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Mumbai, The <keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword> on Monday released a 'draft framework for recognising <keyword id="20198317" type="General" weightage="20" keywordseo="self-regulatory-organisations" source="keywords">Self-Regulatory Organisations</keyword> (SRO) for <keyword id="19942953" type="General" weightage="20" keywordseo="fintech-sector" source="keywords">FinTech Sector</keyword>', laying down the characteristics of a <keyword id="19945816" type="General" weightage="20" keywordseo="fintech" source="keywords">FinTech</keyword> SRO, and includes the required functions and governance standards.<br /><br />FinTechs are significantly reshaping the landscape of financial services by streamlining processes, improving accessibility, and reducing costs. Achieving a healthy balance between facilitating innovation by the industry on the one hand, and meeting regulatory priorities in a manner that protects consumers and contains risk, on the other, is crucial to optimising the contribution of the FinTech sector, the RBI said.<br /><br />"Self-regulation within the FinTech sector is a preferred approach for achieving the desired balance," the central bank stated.<br /><br />According to the RBI draft framework, the SRO-FT would derive its strength from its membership, ensuring that it is truly representative of the FinTech sector. Through comprehensive membership agreements that encompass a broad spectrum of industry players, the SRO-FT should gain the legitimacy and credibility to not only frame baseline standards and rules of conduct codes, but also to effectively monitor and enforce them.<br /><br />The SRO-FT must be looked up to and accepted by the industry as the key body for setting market standards, defining rules of conduct and ensuring voluntary adoption of the common framework by its members, the RBI said.<br /><br />The framework also states that the SRO-FT should be development-oriented, actively contributing to the growth and evolution of the industry. This involves providing specialised knowledge and expertise, offering guidance, and contributing to capacity building through training programs, and prescribing minimum eligibility criteria for its members.<br /><br />Also, members should perceive the SRO-FT as a legitimate arbiter of disputes. This would require a transparent and fair resolution mechanism for disputes arising among members that instils confidence in the FinTech industry. By efficiently handling conflicts and grievances, the SRO-FT would contribute to a more stable and harmonious FinTech environment.<br /><br />A proactive <keyword id="20198316" type="General" weightage="20" keywordseo="sroft" source="keywords">SROFT</keyword> should be capable of motivating its members to align with regulatory priorities. This would involve facilitating communication between industry players and regulatory bodies, advocating for necessary changes, and promoting a culture of compliance.<br /><br />The SROFT, as its duty towards ensuring compliance, should be empowered to investigate and take disciplinary action against its members for non-adherence to codes/standards/rules.<br /><br />The RBI said comments from stakeholders and members of the public on the draft framework may be sent by end February 2024, through e-mail. The final framework will be issued taking into account stakeholder and public responses.<br />

