Yesterday, December 5, marked the launch of Chambers & Partner’s 2024 Fintech guide.
The occasion was marked with a short webinar revealing some intriguing and up-to-date trends and developments in the Fintech sector.
Here are the key points:
Global Investment Trends in Fintech:
There has been a decline in funding in the Fintech sector globally and a fall in deal volume, according to data from the KPMG Pulsar Fintech report. This includes a decrease from $63.2 billion in H2 2022 to $52.4 billion in the H1 2023, and a reduction in deal numbers from 2,885 to 2,153 in the same periods.
Shift in Business Models:
UK-based Fintech companies are shifting their focus from seeking high venture funding rounds to forming partnerships with traditional financial institutions. This includes minority investment deals and joint ventures.
Artificial Intelligence (AI) in Fintech:
There is considerable excitement about the potential of generative AI in Fintech, particularly in savings and investment products, known as “Robo Advisor 2.0.” AI could offer tailored investment advice and financial planning at lower costs. However, concerns were raised about trust, safety, and oversight in the use of AI in financial services.
Regulation of AI and Digital Payments in the EU:
The EU is introducing significant regulations like the Digital Operational Resilience Act (DORA) and the third Payment Services Directive (PSD3), focusing on cyber security, combating online fraud, and facilitating open banking and digital payments.
Cyber security Resilience:
The growing threat of cyber-attacks in the Fintech sector, including threats from state-sponsored groups, is a major concern. There’s a focus on strengthening cyber security risk management.
Cryptocurrency Regulation:
The lack of legislative clarity in the U.S. regarding cryptocurrency regulation contrasts with the EU and UAE’s more structured approaches. The U.S. is currently seen as regulating through enforcement actions by bodies like the SEC and CFTC.
Crypto Asset Disputes:
There’s a growing legal focus on cryptocurrency disputes, regulatory investigations, and bankruptcy cases. The number of U.S. firms involved in such cases has increased significantly.
