Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
5 Fintech Failures and Lessons to Learn From
Leadership | Jul 23, 2024
Image: Freepik/rawpixel.com
"I have not failed. I've just found 10,000 ways that won't work." – Thomas Edison
Failure contains perhaps the greatest insights for future success (assuming one is willing to learn from it!). While there are a myriad of pitfalls to avoid as an entrepreneur (or investor), below we look at 5 case studies with insightful lessons to learn about dependence management, market adaptation, regulatory compliance, and other topics from companies such as Plastiq, Nuri, CommonBond, LendUp, and Bank North, in hopes to avoid similar reoccurring problems in your fintech future.
1. Plastiq
- Founded: 2012, Failed: 2023, Country of Origin: United States, Key Founder: Eliot Buchanan
- What It Did: Plastiq offered a service that allowed users to pay bills that were previously unpayable with a credit card.
- Why It Failed: The collapse of Silicon Valley Bank, a major partner, as well as rising interest rates and operating difficulties, contributed to its demise.
- Lessons:
- Dependency Management --> Reduce reliance on single partners can reduce the risks associated with potential failures.
- Interest rate sensitivity --> Develop measures to deal with interest rate swings can help ensure financial stability.
2. Nuri (formerly Bitwala)
- Founded: 2015, Failed: 2022, Country of Origin: Germany, Key Founders: Jörg von Minckwitz, Jan Goslicki, Benjamin Jones
- What It Did: Nuri was a neobank that provided banking and cryptocurrency investment services.
- Why It Failed: The collapse of the cryptocurrency market in 2022, combined with regulatory demands and operational obstacles, resulted in its shutdown.
- Lessons:
- Market adaptability --> Survival in volatile industries requires agility and quick adaptation to market changes.
- Regulatory compliance --> Ensure compliance with evolving regulations might help you avoid legal and financial problems.
See: Giannis Antetokounmpo Just Delivered an 8-Word Master Class in Handling Failure
3. CommonBond
- Founded: 2011, Failed: 2023, Country of Origin: United States, Key Founders: David Klein, Michael Taormina, Jessup Shean
- What It Did: CommonBond was a student debt lending service that offered refinancing and loans to students.
- Why It Failed: The pandemic slowed student loan refinancing and heightened regulatory scrutiny, causing the core company to fail.
- Lessons:
- Market adaptability --> Adapt to changing market conditions, particularly during a crisis, is critical.
- Regulatory compliance --> Stay ahead of regulatory developments can help you avoid shutdowns and penalties.
4. LendUp
- Founded: 2012, Failed: 2022, Country of Origin: United States, Key Founder: Sasha Orloff
- What It Did: LendUp offered payday loans with the goal of helping customers improve their credit.
- Why It Failed: Regulatory challenges and the inability to scale effectively led to its downfall and bankrupcy.
- Lessons:
- Regulatory Awareness --> Keep up-to-date with regulatory changes and ensuring compliance can prevent operational disruptions.
- Scalability --> Develop a scalable business model is essential for long-term success.
See: Prime Trust’s Financial Failure and Shift Towards ‘No-Custody Solutions’
5. Bank North
- Founded: 2018, Failed: 2022, Country of Origin: United Kingdom, Key Founders: Jonathan Thompson, Craig Iley
- What It Did: Bank North was a challenger bank focused on offering flexible loans to small and medium-sized businesses (SMEs).
- Why It Failed: The bank went bankrupt as a result of a difficult economic environment and an inability to attract sufficient investment.
- Lessons:
- Funding Resilience --> Maintaining a steady and diverse funding base is crucial for weathering economic downturns.
- Investment Attraction - Creating methods to attract and maintain investment is critical to growth and stability.
Case Study Takeways
"Success is not final, failure is not fatal: It is the courage to continue that counts." – Winston Churchill
- Accept failure as a learning tool. Every failure offers vital knowledge. Analyze what went wrong, identify the fundamental causes, and use this information to avoid similar problems in the future.
- Focus on Market Readiness. Make sure your product or service meets a legitimate market need. Conduct extensive market research to better understand consumer behaviour and readiness for new technology.
See: Clearco Secures $60M Series D, Recapitalization
- Build trust. Building your firm based on ethical principles to avoid regulatory concerns and foster trust and loyalty among customers.
- Be adaptable and flexible. The capacity to pivot in shifting market conditions is critical for sustaining your firm. Prepare to adapt your strategy in reaction to new facts and external changes.
- Cash Flow Management. Proper financial planning and management is essential. Make sure you have adequate runway to sustain operations and always have a backup plan for obtaining additional financing if necessary.
- Maintain a clear strategy and effectively communicate it to all stakeholders. Consistency helps to instill confidence and trust in investors and customers.
Conclusion
Failure, whether big or small, teaches important lessons that advances progress. Remember that the path to innovation is full of both success and failure, and each experience is a valuable part of the journey. On a final note, while not related to fintech, checkout the Failure Museum for some inspiration of what not to do and some nostalgic lessons.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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