Moven shuts all consumer accounts, pivots to B2B-only service for banks
Moven, a US-based fintech, has decided to close all its customers’ money management accounts from 30 April 2020 and focus solely on its enterprise business which outsources the firm’s technology to banks.
The decision to axe operations of its neobank in the US comes as the firm, founded in 2011, reveals its “plans to spin-off Moven’s consumer-facing business hit a significant snag with major multi-year funding withdrawn as a result of market conditions”.
The firm, which specifically cites “uncertainty around coronavirus” as a reason for the closure, confirms that its outsourcing business Moven Enterprise “remains funded and growing”.
“As we look at the future, it has become clear that our main focus must shift to providing our technology to help banks, across the globe, help their customers,” the company said in a customer-facing announcement.
There is a substantial margin for profit in this business-to-business (B2B) play, which is why challenger banks such as UK-founded OakNorth have branched out into selling the technology they have developed to banks abroad.
Moven’s founder Brett King tweeted in reply to the customer announcement “go where the money is”, suggesting the company’s consumer business was also not making enough money to justify its existence.
King said in an official company statement released on Tuesday: “While our enterprise business continues to see strong demand, marked by our recent multi-year deal announced with STC Pay based in the Kingdom of Saudi Arabia, the impact of coronavirus on our long-term committed funding pipeline has been impaired, unfortunately.”
“Our plans for the spin-off of the direct-to-consumer business have had to be shelved as a result. It has become patently clear we need to focus our energies and our resources on the segment of our business where we can reach the most consumers moving forward, and that is our distributed smart banking and financial wellness capabilities.”
Alex Jiménez, chief strategy officer at consulting firm Extractable, was not surprised by the announcement. “As many of us expected, Moven is pivoting from a direct to consumer neobank to a bank partner,” he said on Tuesday.
Customers have been sent instructions on what to do leading up to the April deadline, and have been reassured that any current disputes will still be addressed.