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Fintech Regulations: A Global Overview and its Impact on the Industry
Introduction
Fintech, or financial technology, has rapidly gained prominence in the global market, revolutionizing traditional financial services. With the rise of fintech, there has been a need for regulation to ensure safety and transparency in the industry. In this blog post, we will explore the global overview of fintech regulations and their impact on the industry.
Fintech Regulations
Fintech regulations vary across the globe, with some countries having specific regulations for fintech, while others have updated their existing financial regulations to include fintech. The regulations aim to address risks associated with fintech such as data privacy, cybersecurity, and financial stability.
In the United States, the regulatory landscape is divided between federal and state regulators. The Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve are the main federal regulators. States also have their own regulatory bodies that oversee fintech companies.
In Europe, the European Union (EU) has introduced the Payment Services Directive (PSD2) to regulate payment services and increase competition in the market. The EU also has the General Data Protection Regulation (GDPR), which protects consumer data privacy.
In Asia, Singapore has emerged as a leading fintech hub, with the Monetary Authority of Singapore (MAS) regulating the industry. Japan has also introduced specific fintech regulations, such as the Payment Services Act.
Impact on The Industry
Fintech regulations have both positive and negative impacts on the industry. On one hand, regulations provide safety and transparency, which can increase consumer confidence and encourage investment in the industry. On the other hand, regulations can also stifle innovation and increase costs for fintech companies.
The regulations can also create barriers to entry for new players, which can limit competition in the market. This can result in dominant players having a larger market share, making it harder for new players to compete.
Conclusion
Fintech regulations are necessary to ensure the safety and transparency of the industry. While there are challenges associated with regulations, they can also bring benefits to the industry. As fintech continues to grow and evolve, it is important for regulators to keep up with the changes and ensure that the regulations are effective in addressing risks and promoting innovation.
Zilo Secures £25m in Series A Funding
The funding was spearheaded by Fidelity International Strategic Ventures (FISV) and Portage, with additional contributions from State Street and Citi. According to PitchBook data, the company had previously raised $10.6 million in a seed round in October 2022.
Established in 2020 and headquartered in London, Zilo's mission is to enhance cost efficiency, reduce complexity, and generate sustainable value for global asset and wealth management firms, along with their clientele. Zilo's software facilitates the replacement of outdated legacy systems with a digital, real-time user experience. The platform went live with its inaugural client in July 2023.
The newly secured funds will be channeled towards accelerating product development, fostering user acquisition, and expanding its presence in the market. Additionally, the capital will be allocated to entering new markets and establishing strategic partnerships to diversify its offerings.
Philip Goffin, the founder and CEO of Zilo, commented on the funding, stating, "We are committed to empowering financial service institutions to phase out obsolete legacy technologies and significantly enhance the cost efficiencies of their operations by leveraging Zilo to transition to a modern digital solution that supports existing fund structures, new digital assets, and improves client experiences."
SOURCE: Fintech Inshorts
Amethis buys majority in CBS
Headquartered in Paris, France, CBS has been delivering banking solutions internationally for the past 25 years. Its prominent offerings include CapitalBanker, a core banking solution, and CapitalPrivate, a wealth management solution tailored for European private banks and wealth management specialists.
CBS, employing over 300 professionals, operates in multiple locations, including France, Monaco, Switzerland, the USA, Morocco, Lebanon, and Ivory Coast.
Amethis, through its investment, aims to support CBS in accelerating organic growth, especially on an international scale. The strategy includes facilitating CBS's external growth through strategic acquisitions, expanding its geographical reach, and reinforcing existing services.
In this transaction, Amethis secures a majority stake, collaborating with CBS's president and CEO, Samer Hanna, COO Michel Tueni, CFO Aziz Akl, and other key executives, all of whom are reinvesting their proceeds. Founded in 2012 and based in Paris, Amethis manages assets exceeding €1 billion, with over 30 investments to date. As a partner member of Edmond de Rothschild Private Equity, Amethis provides growth capital to mid-sized businesses across various sectors through its six offices in Europe and Africa.