RBI releases draft framework for Fintech sector self-regulatory organisations

<ul><li><strong>European <keyword id="2461546" type="PERSON" weightage="60" keywordseo="FinTech">fintech</keyword> faces an "existential crisis" because the COVID-19 pandemic poses serious challenges for continued funding, according to a report by consultant <keyword id="6372399" type="ORGANIZATION" weightage="60" keywordseo="mckinsey">McKinsey</keyword>.</strong></li><li><strong>Venture capital funding has become more scarce, despite the fintech sector having grown rapidly by over 25% from 2014 onwards.</strong></li><li><strong>The scale of funding dropped by 11% globally and by 30% in <keyword id="28249" type="COMPANY" weightage="60" keywordseo="europe">Europe</keyword> in the first half of 2020, compared to the same time a year ago, McKinsey said.</strong></li><li><strong>The pandemic "has in effect shortened the runway for many fintechs, posing an existential threat to the sector."</strong></li><li><strong><a href="https://www.businessinsider.com/?hprecirc-bullet">Visit Business Insider's homepage for more stories</a>.</strong></li></ul><p>European fintech firms are facing an "existential crisis" as venture-capital funding has dropped from "surplus to scarcity," a <a href="https://www.mckinsey.com/industries/financial-services/our-insights/detour-an-altered-path-to-profit-for-european-fintechs">McKinsey study found</a>. </p><p>Economies in Europe are expected to contract by 11% in 2020, before returning to pre-virus levels only in 2023. This reality brings forth a larger focus on business-model vulnerabilities and a shift in dynamics, thereby negatively influencing fintech funding, McKinsey said.</p><p>"This has brought the sector's underlying profitability and long-term business model sustainability into sharp focus—to a point where we believe the path to profitable scale for many fintechs has been structurally altered," senior partners at the consultancy wrote in the report.</p><p>The scale of funding has dropped substantially during the COVID-19 crisis after the sector grew by over 25% every year since 2014. In the first half of 2020, investment into the sector fell by 11% globally, and by 30% in Europe compared to a year-ago, McKinsey found.</p><p>Even after a slow rebound seen in European economies in July, investment fell even more sharply at 18% globally and 44% in Europe compared to the previous year.</p><p><strong><em>Read More:</em></strong><a href="https://www.businessinsider.com/investing-advice-3-portfolio-moves-to-lower-duration-risk-ms-2020-9"> <em>Morgan Stanley wealth management's head of market research told us a risk to longer-term assets that investors are most overlooking as the economy recovers — and recommends 3 portfolio shifts for sustained gains</em></a></p><p><strong>The report highlighted three likely trends to emerge within fintech funding:</strong></p><ul><li>At-scale fintechs and some sub-sectors gaining disproportionately</li><li>General downward pressure on valuations (it's a buyers market)</li><li>Increased relevance of incumbent/corporate investors</li></ul><div type="image" title="Screenshot 2020 09 22 at 10.45.02" height="1240" width="1668" msid="78258287" hostid="261"></div><p>The glaring drop poses a serious challenge for fintechs that are not yet profitable, and have consistent capital needs as they continue to work on the ideation cycle of product discovery. </p><p>The pandemic "has in effect shortened the runway for many fintechs, posing an existential threat to the sector," the report said.</p><p>For the second half of the year, as much as 5.7 billion euros ($6.7 billion) will be required to sustain the European fintech sector, McKinsey said, citing data from Dealroom.co. There is no clarity on where these funds might come from.</p><p>Due to their pre-profit status and typically-high salaries for engineers and other talent in the sector, fintechs are unable to access loan bailout schemes, McKinsey said. The group pointed out that while venture capital will continue to back some companies, most cannot meet the required need without support. </p><h3><a href="https://www.mckinsey.com/industries/financial-services/our-insights/detour-an-altered-path-to-profit-for-european-fintechs">You can read McKinsey's full report here.</a></h3><p><strong><em>Read More:</em></strong><a href="https://www.businessinsider.com/investing-strategy-top-ideas-from-ex-goldman-trader-tony-greer-2020-9"> <em>Tony Greer made 5 times his money with an early investment in Apple. The macro investor and ex-Goldman Sachs trader provides an inside look into his trading tactics and shares his top 3 ideas right now.</em></a></p>

