While the threat they represent to legacy financial brands hasn’t diminished, thanks to a tightening market, challenger banks and fintechs are for the first time under threat themselves.

Following a decade of record investment and VC backing, the flow of funding has gone from a torrent to a trickle and thanks to the first prolonged market downturn since 2008, fintechs are starting to feel the pinch. So much so, that even the most established organizations within the wider tech sector are reducing headcounts and looking to lower operating costs.

Even if they are better positioned to embrace technological breakthroughs such as generative AI, to survive in the current climate, fintechs first need to focus on bringing their burn rate under control and prioritizing their spending on areas of the business where potential ROI is greatest.

To some extent, digital-by-default brands still hold an advantage over established institutions in the banking and financial services sector. Their businesses are built on data and their strategies steered by real-time business intelligence. But that data means nothing unless it can be combined with fiscal responsibility.