It’s half-time! Don’t worry, I’m not referring to the European Football Championships, which come to a close last night, but the fact that the first half of this year is behind us and it many ways it has been a remarkable six months. We look into the H1 numbers for FinTech funding and, of course, other FinTech news, too, in the latest edition of the FinTechnologist Weekly:
It’s the golden age of FinTech! At least, if you look at the amount money flowing into the sector and the various examples of successful FinTech ventures (at least based on the funding they secure for a lack of another tool to measure success, that is). Let’s start with a record for investment into London based FinTech companies. In the first six months of 2021 investors for more money into the sector than ever before. Investments more than doubled with $5.3bn compared to a mere $2.1bn in the same period last year.
It’s not just London though dad experiences a record period of growth. Fin tech companies globally raised more than $54bn during the last six months. It’s not just VCs and Private Equity pouring in money though. The highly anticipated initial public offering of Wise at the London Stock Market saw a strong stock market debut with a valuation of §8.75bn or more than eleven billion dollars.
That is still only a quarter of the valuation that Robinhood is looking at as it has unveiled its plans for its own IPO though not everyone seems to be so keen as it faces a retail snub on Reddit, the platform whose users played a large role in some off the stories that took Robinhood to prominence in the last few month like the GameStop frenzy. Talking of it, it was exactly the handling of the frenzy, marred with glitches and followed by trading restrictions, attracted the wrath of many of its users and U.S. lawmakers that led a slap on the wrist courtesy of the U.S. Financial Industry Regulatory Authority. While the $57m fine plus $12.6m in reimbursements marks a record for the largest fine ever imposed by FINRA, management may be relieved to be over with it in light of the IPO, but a mountain of litigation and major federal and state challenges to its core business model still loom. Does this present a real threat to the company’s plans or is it simply the kind of noise that often accompanies projects of such scale? We’ll see.
Despite their recent success companies like Wise and Robinhood probably would trade their problems without hesitating with the Big Tech giants they aspire to become. The latter have been in the focus of global lawmakers together with other multinationals that shift profits around to avoid paying taxes. That’s at least the view of the G20 that agreed on a minimum global corporate tax rate of at least 15%. While the management of the companies affected by this plan may disagree, others point to loopholes in the proposals and demand a more ambitious crackdown.
Leaders of the G20 also discussed climate change policy and sustainable finance just after the EU had unveiled its newgold standard sustainable finance strategy to cut greenhouse gas emissions.
While the investment in sustainable finance is part of the larger EU initiative and will receive significant funds, much of the burden will be on the private sector, so business for finance and tech companies could become less profitable. Or not.
Further on the regulatory side of things, the EU was forced to once more delay sustainable finance rules for asset managers as part of its Sustainable Finance Disclosure Regulation (SFDR), which imposes mandatory environment, social and governance (ESG) disclosure obligations, so things may not be so easy for our sustainable finance plans, but you still have to be ambitious even if it doesn’t all go as planned, right?
Another such example would be Her Majesty’s government new Plan for Digital Regulation to boost economic growth and help the country seize the potential of digital technology. It aims to reduce red tape and cut down on cumbersome and confusing policy so businesses are freed to come up with new ideas, grow their firms and create new jobs and prosperity. Again, ambitious and hopefully it pans out.
Another UK initiative I really hope to work out is the joint effort of the FCA, PRA and Bank of England that have come together to explore how they can improve diversity and inclusion in the financial services sector. As the report correctly states, ‘despite years of discussion and many research studies, the conversation about diversity and inclusion in many ways is still in its infancy‘. In the paper, the regulators outline several suggestions including regular reporting, linking renumeration to D&I metrics, internal audits, and considering the approach to non-financial misconduct. It doesn’t sound like much when we talk about mere suggestions, but just like they keep saying on the British Isles: Every little helps.
And again that’s all for this week but if you have an interesting story, please connect on Twitter. And if you would like to join me on the new FinTechnologist podcast, the same applies, of course. So make sure you get in touch and in the meantime, have a good week!
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