European fintech faces an 'existential crisis' as funding has dropped 'from surplus to scarcity,' McKinsey report says

<br />
 <br /> There is a new industry that is rising with the motive of making banking easier for customers, and to top it all, it’s still away from regulators. The financial technology sector, or <keyword id="2461546" type="UNKNOWN" weightage="100" keywordseo="FinTech">fintech</keyword> as it is christened by users, is attracting talented individuals from all the industries.<br />
 <br />
It was last week that Flipkart hired for two high-profile jobs in the fintech business, following Paytm, which had roped in PwC's <a href="http://www.businessinsider.in/Shinjini-Kumar-to-head-Paytm-payments-bank/articleshow/51056601.cms">Shinjini Kumar</a> to be the CEO of its <a href="http://www.businessinsider.in/IT-giants-like-Infosys-TCS-want-to-pull-off-a-deal-worth-Rs-125-crore-with-Paytm-for-its-payments-bank/articleshow/51102984.cms">payments bank</a> that is yet to be launched. Not only this, Krishna Hegde, Barclays’ top executive, and Vipin Surelia, former DGM at RBI, were also hired.<br />
 <br />
Fintech, the umbrella term, covers technology-based companies operating in insurance, payment, and asset management, etc. It is already transforming banking business, challenging mammoth banks, which is why headhunters are observing talents moving towards it.<br />
 <br />
"Finance technology is a booming segment in India with the opening of numerous mobile wallet companies, non-banking financing companies and now payments banks - all running on robust digital platforms," said AG Rao, group managing director of ManpowerGroup India. Being relatively new, the segment is already generating a lot of new jobs, with most of them clustered around mobile, user experience and financial analysis.<br />
 <br />
More than 117 million Indians use smartphones and over 160 million of us are connected to the Internet, which is why a large number of companies are coming up with products that can assist their customers. Financial sector is not far behind in this, as technology is developing at a rate alarming for traditional banking.<br />
 <br /> These low-cost, high-tech technology models deal with low-value, high-volume financial customers, which is why companies like <keyword id="143842" type="UNKNOWN" weightage="100" keywordseo="Mobikwik">Mobikwik</keyword>, <keyword id="2461194" type="UNKNOWN" weightage="100" keywordseo="Capital-Float">Capital Float</keyword>, <keyword id="1745661" type="UNKNOWN" weightage="100" keywordseo="Mswipe">MSwipe</keyword>, <keyword id="6580234" type="UNKNOWN" weightage="100" keywordseo="CITRUS-PAY">Citrus Pay</keyword> and <keyword id="6519244" type="UNKNOWN" weightage="100" keywordseo="Ezetap">Ezetap</keyword> have raised more than $150 million in India.<br />
 <br />
"Considering this is a newly evolved industry, it will see at least a 20% increase in hiring due to new e-wallets and payments banks. It will be due to large scale of business (ecommerce) and financials going online," Ajay Shah, assistant vice president at Teamlease Services, told ET.<br />
 <br />
Talking about the future of fintech in India, it is as of now synonymous with just payment technology; however, globally speaking, there are 11 lending fintech unicorns. Nonetheless, the sector is expected to spread its wings in India, covering hitherto untapped areas such as lending and personal finance.<br />
<br />
<a href="http://hollandfintech.com/wp-content/uploads/2015/04/fintech-apps.jpg"><em>Image source</em></a><br />