SOURCE: Amethis
Ant Group Close to Acquiring MultiSafepay
In its pursuit of global expansion, Ant Group had previously entered the Singaporean market through the acquisition of 2C2P in 2022. Known for operating the cross-border payments platform Alipay alongside its affiliate Alibaba Group, Ant Group has established itself as a key player in the worldwide financial services market.
MultiSafepay, generating an annual revenue of US$50 million, is poised to become a valuable addition to Ant Group's European portfolio. Unlike many companies, MultiSafepay has achieved substantial growth organically, with no external investment, expanding from its native market into Spain and Germany.
Ant Group's latest acquisition involves obtaining 100% ownership of MultiSafepay, a company renowned for providing payments acquiring and processing services to over 18,000 SMEs. Moreover, MultiSafepay collaborates with commercial partners to offer supplementary services to its clients. In 2022, the Dutch firm recorded a net profit of US$1.43 million on gross income totaling US$13.02 million. With this impending deal, MultiSafepay's CEO, Olaf Geurs, is expected to pass the reins to Ant Group.
SOURCE: Fintech Magazine
FirstOntario's Open Banking Readiness with Flinks and Everlink
This partnership is set to provide greater control over financial data to FirstOntario's members, enabling the credit union to deliver a more personalized range of financial services. Lloyd Smith, CEO of FirstOntario, emphasizes the importance of this capability as a "key strategic priority" and underscores the readiness to offer this emerging service once legislatively enabled, given the anticipation surrounding open banking in the marketplace.
Flinks, headquartered in Montreal and majority-owned by the National Bank of Canada, and Everlink, based in Markham, joined forces in March 2023 to spearhead the adoption of consumer-driven banking in Canada. They achieved this by combining Flinks' open banking infrastructure product, Outbound, with Everlink's digital solutions.
This collaboration aligns with the federal government of Canada's initiative, unveiled last November, to implement an open banking framework in its upcoming budget. The framework is slated to be nationally operational in 2025, prompting financial institutions like FirstOntario to establish partnerships with suitable providers in preparation.
Yves-Gabriel Leboeuf, CEO of Flinks, notes the growing momentum for a consumer-driven financial industry, emphasizing that the inclusion of open banking functionality within FirstOntario will "elevate the banking experience" for its members.
As per the federal Department of Finance, approximately 9 million Canadians currently use screen-scraping to share confidential banking credentials with service providers, posing privacy, liability, and security risks. Canada aims to replace this process with open banking, following the lead of countries such as Australia, the European Union, the UK, Japan, and Singapore.
SOURCE: Banking Frontiers
Global Fintech Investment Drops 48% in 2023
The number of funding deals also saw a notable reduction, with capital being distributed across a total of 3,973 deals compared to 6,397 deals recorded in 2022. The United States maintained its position as the leader in fintech funding by a considerable margin, attracting $24 billion across 1,530 deals. The UK secured the second spot with $5.1 billion, followed by India in third place with $2.5 billion. The UK's $5.1 billion in funding for 2023 was distributed across 409 deals, reflecting a 65% decrease from the previous year's $14.6 billion across 592 deals.
Innovate Finance highlights that this decline in funding aligns with trends observed in other major fintech markets, including the US, which experienced a 44% drop from 2022. An exception to this trend was the UAE, where investments surged by an impressive 92% compared to 2022. In the UK, female-led fintech companies attracted $536 million in 2023 across 59 deals, representing 10.5% of the country's total funding. The industry body also points out that "the UK received more investment in fintech than the next 28 European countries combined" throughout the year.
Janine Hirt, CEO of Innovate Finance, notes that despite economic challenges for fintech globally in 2023, the UK sector demonstrated resilience by maintaining its position as a global investment hub, ranking second only to the US and leading in Europe. Hirt sees a "clear opportunity" for UK fintechs to strengthen their presence in Asian markets, which collectively attracted "more combined investment than their European counterparts."
Innovate Finance compiled and summarized its report using data from PitchBook as of December 31, 2023.
SOURCE: Innovate Finance
