Fintech Layoffs: Money Transfer Unicorn Zepz Cuts 420 Jobs, Citing 'Workforce Optimization'

Money transfer provider Zepz is laying off 420 employees, the fintech unicorn said Tuesday, as more fintech firms suffer the brunt of the wider tech downturn.

The company already started informing employees of job cuts Monday, Zepz told CNBC. Individual employees were informed by their managers before wider communications were issued across the London-based company.

Most of the layoffs will hit engineering and customer care divisions as part of plans to transition the said units from multiple international offices to centralized locations, said the company, which CNBC dubbed as a Western Union "challenger."

The fintech unicorn – a startup that has a valuation of over $1 billion - went on to reveal that it was implementing "workforce optimization," which included the process of determining which roles were duplicated after it combined international money transfer brands Sendwave and WorldRemit under a single parent company.

Zepz has a global workforce headcount of around 1,600, which means this week's reductions account for about 26% of the company's workforce, as per CNBC.

CEO Mark Lenhard told the outlet that the layoffs were necessary to lay out "ambitious foundations towards our long-term strategic direction as a portfolio business," adding that the company took "a serious look" at how the organization can be optimized so it can pursue operations "in a mature fashion" that should set Zepz up for long-term success.

Affected employees will be supported through coaching, career development and developing other job application-related skills.

The company previously slashed its workforce in July 2022, affecting "scores of employees," according to Sky News.

At the time, a spokeswoman for Zepz said leadership "internally shared a strategy to reduce our cost base and seek a stronger degree of financial independence to ensure that we can service our millions of customers around the world sustainably and independently of further external funding."

The spokeswoman added that redundancies were announced as part of the cost-saving strategy. "These redundancies affected less than 5% of WorldRemit roles globally," she said.

Around the same time as Zepz's reported July 2022 layoffs, Bloomberg reported that the fintech unicorn pushed back plans of an initial public offering (IPO) due to alleged accounts issues and a renewed focus on profitability.

The company reportedly discovered that some customer accounts weren't being checked in a timely manner. Furthermore, there have been several exits among senior leaders, people with knowledge of the matter told the outlet.

Despite the latest workforce cuts, Zepz said it was hiring for 200 roles.

Harry Nelis, a partner at venture capital firm Accel which backs Zepz alongside other VC firms, told CNBC that the next step for Zepz after it acquired Sendwave was to "remove duplication of roles" across the recently acquired brand and WorldRemit.

In August 2021, Zepz raised $292 million which brought its market value to $5 billion.

In the said funding round, Accel, TCV, and Leapfrog helped raised the funds, along with new investors Farallon Capital and others.

Earlier this year, the fintech sector saw a series of startup layoffs that affected thousands of fintech workers.

Upstart led this year's fintech layoffs with job cuts affecting 365 employees or about 20% of its work headcount early in January. The company cited "the challenging macro environment" as a reason for the cuts.

In the same month, PayPal said it was cutting about 7% of its global workforce or around 2,000 full-time employees. PayPal CEO Dan Schulman told staff that departing workers will be given "generous packages."

Affirm CEO Max Levchin said in a letter to shareholders early in February that the company was laying off 19% of its workforce due to decreased consumer spending in 2022. The cuts could affect about 485 workers, CNBC reported at the time.

In April, neobank Aspiration reportedly planned to let about 180 employees go amid an ongoing restructuring at the company, Forbes reported. The layoffs included chief administrative officer, Deepak Kumar, as per Forbes.

Stripe was the biggest fish in the fintech reckoning that kicked off late last year after the startup announced that it was slashing 14% of its headcount. At the time, Twitter users praised Stripe for its "quite generous" exit package for affected employees.

Digital bank Chime also announced late in 2022 that it was cutting 12% of its workforce amid a drive toward profitability.