Fintech sector spreading its wings in India, attracting talents from across industries

<ul><li>According to <keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword>, the <keyword id="19945816" type="General" weightage="20" keywordseo="fintech" source="keywords">Fintech</keyword> <keyword id="881153" type="General" weightage="20" keywordseo="self-regulatory-organisation" source="Orion">self regulatory organisation</keyword> (SRO-FT) would derive its strength from its membership, ensuring that it is truly representative of the <keyword id="6133582" type="General" weightage="20" keywordseo="fintech-sector" source="Orion">fintech sector</keyword>. <br /></li><li>The <keyword id="19901291" type="General" weightage="20" keywordseo="sro" source="keywords">SRO</keyword> model enables a balance between regulation and innovation, which is especially critical in fast-evolving sectors such as fintech.<br /></li><li>The SRO-FT is anticipated to function impartially, with credibility and responsibility under the supervision of the regulator.<br /></li></ul>The Reserve Bank(RBI) of India has released a preliminary framework outlining general functions, governance standards, and eligibility requirements for the establishment of a self-regulatory organisation for FinTech firms (SRO-FT). <br /><br />The recognition of SRO-FTs would be determined by the quantity and characteristics of the applications received.<br /><br />According to the RBI, “The SRO-FT would derive its strength from its membership, ensuring that it is truly representative of the fintech sector. Through comprehensive membership agreements that encompass a broad spectrum of industry players, the SRO-FT should gain the legitimacy and credibility to not only frame baseline standards and rules of conduct codes, but also to effectively monitor and enforce them.” <br /><strong><br />Keeping up with technological progress</strong> <br /><br />“The RBI's move to establish an SRO framework is a game-changer in financial regulations, especially for digital lending and AI-driven innovation. This is a strong shift towards a collaborative, adaptive ecosystem. By integrating industry insights into regulation, we're ensuring that rules are practical and keep up with technological progress, fostering innovation and growth,” says <keyword id="20212226" type="General" weightage="20" keywordseo="adhil-shetty" source="keywords">Adhil Shetty</keyword>, CEO, BankBazaar, a financial marketplace. <br /><br />He adds that the SRO model enables a balance between regulation and innovation, which is especially critical in fast-evolving sectors such as fintech. This is not just about ensuring compliance; it's about creating a culture of integrity and ethical practices that are ingrained in the industry's DNA. <br /><br />The RBI's commitment to this collaborative approach is thus a significant step in developing a resilient financial ecosystem.<br /><br /><strong>Healthy and sustainable growth of the fintech sector</strong> <br /><br />“The creation of an SRO is seen as crucial in combating the influence of unscrupulous lenders, promoting ethical conduct, strengthening lending infrastructure, and formulating adaptable regulatory strategies,” says <keyword id="20212225" type="General" weightage="20" keywordseo="madhusudan-ekambaram" source="keywords">Madhusudan Ekambaram</keyword>, Co-founder and CEO, KreditBee, a personal loan app. <br /><br />The SRO-FT is anticipated to function impartially, with credibility and responsibility under the supervision of the regulator. Its primary goal is to contribute to the healthy and sustainable growth of the fintech sector, while also charting a smooth path to phased regulatory compliance when necessary.<br /><br />“This collaborative and participatory approach aligns with the RBI's overarching objective of fostering a resilient and sustainable financial ecosystem, emphasising ethical behaviour and transparency,” says Ekambaram. <br /><br />The SRO-FT is thus expected to play a pivotal role in shaping the course of digital lending in India by ensuring the adoption of responsible practices and maintaining integrity within the industry.<br />

