Fintech

What different choices would fintech CEOs make in their leadership strategies if they could go back in time?

Published

9 months ago

18 July, 2024

What lessons have fintech CEOs learned while mastering the art of leadership?

Author’s Note: This story is the second part of the series, “The Journey to Leadership,” which highlights six fintech CEOs and their individual journeys. In Opening of the installment of the series, I highlighted the lessons these leaders learned and how their experiences sharpened their sense of their roles and capabilities. The second installment of this series explores the “what ifs” in the decisions these six fintech CEOs would reconsider if they could do it all over again. While a strategy that worked for one might not work for another, sharing their insights suggests how understanding and addressing individual strengths and weaknesses can lead to more positive outcomes.

Learning the tricks of the CEO role requires mixing and balancing external guidance with personal experiences. Part of this journey also involves reflecting on leadership decisions, both past and present, to recognize areas for improvement. This reflection is not about dwelling on past actions, but about identifying better ways to address challenges with the knowledge gained over time and using that insight to guide future decisions.

One Thing at a Time and the Covid-19 Chapter

According to Stephany Kirkpatrick, CEO and founder of Gold.

“The timing of when we started Orum has a lot to do with my response, because I think it would have looked different in a different context, but we are essentially a baby born out of the pandemic, in late 2019,” Kirkpatrick said.

Kirkpatrick shared how her experience building the foundation of her company taught her the value of prioritizing one task before moving on to the next. She learned that when faced with uncertainty, it’s crucial to step back and pause until there’s a clear path forward.

In the early days of his company, as it prepared to seek institutional capital during the Covid-19 pandemic, the path forward was fraught with challenges and ambiguity. During this time, the team focused on perfecting its product and considered solving two significant problems simultaneously: money transfer efficiency and developing innovative solutions for money movement with effective risk management.

Looking back, Kirkpatrick recognizes that they needed a system designed to connect their initial product to subsequent APIs, which required them to adopt a new strategy for building that support. This helped her realize that focusing on a single task is more effective than spreading your efforts too thin.

“The old adage is true, doing two things at once is infinitely harder than doing one and it’s better to be sure of that primary initiative before moving on to the next thing. It’s just been a great learning curve,” Kirkpatrick added. “Even the most legendary CEOs and founders of companies will tell you that, but sometimes you have to live and learn it yourself!”

New CEO and founder Michael Rangel also encountered the challenges of running a startup during a time when the world had suddenly gone remote. This unprecedented shift to a fully remote work environment was a unique challenge for CEOs at all levels, requiring rapid strategy shifts and innovative solutions.

One of the biggest challenges Rangel faced during this time was finding effective ways to communicate institutional knowledge across global teams, something that had previously come naturally in a traditional five-day office environment.

Reflecting on what he would have done differently, Rangel said, “I would have implemented more systems and processes sooner to capture and share institutional knowledge, focusing on everything we’ve learned since day one about the problems our small business customers face, how Novo has historically approached solving those problems, and the successes and lessons we’ve learned along the way.”

The value of teamwork combined with transparency

CEO and co-founder of MercuryImmad Akhund believes that transparency with the team is essential. According to Akhund, a CEO should not hide his challenges from the team simply because he is in a leadership position. Maintaining transparency in sharing challenges is as crucial as being transparent in other aspects of running a business, such as setting expectations and defining company goals.

“When I ran my previous startup, I was worried that I would put my team in a difficult position if things didn’t go exactly as planned,” Akhund said. “My assumptions got the best of me, and I forgot to take into account the resilience of the people around me.”

In hindsight, Akhund wishes he had been more available to his team during difficult times. He has learned that treating information as a basis for broader discussions and framing setbacks as opportunities for collective effort is key to effective leadership.

Stressing the importance of team dynamics, CEO and co-founder of RhoEverett Cook observed, “For me, one of the main goals is to appreciate the human element in building an organization.”

Cook believes that team members should be recognized for contributing their lives meaningfully to the mission because they believe in the founder(s) and the vision. However, it is equally important to ensure that the right people are hired for the right reasons, as a cohesive team can weather the ups and downs of the company’s journey.

Get the most value from your investments

Reflecting on previous strategies, Colin Walsh, CEO and founder of the neobank Varo Bankbelieves that funneling more investment capital into monetization activities could have shortened Varo’s path to profitability. The urgent need to expand the user base at the time, however, limited such initiatives.

If Walsh could go back in time, he would “prioritize investments that have a more immediate and tangible impact on revenue and profitability, in order to improve operational efficiency and reduce costs.” He believes the result of this approach would have allowed the company to reach profitability more quickly.

Leadership based on belief rather than success

For Max Levchin, To assertCEO and co-founder of, passion is the main ingredient in the recipe for success. In fact, through his experiences, Levchin has come to value belief more than just success, as he believes it is what sustains a founder or leader through challenges.

“I am much more proud of my failed projects, in which I was 110 percent convinced, than of the moderate successes, in which I was 90 percent convinced,” he said.

He says that being passionate about your work makes it easier to persevere through difficult times and stay aligned with your vision. The journey to find product-market fit can be like a 40-year trek in the desert, and without belief in the importance of what you’re creating, you might abandon the effort when things go wrong.

