European fintech funding experienced a massive drop in funding and number of deals in the third quarter.

While some fintechs had successful funding rounds in Q3, even those will find it difficult to be profitable, according to a Nov. 16 report published by London-based venture capital firm WinYield. Fintechs are struggling to make money due to lack of fintech-related experience and black box lending models of digital lending startups.

In Q3, European fintechs raised $1.3 billion (1 billion pounds), down 67% year over year, while the number of deals fell to 181, down 42% YoY, according to the Q3 State of Fintech report by business analytics platform CB Insights. Fintechs in the United Kingdom suffered a similar fate in Q3, with funding dropping 25% YoY to $600 million and the number of deals falling 36% YoY to 60.

Despite a rocky funding cycle for EU and U.K. fintechs, these fintechs did raise capital in the past month:

• Payments fintech Redpin raises $152M

Payments provider Redpin raised $152 million in a venture capital round led by Blackstone Group on Nov. 14, according to Crunchbase.

The funds will be used to increase headcount, acquire technology companies, and expand its payments technology and offerings, Redpin Chief Executive Arnaud Loiseau told Bank Automation News.

Redpin operates in 10 countries and is “actively involved in the end-to-end purchase and sale process,” Loiseau said, noting that the fintech is looking to implement embedded finance, launch new products and acquire companies as part of its strategy.

In addition to Blackstone, the London-based company has raised funds from Palamon and Corsair and aims to leverage the investors’ “insight on acquisition-led growth opportunities,” Loiseau said. The company is headed into 2024 with a “full throttle” approach, Loiseau said.

• Atom Bank raises $109M

Digital bank Atom Bank raised $109 million in a private equity round, led by existing investors like BBVA, Toscafund and Infinity Investment Partners, according to the company’s Nov. 2 release.

The funds will be used to increase the bank’s mortgage lending operations, according to the release.

The Durham, U.K.-based bank recently experienced growth, posting a 62% income surge in its FY23 (ending in June 2023), according to the release. Additionally, the bank’s customers nearly doubled to 224,000 during the fiscal year compared with FY22, according to its annual report.

Deposits also doubled YoY for FY2023 to $8.3 billion, according to the report.

“This money will be put to work to drive growth and to fuel the development of our franchise,” Mark Mullen, chief executive officer at Atom, said in the release. “We are a cautious bank with an excellent track record of lending responsibly and successfully [and] we have a compact business model, and we keep tight control over our costs.”

Atom Bank has raised $849 million since its inception in 2014, according to Crunchbase.

• Railsr secures $24M

Embedded finance company Railsr secured $24 million in a venture funding round led by D Squared Capital, according to a recent release from Railsr.

The funds will be used for expansion and compliance efforts, the release stated. Railsr is looking to pursue an electronic money institution license, a license to issue electronic money in the European economy, in France to expand its offerings, according to the release.

“With this substantial new investment secured in a much tougher fundraising environment, we are very well placed to grow sustainably,” Philippe Morel, chief executive, said in the release. “We have a proven product and business model, which is operating in a sector with much higher barriers to entry due to a tougher regulatory and fundraising environment.”

Railsr has raised over $211 million since its inception in 2016, according to Crunchbase.

• Fnality International raises $97.6M

Payments fintech Fnality has raised $97.6 million in a series B funding round led by Goldman Sachs, BNP Paribas and other investors, according to the company’s Nov. 14 release.

The funds will be used to develop payments technology, including distributed ledger technology-based payments and tokenized payments, according to the release.

“Our series B funding round represents the financial sector’s desire for a central bank money-backed blockchain-based settlement solution that bridges the gap between traditional finance and decentralized finance in wholesale markets,” Fnality Chief Executive Rhomaios Ram said in the release.

Banco Santander, BNY Mellon, Barclays, CIBC, Commerzbank, ING, Lloyds Banking Group, Nasdaq Ventures, State Street and UBS are among Fnality investors, according to the release.

The London-based company has raised $167 million since its founding in 2019.

Editor’s note: All figures have been converted to U.S. dollars.

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