Fintech SRO aims to enhance credibility of sector, promote ethical conduct

While VC interest in <keyword id="2461546" type="UNKNOWN" weightage="20" keywordseo="FinTech">fintech</keyword> companies stays high around the world, market instability has brought about numerous investors to adopt a conventional strategy in Q3'16. Both the quantity of deals and aggregate estimation of VC investment in fintech dropped in Q3'16 due, in expansive part, due to the absence of $1 billion+ super deals stated a new report Pulse of Fintech (the quarterly report on global fintech VC trends published jointly by <keyword id="50041" type="CITY" weightage="20" keywordseo="KPMG">KPMG</keyword> International and <keyword id="2407682" type="ORGANIZATION" weightage="20" keywordseo="CB-Insights">CB Insights</keyword>).<br />
<br />
Even after the global decline in investments in the fintech sector, Asia saw an increase in the same. The reports expressed that Asia is on track for a record-breaking year for VC investment up fintech. Q3'16 was Asia's time to sparkle, with an expansion in VC funding from $800 million last quarter to $1.2 billion in Q3. Chinese fintech companies have done particularly well this quarter.<br />
<br />
“It’s interesting to watch global fintech trends and observe the ‘wave’ of investor interest move across the world. Payments were very hot in US and then Europe in 2015. In 2016 we’re seeing significant investment in payments in Asia,” said Anna Scally, Technology, Media and Telecommunications, and Fintech Leader, KPMG in Ireland.<br />
<br />
“Unlike in other areas of the world, investment in lending solutions is still going strong in India. A number of fintechs are now partnering with banks, either acting as lead generation for them or offering ‘white label’ platforms so that banks can provide their own services,” quoted Neha Punater, Head of Fintech, KPMG India.<br />
<br />
<strong>Some highlights from the report</strong><br />
<br />
• Global fintech mega-rounds fell to a new low in Q3’16. Asia saw US$50M+ fintech rounds stay level for the fourth straight quarter, while Europe has not registered a single US$50M+ round to a VC- backed fintech company so far in 2016.<br />
• The median late-stage deal size in fintech globally fell to US$23M in Q3’16. This is significantly smaller than the same quarter last year, when median late-stage fintech deal size hit US$50.2M globally.<br />
• VC-backed global fintech deal activity fell for the second consecutive quarter, marking its lowest level since Q2’14. At the current run rate, total annual deals are projected to drop from 2015’s peak high.<br />
• Next-gen payments has attracted US$1.2B+ in 2016 VC-backed funding (year-to-date). The top 20 deals, including Affirm, Mobikwik and One97, raked in 67 percent of the total funding to payments technology companies in the first three quarters.<br />
<br />
<strong>Corporates in Fintech</strong><br />
<br /> Corporates participated in 30 percent of global VC-backed fintech deals for the second consecutive quarter in Q3’16, driving a significant amount of fintech deals activity globally. Citigroup, <keyword id="64259" type="CITY" weightage="20" keywordseo="Banco-Santander">Banco Santander</keyword> and Goldman Sachs have made over 20+ fintech investments in total over the past five quarters, while a host of insurers have launched corporate venture arms.

As investments fall sharply in the fintech sector, Asia
becomes the new silver lining

Prime Minister Narendra <keyword id="19899684" type="General" weightage="20" keywordseo="Modi" source="keywords">Modi</keyword> on Friday said the government is making necessary <keyword id="20861068" type="General" weightage="20" keywordseo="policy-changes" source="keywords">policy changes</keyword>, like removal of <keyword id="20279287" type="General" weightage="20" keywordseo="Angel-Tax" source="keywords">Angel Tax</keyword>, to promote the <keyword id="19945816" type="General" weightage="100" keywordseo="fintech" source="keywords">fintech</keyword> sector, even as he asked the <keyword id="19962476" type="General" weightage="20" keywordseo="regulators" source="keywords">regulators</keyword> to take additional measures to check cyber frauds which can have a crippling impact on startups. Lauding the fintechs for democratising <keyword id="19976433" type="General" weightage="20" keywordseo="financial-services" source="keywords">financial services</keyword>, Modi said the sector, which has attracted USD 31-billion investment in the last 10 years, has played a key role in denting the parallel economy. <br /><br /> The Prime Minister was addressing the Global Fintech Fest (GFF) 2024, jointly organised by the Payments Council of India, the National Payments Corporation of India and the Fintech Convergence Council. <br /><br /> He said the domestic economy and the capital market are in a celebratory mood at a time when the nation is also going through a festive period. <br /><br /> Modi underlined that the government is making all necessary changes on the policy level to assist the fintech sector and gave examples of doing away with Angel Tax, allocating Rs 1 lakh crore to encourage research and innovation in the country and implementing the Digital Personal Data Protection Act. <br /><br /> Broadly, fintech refers to entities utilising technologies for providing financial services. <br /><br /> Expressing the need to put an end to <keyword id="19901142" type="General" weightage="20" keywordseo="cyber-fraud" source="keywords">cyber fraud</keyword>, he urged the regulators to take major initiatives to boost digital literacy. <br /><br /> It is equally important to ensure cyber fraud does not come in the way of the growth of fintech and startups in the country, Modi said. <br /><br /> In his speech, the Prime Minister also cautioned about the dangers of a parallel economy for the world. <br /><br /> Fintech, he said, has played an impactful role in denting such a system and credited the emergence of transparency. <br /><br /> He said that digital technology has introduced transparency in India and gave the example of the implementation of Direct Benefit Transfer used in hundreds of government schemes that has prevented leakages in the system. <br /><br /> "Today, people can see the benefits of aligning with the formal banking system," he said. <br /><br /> Modi further said the trinity of Jan Dhan, Aadhaar and Mobile have broken down the mentality of 'Cash is King' and made way for approximately half of the <keyword id="20004116" type="General" weightage="20" keywordseo="digital-transactions" source="keywords">digital transactions</keyword> in the world taking place in India. <br /><br /> "India's <keyword id="19900911" type="General" weightage="20" keywordseo="upi" source="keywords">UPI</keyword> has become a major example of fintech in the world," he said, adding that it has enabled 24X7 banking services in every village and city in all weather conditions. <br /><br /> Underlining the role of fintech in democratising financial services, the Prime Minister gave examples of readily available loans, credit cards, investments and insurance. <br /><br /> He said that fintech has made access to credit easy and inclusive, and gave the example of PM SVANidhi scheme that has enabled street vendors to avail collateral-free loans and further expand their business with the help of digital transactions. <br /><br /> "Sustainable <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword> is India's priority today," he said and emphasised that the government is creating robust, transparent and efficient systems to strengthen financial markets with advanced technologies and regulatory frameworks. <br /><br /> About 800 speakers, including policymakers, regulators, senior bankers, industry captains, and academicians, from India and other countries are participating in the fest.