Levchin’s diverse experiences, with their mix of successful and unsuccessful initiatives, have taught him that it is essential to find one’s true calling and that the impact of success or failure depends on how much one cares about one’s mission.

“I’ve delved into some areas that I didn’t really have a passion for (social gaming! Photo sharing!)—I’ve learned a lot about consumer psychology and met some amazing people, but when the products I’ve created don’t make a dent in the universe, I don’t get too upset—and that’s a sign of wasted time,” he noted.

The insights of these fintech CEOs into their past strategies, what worked, what didn’t work, and lessons learned, highlight that each of them has faced and continues to face unique challenges that cannot be addressed with a one-size-fits-all solution. Effective solutions come from recognizing and working on individual strengths and weaknesses.

The first episode of the series explored:

What lessons have fintech CEOs learned from mastering the art of leadership?

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Fintech

US Agencies Request Information on Bank-Fintech Dealings

Published

9 months ago

30 July, 2024

FinCrypt Staff

Federal banking regulators have issued a statement reminding banks of the potential risks associated with third-party arrangements to provide bank deposit products and services.

The agencies support responsible innovation and banks that engage in these arrangements in a safe and fair manner and in compliance with applicable law. While these arrangements may offer benefits, supervisory experience has identified a number of safety and soundness, compliance, and consumer concerns with the management of these arrangements. The statement details potential risks and provides examples of effective risk management practices for these arrangements. Additionally, the statement reminds banks of existing legal requirements, guidance, and related resources and provides insights that the agencies have gained through their oversight. The statement does not establish new supervisory expectations.

Separately, the agencies requested additional information on a broad range of arrangements between banks and fintechs, including for deposit, payment, and lending products and services. The agencies are seeking input on the nature and implications of arrangements between banks and fintechs and effective risk management practices.

The agencies are considering whether to take additional steps to ensure that banks effectively manage the risks associated with these different types of arrangements.

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Fintech

What changes in financial regulation have impacted the development of financial technology?

Published

9 months ago

30 July, 2024

FinCrypt Staff

Exploring the complex landscape of global financial regulation, we gather insights from leading fintech leaders, including CEOs and finance experts. From the game-changing impact of PSD2 to the significant role of GDPR in data security, explore the four key regulatory changes that have reshaped fintech development, answering the question: “What changes in financial regulation have impacted fintech development?”

PSD2 revolutionizes access to financial technology
GDPR Improves Fintech Data Privacy
Regulatory Sandboxes Drive Fintech Innovation
GDPR Impacts Fintech Data Security

PSD2 revolutionizes access to financial technology

When it comes to regulatory impact on fintech development, nothing comes close to PSD2. This EU regulation has created a new level playing field for market players of all sizes, from fintech startups to established banks. It has had a ripple effect on other markets around the world, inspiring similar regulatory frameworks and driving global innovation in fintech.

The Payment Services Directive (PSD2), the EU law in force since 2018, has revolutionized the fintech industry by requiring banks to provide third-party payment providers (TPPs) with access to payment services and customer account information via open APIs. This has democratized access to financial data, fostering the development of personalized financial instruments and seamless payment solutions. Advanced security measures such as Strong Customer Authentication (SCA) have increased consumer trust, pushing both fintech companies and traditional banks to innovate and collaborate more effectively, resulting in a dynamic and consumer-friendly financial ecosystem.

The impact of PSD2 has extended beyond the EU, inspiring similar regulations around the world. Countries such as the UK, Australia and Canada have launched their own open banking initiatives, spurred by the benefits seen in the EU. PSD2 has highlighted the benefits of open banking, also prompting US financial institutions and fintech companies to explore similar initiatives voluntarily.

This has led to a global wave of fintech innovation, with financial institutions and fintech companies offering more integrated, personalized and secure services. The EU’s leadership in open banking through PSD2 has set a global standard, promoting regulatory harmonization and fostering an interconnected and innovative global financial ecosystem.

Looking ahead, the EU’s PSD3 proposals and Financial Data Access (FIDA) regulations promise to further advance open banking. PSD3 aims to refine and build on PSD2, with a focus on improving transaction security, fraud prevention, and integration between banks and TPPs. FIDA will expand data sharing beyond payment accounts to include areas such as insurance and investments, paving the way for more comprehensive financial products and services.

These developments are set to further enhance connectivity, efficiency and innovation in financial services, cementing open banking as a key component of the global financial infrastructure.

Sebastian Malczyk

General Manager, Technology and Product Consultant Fintech, Insurtech, Miquido

GDPR Improves Fintech Data Privacy

Privacy and data protection have been taken to another level by the General Data Protection Regulation (GDPR), forcing fintech companies to tighten their data management. In compliance with the GDPR, organizations must ensure that personal data is processed fairly, transparently, and securely.

This has led to increased innovation in fintech towards technologies such as encryption and anonymization for data protection. GDPR was described as a top priority in the data protection strategies of 92% of US-based companies surveyed by PwC.

