Weekly Analysis And Opinion Highlights – 6 November 2023

And we’re kicking off the week with new analysis and opinions on fintech with updates on the future of banking, generative AI, ransomware threats, and more. Dive into the latest fintech insights and have a great start to the week!

How 1033 May Impact Embedded Finance (Fintech Nexus)

The CFPB’s rule on Personal Financial Data rights, implementing section 1033 of the Consumer Financial Protection Act of 2010 (CFPA) is meant to supercharge the drive to open banking. Once finalized and passed, it is the hope that consumers will have more control over their data and competition within the financial services sector. On completion, fintechs and “third party entities” will have permissioned access to banks’ walled gardens of data, a wealth of information that could enrich services and streamline processes. One sector that is expected to be significantly impacted by the influx of additional data is embedded finance. Read more

How embedded lending changes the game for non-fintech startups (Fintech Nexus)

The distinction between startups rooted in the finance world and startups that weren’t used to be an obvious one. Startup founders would pick an industry and stay there to grow. If that industry didn’t happen to be banking and finance, as it often wasn’t, then money-related services stuck to the basics, like a basic card payment platform for purchasing products or paying a subscription fee. If that industry did happen to be banking and finance, offering financial products would usually be the sole focus. Read more

Before you found a startup, think about your personal goals (Tech Crunch)

In one of my past startups, I had a co-founder who had a pretty clear goal for himself: he wanted to make $1 million for every year that he worked on this startup, and he wanted to leave a positive impact on the world. I was struck by the clarity of that thought, and so I started asking other founders what their personal goals were. It turns out that a surprising number of startup founders aren’t really sure why they are running a company at all, let alone what their personal goals are. Read more

A new breed of companies expand in San Francisco’s prime areas (Tech Crunch)

Ten years ago, Pear VC, then a tiny new venture firm, operated out of a nondescript office in Palo Alto that was enlivened by bright, computer-themed art. Last week, the outfit — which closed its largest fund to date in May — quietly inked a deal to sublease 30,000 square feet of “Class A” office space in San Francisco’s Mission Bay neighborhood from the file-storage giant Dropbox. It’s among a number of fast-growing outfits taking up more space in San Francisco as an earlier generation of companies shrinks its physical footprint. Read more

How AI Is shaping the future of risk management and compliance (Fintech Global)

AI is rapidly becoming an essential instrument for businesses around the world, particularly in the realm of risk management and compliance. A recent study by Moody’s, titled “Navigating the AI landscape: insights from compliance and risk management leaders,” highlights this trend, revealing that 70% of the 550 leaders surveyed anticipate AI will substantially impact their operations in the next one to five years. The integration of AI is particularly effective where the challenge of resource-strapped teams meets the need to manage extensive datasets for compliance and risk procedures. AI not only enhances the performance and capability of human staff but also excels in processing vast amounts of data, crucial for risk and compliance activities. Read more

ECB: Why we need a better cross-border payments network (Payments, Cards and Mobile)

In recent decades, the world has witnessed a remarkable surge in cross-border payments, driven by the globalisation of trade, capital and migration flows. Global payments are expected to rocket from $190 trillion in 2023 to a staggering $290 trillion by 2030, according to one study. Despite such spectacular growth, cross-border payments remain prohibitively expensive and sluggish, leaving the most vulnerable behind – writes Fabio Panetta, Member of the Executive Board, European Central Bank in an article first published in the FT. Read more

Regulators are cracking down on banking software startups. That’s bad news for Europe’s fintechs (Sifted)

European fintechs relying on Banking-as-a-Service (BaaS) providers for their infrastructure face challenges as regulatory restrictions threaten these providers. With 82% of European fintechs utilizing BaaS, recent compliance issues have led to service outages, product delays, and regulatory interventions. Funding into BaaS startups has plummeted by 94% from 2021 to mid-2023. Fintech founders express concerns about the asymmetry in risk and reward, with some predicting that the BaaS model may not survive in its current form. Alternative approaches, such as handling compliance in-house, are considered by some fintechs to navigate these challenges. Read more

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