Removed Angel Tax, taking policy measures to promote fintech sector: PM Modi

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Funding Circle</span></p><p class="caption">Funding Circle's cofounders, from left, Andrew Mullinger, Samir Desai, and James Meekings.</p></div><p></p></div></div>Fintech, or financial technology, startups and businesses raised almost $1 billion in funding last year, according to industry body Innovate Finance.</p><p><a href="http://www.slideshare.net/innovatefinance/innovate-finance-the-2015-fintech-investment-landscape">Innovate Finance says in a release on Wednesday</a> that the <keyword id="6354868" type="COUNTRY" weightage="60" keywordseo="UK">UK</keyword> attracted the second highest number of fintech funding deals in 2015 after the US and was third in terms of volume invested, behind the US and China.</p><p>The UK took $901 million (£647.5 million) of the $12.5 billion (£8.9 million) that was invested in fintech globally across 860 deals, according to analysis by venture capital tracking service Pitchbook on behalf of Innovate Finance.</p><p>A <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/502995/UK_FinTech_-_On_the_cutting_edge_-_Full_Report.pdf" target="_blank">separate report out Wednesday from Ernst &amp; Young (EY)</a> ranked the UK first amongst the world's seven leading fintech hubs, from Silicon Valley to Hong Kong. EY compared the availability of talented staff, access to investment, the nature of government and regulatory policy, and the demand for fintech services. The report also sets out a number of areas where the UK can improve.</p><p>Commenting on the EY report, Chancellor George Osborne said: "In 2014 I said I wanted Britain to be the global capital of fintech. This report says that we have delivered exactly that: we have the most supportive tax and regulatory regimes in the world for fintech, and we have the world's leading FinTech ecosystem.</p><p>"But we're not going to rest on our laurels. I know that we need to do more if we want to maintain this position, and so I welcome the report's recommendations."</p><p class="last-child">The reports from Innovate Finance and EY come midway through "Fintech Week," which is a <a href="https://medium.com/@HBaldwinMP/introducing-uk-fintech-week-afcf968c660f#.452bas2il" target="_blank">government initiative being led by Economic Secretary Harriet Baldwin</a> to promote and celebrate the emerging cluster of fintech companies in the UK. Baldwin and UK fintech envoy Eileen Burbidge hosted an event at 11 Downing Street, the Chancellor's home, on Tuesday night to mark the launch of Fintech Week</p><p>During the event, fintech founders and industry regulators were asked by Burbidge, who chaired the session, what needs to be done to further support the UK fintech sector. Suggestions ranged from linking up the UK fintech sector to other clusters in places like New York, to setting up government-backed fintech centres of excellence across the country.</p><p>Notable UK funding deals last year include a <a href="http://uk.businessinsider.com/funding-circles-new-150-million-round-impact-on-smbs-2015-4">£97 million ($150 million) investment</a> in peer-to-peer lender Funding Circle last April, mobile money service WorldRemit's <a href="http://uk.businessinsider.com/worldremit-raises-100-million-half-billion-valuation-2015-2">£64.8 million ($100 million) round in February</a>, online money transfer platform TransferWise's <a href="http://uk.businessinsider.com/transferwise-58-million-andreessen-horowitz-2015-1">£37.4 million ($58 million) funding round at the start of the year</a>, and <a href="http://uk.businessinsider.com/london-fintech-startup-ebury-raises-83-million-2015-11">a </a><a href="http://uk.businessinsider.com/london-fintech-startup-ebury-raises-83-million-2015-11">£54.5 million (</a><a href="http://uk.businessinsider.com/london-fintech-startup-ebury-raises-83-million-2015-11">$83 million) investment in online small business funding company Ebury</a>.</p><p>The UK's 2015 fintech funding total represents a 35% jump on 2014's figure, although the total number of deals actually fell, suggesting larger rounds last year.</p><p>Innovate Finance CEO Lawrence Wintermeyer says in a release announcing the statistic:</p><p style="padding-left: 30px;">One of the big trends in 2015 was investment in FinTech by financial institutions in incubators, accelerators, labs, talent, partnerships, digital M&amp;A, and corporate venture funds. A couple of years ago, entrepreneurs in the community were looking for introductions to VCs. Last year, they were interested in introductions to institutions. What this reveals is that corporate venture funding could be the new smart money for FinTech.</p><p>Spanish bank BBVA <a href="http://uk.businessinsider.com/bbva-invests-45-million-in-atom-bank-at-150-valuation-2015-11">invested £45 million ($68 million) in digital challenger bank Atom last November</a>, huge institutional investor BlackRock took part in Funding Circle's big round last year, and Woodford Investment Management, the company set up by star fund manager Neil Woodford, invested in several fintech startups last year <a href="http://www.thesundaytimes.co.uk/sto/business/Finance/article1537207.ece">including RateSetter</a> and Seedrs.</p><p>The figures show how big fintech has become within the UK tech sector and how excited venture capitalists are by its potential. $3.6 billion (£2.5 billion) was invested in UK tech startups overall in 2015, according to data from CB Insights and London &amp; Partners, meaning a quarter of the total invested in tech last year went to finance-focused startups.</p><p>While 2015 was a blockbuster year for the sector, 2016 has so far been more muted in terms of investment. VCs ended 2015 in a <a href="http://uk.businessinsider.com/sequoia-capitals-michael-moritz-on-subprime-unicorns-2015-10">mood of reluctance and worry</a>, <a href="http://www.techinsider.io/tech-company-layoffs-are-increasing-2015-10">amid redundancies at some of the best known Silicon Valley startups such as Snapchat and Twitter</a>.</p><p><a href="http://uk.businessinsider.com/index-ventures-jan-hammer-on-tech-valuations-maybe-that-was-the-top-2015-11">Index Ventures Jan </a><a href="http://uk.businessinsider.com/index-ventures-jan-hammer-on-tech-valuations-maybe-that-was-the-top-2015-11">Hammer told Business Insider in November</a> that the industry was seeing more and more down rounds - funding rounds where the startup is valued at less than it was in its previous round. He said: "You can look back and say maybe that was the top. We're not seeing valuations continue to escalate upward from maybe where they were one-quarter ago."</p><p>At the recent Finovate Europe conference in London, the mood among VCs was one of skepticism, <a href="http://uk.businessinsider.com/finovate-europe-2016-fintech-hot-froth-2016-2">with some on the look out for "froth."</a></p><p>Alex McCracken, managing director of venture services at Silicon Valley Bank, <a href="http://uk.businessinsider.com/finovate-europe-2016-fintech-hot-froth-2016-2">told BI at the conference</a>: "What's become clear now is who are the one or two leaders in a particular subsector. It's easy for the VCs to keep supporting those companies rather than finding 'new new'."</p><p>So far the most notable deal of 2016 in the UK fintech sector has been <a href="http://uk.businessinsider.com/mondo-bank-valued-at-30-million-in-6-million-fundraise-2016-2">mobile-only challenger bank Mondo's £6 million round</a>, which valued it at £30 million.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/internet-reacts-kanye-west-53-million-dollar-debt-2016-2">This is how the Internet feels about Kanye West's $53 million debt</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="JvanQxMTE6lCWw-z17578LeOH24q-ssu" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Fintech businesses in the UK raised $901 million in 2015 - but the wind is changing

