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Fintech Leaders Say Regulatory Challenges No. 1 Concern

BankingDive | Gabrielle Saulsbery | Nov 28, 2022

Gartner peer to peer 2022 fintech insights - Fintech Leaders Say Regulatory Challenges No. 1 Concern

Image source: Gartner, Peer to peer 2022 Fintech survey

Private firms are adopting a more defensive posture, delaying new funding rounds, planning for modest growth and addressing regulatory risks, according to a report.

  • Regulatory challenges have doubled in importance to fintech leaders from 2021 to 2022, according to the results of a survey of 100 industry leaders released Monday.  Now, nearly half (47%) of respondents dubbed regulatory challenges their No. 1 concern.

See:  EY Handbook: Key Priorities for Fintechs to Sustainably Grow from Start-up to Scale-up

  • Could see it coming:  Survey data was collected Aug. 2 to Oct, 22, after several U.S. senators first put big-bank-owned fintech Zelle under a microscope due to fraud concerns. Shortly before the report came out, the Treasury Department declared a need for more oversight of the fintech sector and bank-fintech partnerships.
  • Private fintech companies have been made obvious by double-digit percentage-point workforce layoffs at places like Brex, Chime and Stripe.
  • Public fintech companies have seen their share prices cut at the knees — SoFi is down from $15.05 on Jan. 3 to $4.98 as of Nov. 23, and PayPal is down from $194.94 to $80.28 for the same period
  • Hiring: Despite the recent layoffs, however, leaders of private fintechs are optimistic about the second half of 2022, with only 3% of companies expecting to reduce headcount. Most (81%) of respondents expect to increase their workforce at least somewhat in the second half of this year.
  • H2 plan: Fintech companies instead plan to spend the second half of this year focusing on core priorities such as product development (49%), profitability (35%) and developing partnerships (30%). And they continue to focus on the same markets as last year, with 40% primarily targeting millennials and 37% primarily targeting low-income consumers.

See:

CB Insights Report: The State Of Fintech: Q3 2022

EmFi Fueled by Cloud-based Infrastructure | KPMG Fintech Pulse H1 2022

Alloy General Manager Charley Ma:

Before this year, “regulators were sort of viewed as, they move really slowly, and they’re more interested in regulating large banks and [financial institutions].” Regulators have moved a lot faster this year, for example, with crypto, and anything within crypto will touch fintech.  Noting the “spectacular failures in the stablecoin space, like Luna and Terra,” fintech and crypto both have a “big, flashing red light for regulators to look at.  It’s clear that private firms in particular have adopted a more defensive posture for the time being — delaying new funding rounds, planning for modest (rather than explosive) growth, and addressing regulatory risks

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NCFA Jan 2018 resize - Fintech Leaders Say Regulatory Challenges No. 1 ConcernThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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