If you don't know what fintech is, it's important to understand that it is a startup or company that develops 100% digital financial products. Knowing this, it is worth noting that startups are uncertain business models that depend on the world economic scenario, which is increasingly unstable.
Therefore, the movement to grow incessantly at any cost now needs to be modified for a more sustainable growth. That would be the motivation for mass layoffs in fintechs? Understand more as you read on.
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How is the fintech market doing?
With rising interest rates around the world and economic instability, many companies had to revise their projections so that it was possible to grow in a healthy way, with that around 955 professionals from fintechs were fired this year in the Brazil.
The fintech market is cyclical and many investors who joined the stock market boom in 2020 are now returning to the safety of fixed income, after all, even in the United States, the largest market in the world, interest rates and inflation keep rising to grow. In May of this year, for example, interest rates reached 8.6% higher than those of the last 4 decades.
It is possible to list some examples of companies that justified their layoffs with the argument given earlier, the readjustment in projections. As an example, we have Chlme, which, after dismissing 160 employees, says that this decision would help the company to prosper regardless of market instability.
In addition to it, we also have Opendoor, which laid off about 550 employees in order to reduce expenses to remain active in the market, even with the loss of customers. Another fintech that followed the trend was Stripe, which after a large hiring rate driven by the pandemic, the which attracted several clients, had to carry out the opposite process and dismissed 14% of the team to adapt to the new conditions.
Does this demonstrate a step backwards for fintechs?
How startups will survive this crisis is an important question to be asked, so some experienced investors are already projecting what should happen to the market. For them, the secret to staying alive is in the segment: companies that propose to help customers face crises and companies that provide the client with a safer and fractioned investment in properties, have a good chance of surviving this crisis.
With this, it is concluded that the key to face the high interest rates in the market is for these companies to show their customers that it is possible to save in difficult times.