Mumbai, Fintech players should form <keyword id="18684976" type="General" weightage="50" keywordseo="a-self-regulatory-organisation" source="Orion">a self regulatory organisation</keyword> for an orderly growth of the industry that is projected to have revenues of USD 200 billion by 2030, <keyword id="7268643" type="General" weightage="20" keywordseo="rbi-governor-shaktikanta-das" source="Orion">RBI Governor Shaktikanta Das</keyword> said on Wednesday. Addressing the industry at the <keyword id="9621521" type="General" weightage="50" keywordseo="global-fintech-fest" source="Orion">Global Fintech Fest</keyword> here, Das said fintech players need to evolve industry best practices to avoid misselling, stress on ethical practices, pricing transparency and take care of privacy and data protection concerns. <br /><br /> "I would like to use this opportunity to urge and encourage the fintechs to establish a Self Regulatory Organisation (SRO) themselves," he said and assured all help from the Reserve Bank of India (RBI) for the process. <br /><br /> The fintech players should form the SRO at the earliest, Das said and hoped that such a platform will be ready at least by the next edition of the yearly event. <br /><br /> Stating that other industries also have SROs, Das said forming an SRO will help the players to voice their concerns. <br /><br /> He also said that having the SRO will reduce the burden of regulating a dynamic sector off the RBI's shoulders. <br /><br /> Das said regulators play a critical role in addressing arbitrage, ensuring compliance with existing laws, and adopting regulations as per technological advancements. <br /><br /> Further, he asked the fintech players -- most of them startups -- to avoid the "relentless drive for valuations" and profits, and asked them to focus on customer centricity. <br /><br /> "... to focus on customers means embracing a customer-centric approach to innovation by understanding the needs of customers, making provisions that protect customer interests and earn their trust," he added. <br /><br /> He said that good governance will be key to durable and long term success of any company and in particular, the fintech players. <br /><br /> Technological innovation has "unprecedented potential" to make finance more inclusive, competitive and robust, Das said, adding that advancements in technology need to evolve in a "responsible" manner. <br /><br /> "Fintech players should themselves ensure responsible digital innovations. The Reserve Bank on its part will continue to drive the necessary regulatory and other policy measures to promote a vibrant and responsive fintech ecosystem," he said. <br /><br /> While stressing that the coming years hold immense promise which need to be leveraged by innovators, the RBI chief said that as per projections, the fintech sector revenues are set to touch USD 200 billion by 2030. "We are at the cusp of a major transformation in fintech sector". <br /><br /> Das also spoke about the progress on the Central Bank Digital Currency and said that newer use cases will be soon added on the wholesale CBDC front. <br /><br /> The CBDC retail pilot is currently being operated through 13 banks across 26 cities, Das said, adding that around 1.46 million users and 0.31 million merchants are currently part of the pilot as on August 31, 2023. <br /><br /> RBI has also enabled full inter-operability of CBDC with UPI QR codes, and is targeting 10 lakh CBDC transactions per day by December 2023 which will give it sufficient data points for analysis, Das said. <br /><br /> Meanwhile, Srinivas Jain, the Co-Chairman of the Fintech Convergence Council, said it will be working earnestly to have an SRO in place at the earliest. <br /><br /> "We are not on the same pages on who all from the fintech space can be members as currently this space is dominated by payments tech players but there are many others also in the fray," he told PTI.

RBI Governor asks fintech players to form self regulatory organisation

<p><span><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>REUTERS/Gary Hershorn</span></p><p class="caption">TA policeman walks through confetti after it was dropped on revelers at midnight during New Year's Eve celebrations in Times Square in New York January 1, 2014.</p></div><p></p></div></div></span></p><p><span>It is going to be a big year for the booming fintech industry.</span></p><p><span><span>Fintech </span></span><span><span>refers to financial technology, and more specifically the rise of startups using technology to take on the financial industry in everything from wealth management to payments. </span></span></p><p><span><span><span><span>It's</span></span></span></span><span><span><span><span> already </span><a href="http://www.businessinsider.com/the-10-hot-new-financial-buzzwords-you-need-to-know-2015-12">one of Wall Street's buzzwords.</a> And after a year of heavy investment in fintech startups, 2016 is going to be the year that establishment firms start testing their own fintech offerings. </span></span></span></p><p><span><span><span>"When we talk to the banks, 2016 is the year of the use case," said</span></span></span><span> </span><span>Brian Foran, a partner at Autonomous Research US. "They all say there is something in fintech that we want to roll out. There will be a lot more launches in 2016. Some will be a success, and some will fall by the wayside."</span></p><p>He cited the rollout of platforms that use algorithms to determine investment allocations, known as robo-advisers, as an example. Elsewhere, <a href="http://www.businessinsider.com/r-jpmorgan-chase-says-it-is-building-a-rival-to-apple-pay-2015-10">big banks are launching mobile-payment apps</a> and experimenting with blockchain technology. </p><h2>Valuation shakeout</h2><p><span>Fintech funding has boomed in recent years, and that's led to talk of a bubble in valuations. Investors put $12.2 billion into fintech firms in 2014, up from $2.8 billion in 2012, according to BI Intelligence. In the first quarter of 2015 alone there were nearly $3 billion of investments in the sector, according to CB Insights. <br /></span></p><p>Foran said that 52% of respondents to a survey it carried out said that VC valuations in the fintech sector were "<u></u>bonkers - a lot of the money being invested today will be lost."</p><p>"It is a critical year for the anti-establishment as well," Foran told Business Insider.  </p><p> </p><p>"People are asking if there is a path to get getting paid on this."</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/jim-cramer-bad-moment-jon-stewart-revenge-show-up-cnbc-mad-money-2015-12">JIM CRAMER: 'YOU SHOW UP AND THAT'S THE REVENGE'</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="dub2JmeToAuIb6s6LVlTsmOe6FIdXLlt" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