Arid Islam

Financial Expert, Sterlinx Global

Regulatory Sandboxes Drive Fintech Innovation

Since the UK’s Financial Conduct Authority (FCA) pioneered sandbox regulatory frameworks in 2016 to enable fintech startups to explore new products and services, similar frameworks have been introduced in other countries.

This has reduced the “crippling effect on innovation” caused by a “one size fits all” regulatory approach, which would also require machines to be built to complete regulatory compliance before any testing. Successful applications within sandboxes give regulators the confidence to move forward and address gaps in laws, regulations, or supervisory approaches. This has led to widespread adoption of new technologies and business models and helped channel private sector dynamism, while keeping consumers protected and imposing appropriate regulatory requirements.

George Blandford

Co-founder, UK Linkology

GDPR Impacts Fintech Data Security

A big change in financial regulations that has had a real impact on fintech is the 2018 EU General Data Protection Regulation (GDPR). I have seen how GDPR has pushed us to focus more on user privacy and data security.

GDPR means we have to handle personal data much more carefully. At Leverage, we have had to step up our game to meet these new rules. We have improved our data encryption and started doing regular security audits. It was a little tricky at first, but it has made our systems much more secure.

For example, we’ve added features that give users more control over their data, like simple consent tools and clear privacy notices. These changes have helped us comply with GDPR and made our customers feel more confident in how we handle their information.

I believe that GDPR has made fintech companies, including us at Leverage, more transparent and secure. It has helped build trust with our users, showing them that we take data protection seriously.

Dr. Rhett Stubbendeck

CEO & Co-Founder, Leverage Planning

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Fintech

M2P Fintech About to Raise $80M

Published

9 months ago

30 July, 2024

FinCrypt Staff

Application Programming Interface (API) Infrastructure Platform M2P Financial Technology has reached the final round to raise $80 million, at a valuation of $900 million.

Specifically, M2P Fintech, formerly known as Yap, is closing a new funding round involving new and existing investors, according to entrackr.com. The India-based company, which last raised funding two and a half years ago, previously secured $56 million in a round led by Insight Partners, earning a post-money valuation of $650 million.

A source indicated that M2P Fintech is ready to raise $80 million in this new funding round, led by a new investor. Existing backers, including Insight Partners, are also expected to participate. The new funding is expected to go toward enhancing the company’s technology infrastructure and driving growth in domestic and international markets.

What does M2P Fintech do?

M2P Fintech’s API platform enables businesses to provide branded financial services through partnerships with fintech companies while maintaining regulatory compliance. In addition to its operations in India, the company is active in Nepal, UAE, Australia, New Zealand, Philippines, Bahrain, Egypt, and many other countries.

Another source revealed that M2P Fintech’s valuation in this funding round is expected to be between USD 880 million and USD 900 million (post-money). The company has reportedly received a term sheet and the deal is expected to be publicly announced soon. The Tiger Global-backed company has acquired six companies to date, including Goals101, Syntizen, and BSG ITSOFT, to enhance its service offerings.

According to TheKredible, Beenext is the company’s largest shareholder with over 13% ownership, while the co-founders collectively own 34% of the company. Although M2P Fintech has yet to release its FY24 financials, it has reported a significant increase in operating revenue. However, this growth has also been accompanied by a substantial increase in losses.

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Fintech

Scottish financial technology firm Aveni secures £11m to expand AI offering

Published

9 months ago

30 July, 2024

FinCrypt Staff

Aveni, Investment Management, AI, NLP, UK

By Gloria Methri

Today

To come
Aveni Assistance
Aveni Detection

Artificial intelligence Financial Technology Aveni has announced one of the largest Series A investments in a Scottish company this year, amounting to £11 million. The investment is led by Puma Private Equity with participation from Par Equity, Lloyds Banking Group and Nationwide.

Aveni combines AI expertise with extensive financial services experience to create large language models (LLMs) and AI products designed specifically for the financial services industry. It is trusted by some of the UK’s leading financial services firms. It has seen significant business growth over the past two years through its conformity and productivity solutions, Aveni Detect and Aveni Assist.

This investment will enable Aveni to build on the success of its existing products, further consolidate its presence in the sector and introduce advanced technologies through FinLLM, a large-scale language model specifically for financial services.

FinLLM is being developed in partnership with new investors Lloyds Banking Group and Nationwide. It is a large, industry-aligned language model that aims to set the standard for transparent, responsible and ethical adoption of generative AI in UK financial services.

Following the investment, the team developing the FinLLM will be based at the Edinburgh Futures Institute, in a state-of-the-art facility.

Joseph Twigg, CEO of Aveniexplained, “The financial services industry doesn’t need AI models that can quote Shakespeare; it needs AI models that deliver transparency, trust, and most importantly, fairness. The way to achieve this is to develop small, highly tuned language models, trained on financial services data, and reviewed by financial services experts for specific financial services use cases. Generative AI is the most significant technological evolution of our generation, and we are in the early stages of adoption. This represents a significant opportunity for Aveni and our partners. The goal with FinLLM is to set a new standard for the controlled, responsible, and ethical adoption of generative AI, outperforming all other generic models in our select financial services use cases.”