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The Monday Roundup: what we are watching this week | July 10th

By Puja Sharma

July 10, 2023

  • AI
  • Fintech news
  • fintech regulations
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MondayThe Monday Roundup sets the scene for the week’s biggest news stories, industry deals, and upcoming events. For Prime subscribers only.

New FinTech regulations

The Reserve Bank of India (RBI) is working on regulations that will be more “developmental” for FinTech companies, according to Reserve Bank of India (RBI) deputy governor T. Rabi Sankar. “We are working on regulations (that) would be specific to FinTech entities and the FinTech ecosystem,” he said at an event in Bengaluru.

The central bank has been monitoring the FinTech space to ensure financial stability and mitigate risks related to cybersecurity and prevent fraud. RBI is talking to FinTech companies, and any regulations in that regard will only be after “close consultation” with the industry, he added, without providing a timeline for the same.

Sankar also observed that a FinTech company providing characteristic banking services like loans or payments is doing banking activity. He stressed that such entities need to be regulated similarly to the way such activities are regulated in banks.

Papara, a Turkish neobank, announces the acquisition of Madrid-based neobank Rebellion, bringing the Turkish neobank’s valuation to over $1 billion.

Papara has purchased Rebellion from its current owners, Beka Finance, in a multi-million-dollar cash and stock transaction, making the business Europe’s latest unicorn and one of very few to have reached this milestone with no prior external investment. As well as being bootstrapped, unlike other challenger banks, Papara became profitable just two years after being founded by Ahmed Karslı in 2015.

Commenting on the acquisition, Rebellion, co-founder, Sergio Cerro said, “This acquisition presents an exceptional opportunity to propel a project that aligns seamlessly with the Spanish neobanking market. Given the absence of a dominant player in the Spanish sector, and considering the prevailing economic landscape, I strongly believe that Papara is the ideal partner to synergistically blend resources, business vision, and ambition.”

Papara’s acquisition of Rebellion which will rebrand to Papara Spain offers the business a strong foothold in the fast-growing Spanish banking market. Current Rebellion employees will also join Papara’s team and report to CEO, Emre Kenci.

AI-powered risk solution

Nine UK banks tap Mastercard for new AI-powered fraud risk solution. Mastercard has rolled out its new artificial intelligence (AI) powered Consumer Fraud Risk solution in the UK, with nine banks adopting the tech to help fight real-time payment scams.

Lloyds Bank, Halifax, Bank of Scotland, NatWest, Monzo, and TSB are six of the nine UK banks partnering with Mastercard for its latest offering. For the last five years, Mastercard says it has been working with UK banks to follow the flow of funds through mule accounts created by criminals.

Based on insights from this tracing activity, along with specific analysis factors such as account names, payment values, and payer and payee history, Mastercard’s AI solution provides banks with real-time intelligence to stop payment before funds are lost. The payments giant adds that it is currently “assessing” further international markets to scale the solution.

South Korea sets out measures to promote competition in the banking sector. South Korea’s financial authorities have set out new measures to help promote competition within its banking sector.

The measures follow a series of meetings held with private sector experts, financial industry officials, and research institutions since the end of February to improve the management and operating practices of the country’s banks. The Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) intend to allow more banking players to enter the market, with regional banks now receiving permission to expand their business operations across the country.

“For the first time in 30 years, a new nationwide bank can be established. This change is meaningful as the new nationwide bank can have its headquarters not in Seoul but in another regional city,” said Kim Joo-hyun, chairman of the FSC.

What is the buzz

According to new data, UK FinTech funding cratered in the first half of the year due to further interest rate hikes and economic volatility.

According to new figures shared exclusively with City A.M, UK FinTech firms raised $2.9bn in the first half of 2022, a 37% drop from the second half. A taper off in investment was also noticeable towards the end of the year, with 111 of the 199 deals in the first half – around $2bn worth of the total – occurring in the first three months.

The slowdown comes amid a torrid 12 months for global fintech funding as investors sour on loss-making high-growth start-ups amid wild swings in the markets. In the first six months of 2023, there were 1,714 deals globally with a total capital investment of $27.3bn, down from $31.7bn invested across 2,500 deals in the second half of 2022.

Chief of Innovate Finance Janine Hirt said the drop in global and UK FinTech investment was an “expected result of the current economic landscape” and reflected the “cautious investor sentiment as seen across equity markets over the last 12 months”.

Volatile public markets have shuttered potential IPO exits for investors and forced firms to slash their valuations as they raise more cash from private investors. A host of big names have been forced to write down their value after a post-pandemic funding frenzy in 2021.

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