due.

Chris Sweeney, CEO of Fiinu, says: "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 specific conditions, are increasingly challenging for a business at Fiinu's current stage of development"

Shares in Fiinu nosedived on the news, plunging by 67%.

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