Weekly Analysis And Opinion Highlights – 25 April 2023

And we’re kicking off the week with new analysis and opinions on fintech with banking, Artificial Intelligence,  ESG, crypto, and more. Dive into the latest fintech insights and have a great start to the week!

Warning that big name investors will ‘disappear’ – GP Bullhound (Business Cloud)
GP Bullhound’s managing partner Hugh Campbell used the 10th Northern Tech Awards to speak about some of the challenges facing the tech sector. Campbell said there was no hiding the fact that investment activity was down and many of the biggest companies in the world were laying off ‘staff in their thousands’. However, he told the audience at the Assembly Rooms, in Edinburgh, that the tech sector had consistently reinvented itself. He said the problems at Silicon Valley Bank had ‘sent shockwaves across the tech world’ and spoke about the challenges and opportunities that AI and ChatGPT represent. Read more

MiCA – Landmark crypto regulation approved by EU Parliament (Lexology)
MiCA is the first, harmonised EU framework governing crypto-assets. As a regulation (and not a directive), MiCA will be directly applicable across Member States – including Malta – without the need for transposition at a national level. In 2018, Malta had enacted the Virtual Financial Assets Act (Chapter 590, Laws of Malta) (“VFA Act”) – which evidences the jurisdiction’s foresight and willingness to support financial innovation. The Malta Financial Services Authority (“MFSA”) has already commenced discussions with stakeholders to ensure a seamless transition to MiCA once the VFA Act is repealed. The term “crypto-asset” under MiCA is broadly defined as any “digital representation of a value or a right which may be transferred and stored electronically, using distributed ledger technology or similar technology”. MiCA establishes three distinct, but interrelated, regulatory regimes, namely (i) a regime for issuers of stablecoins (ARTs and EMTs), (ii) a regime for issuers of non-stablecoins (other crypto-assets), and (iii) a regime for entities providing services in respect of crypto-assets, who are referred to as crypto-asset service providers or CASPs in short. Read more

London seeks to keep Europe fintech crown despite Brexit (International Business Time)  
From digital bank Revolut to money-transfer group Wise and payments company Checkout, London is Europe’s fintech champion and intends on keeping its crown despite Brexit fallout and declining investments. “Before Brexit, the UK was a great place” for the sector developing financial technology, Revolut’s global head of government affairs, Adam Gagen, told UK Fintech Week which ended on Friday. He put this down to “fantastic regulation… great talent” and 300-400 million customers that could be directly accessed throughout Europe. “That’s not the case anymore.” Britain’s exit from the European Union without an EU-London deal on financial services has complicated access to the gigantic market and talent. Also addressing the Fintech Week, junior UK Treasury minister Andrew Griffith insisted the sector was “vital for the economy”. Read more

Neobanks across Europe fatten up as VCs demand profits (Teach.eu)
Across Europe, the emergence of neobanks has been one of the landmark disruptions to financial services over the past eight years. But despite the hype, these financial disruptors have enjoyed only mixed success and those neobanks which are winning out now face the conundrum of profiting from their increasingly enlarged businesses. The likes of Revolut, Monzo, Starling, N26 and Bunq have garnered tens of millions of mainly younger customers across the continent, enticed by their whizzy technology, flashy cards and almost cult-like status. But the quintet, generally speaking, are rare successes in a nearly 300-strong neobank market overwhelmingly populated by loss-making startups, and many which have failed altogether. Adam Davis, associate partner, Bain & Company, says: “There are so many neobanks and many haven’t made the grade. Read more

How to attract early-stage angel investors (Sifted)
Though it’s become a lot more common for early-stage cap tables to be filled with angel investors, knowing where to start, who to talk to and how to approach actually asking for cash can be daunting for first-time founders. Going from “hi, this is my business” to “would you like to invest” is fraught with potential pitfalls and awkward moments, not to mention dead ends and what can feel like wasted time. Fundraising has presented some of the hardest and most stressful times I’ve had as both a founder and CEO. Essentially, you are asking investors to take a view on your business, and on you as a leader of that business — no matter how brilliant you and your business are, when it comes to investment most conversations are going to end in rejection. But despite the challenges, in the last decade I’ve managed to raise more than £11m for my womenswear business The Fold — here are the lessons I’ve learned when it comes to tapping into angel investment. Read more

UK economy shows signs of recovery despite inflation’s drag (International Business Time)
British businesses reported their busiest month in a year and consumers turned more confident, according to surveys published on Friday that added to signs of a recovery in the economy that has so far defied forecasts of a recession. The preliminary reading of the S&P Global/CIPS UK Composite Purchasing Mangers’ Index (PMI) also showed the slowest input cost inflation in over two years, but price pressures look strong enough for the Bank of England to raise rates again next month. The PMI – spanning services and manufacturing firms – rose to 53.9 in April from 52.2 in March, putting it further above the 50 line denoting growth for the third consecutive month and representing the strongest growth since April last year. Economists polled by Reuters had forecast a lower reading of 52.5. “The key takeaway is that the economy as a whole is not only showing encouraging resilience but has gained growth momentum heading into the second quarter,” Chris Williamson, chief business economist at S&P Global, said. Read more

GenAI meets InsurTech: a game-changing duo? (Fintech Global)
ChatGPT has captured the imagination of the public, bringing conversations about Generative AI (GenAI) to the fore – but how will it impact the insurance industry? ChatGPT brought GenAI into the limelight this year, stirring up conversations about how AI might impact the world as we know it. The chatbot developed by OpenAI was estimated to have reached 100 million monthly active users in January, just two months after its launch. By comparison, it took TikTok nine months after its global launch to reach that number, and Instagram, around two years. Generative AI comprised less than 1% of total US venture capital (VC) funding of $238.3bn in 2022, according to PitchBook and the National Venture Capital Association (NVCA). But an estimated 450 startups and several new funds for generative AI indicate the potential for growth. Viju Shamanna, vice president, AI Lab at Ushur, said, “Part of the excitement surrounding ChatGPT 3.5 and Large Language Models (LLMs) over the last few months can be attributed to the fact that they are now easily accessible to the public through a simple conversational interface.” In addition to essays and poems, it generates emails, blog posts, and code snippets and can handle long-form conversations through prompting. Read more

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