It's going to be 'a critical year' for one of the hottest areas in tech

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Dan Kitwood/Getty Images</span></p><p class="caption">Fireworks light up the London skyline and Big Ben just after midnight on January 1, 2014 in London.</p></div><p></p></div></div>Payment processing company Worldpay had London's biggest stock market listing of the year so far this week - and it's a huge moment for fintech, short for financial technology.</p><p>Worldpay was valued at £4.8 billion ($7.4 billion) when shares listed on Tuesday, and the stock price popped over 3% on the opening day.</p><p>The reception of the listing could cement London's reputation as the fintech capital of Europe, if not the world. If London can prove its public markets "get" fintech it could herald a wave of floats here.</p><h2>'<span>We expect to see more multibillion-dollar events'</span></h2><p>Worldpay's listing coincides with a bit of a "moment" for fintech. The sector has become the <a href="http://uk.businessinsider.com/these-2-simple-slides-show-just-how-hot-fintech-is-right-now-2015-5">latest hot area for venture capital investment</a>, with money pouring into everything from peer-to-peer lending marketplaces (Funding Circle, Prosper) to bond market technology (Algomi).</p><p>Worldpay makes payment terminals and does payment processing for businesses. But most in the fintech sector don't regard Worldpay as a fintech business.</p><p>It started out as innovative - the company was one of the first to offer internet payment services back in 1994 - but Worldpay was bought by Royal Bank of Scotland (RBS) in 2002 and quickly became pretty corporate. It was spun out of RBS as part of the bank's state bailout in 2009 and bought by private equity groups Advent International and Bain Capital.</p><p>Fred Destin, a partner at VC firm Accel Partners, told Business Insider: "It's a large card processor - we don't really see it as a fintech like [Swedish card reader maker] iZettle or [Dutch payment processor] Adyen or Accel-backed Braintree [an online payment processor]. But it's a relevant, comparable, and clearly great to see a large IPO coming to the <keyword id="6354868" type="COUNTRY" weightage="60" keywordseo="UK">UK</keyword> market "</p><p>While Worldpay may not be seen as fintech by many close to the sector, traditional public market investors may well lump it in with newer businesses.<span><br /></span></p><p>Yann Ranchere, finance director of fintech-focused investment group Anthemis, told Business Insider: "For European fintech startups, especially UK ones, it's probably one of the best indication of appetite for listings in the UK market."</p><p>"For London, the saying had historically been that one of the constraints for startups was on later stage and liquidity events so having a sizable IPO is a good validator."</p><p>Despite its best efforts, the London Stock Exchange failed to capitalise on the tech boom of recent years, with companies like Candy Crush maker King choosing New York over London.</p><p>Just Eat became the first to join the newly created "High Growth Market" specifically set up for tech businesses when it IPO'd last year, but quickly moved to the main market instead.</p><p>Ranchere says: "Obviously Worldpay has a different profile than startups in terms of growth trajectory/multiple but as they announced they will do substantial investment in technology (important use of IPO proceeds). They are a significant data point."</p><p>The London Stock Exchange knows it's good business to pull in fintech and trumpeted Worldpay as a fintech float in an email announcing its success this week. If Worldpay can demonstrate the UK stock market understands and supports financial technology businesses, it could mean plenty more business down the line.</p><p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Index Ventures</span></p><p class="caption">Index Ventures' Jan Hammer.</p></div><p></p></div></div>Jan Hammer, a partner at VC firm Index Ventures who has backed firms like TransferWise and Adyen, told Business Insider: "The IPO demonstrates that payments is a mega large space, and that omni-channel is the direction things are going. We expect to see more multibillion-dollar events over the next few years."</p><p>There are already two homegrown fintech companies worth more than $1 billion (<a href="http://uk.businessinsider.com/interview-with-funding-circles-samir-desai-and-sam-hodges-2015-10">Funding Circle</a> and <a href="http://uk.businessinsider.com/transferwise-58-million-andreessen-horowitz-2015-1">TransferWise</a>) and there are plenty coming up behind it.</p><p>London's play for fintech also comes at a time when US markets so far haven't nailed it. Peer-to-peer lending platform Lending Club has been the highest profile IPO in the US and <a href="http://uk.businessinsider.com/lending-club-q4-earnings-2015-2">shares have fallen over 35% since the company listed at the end of last year</a>.</p><p>If Worldpay can avoid the kind of stock price pit falls of Lending Club, companies will have to seriously think about whether London could be a better option than one of the US markets.</p><p>Square, the high-profile card reader and payment processing company set up by Twitter's Jack Dorsey, <a href="http://uk.businessinsider.com/square-files-for-ipo-2015-10">this week filed documents to go public in the US</a>. How that float goes could be a defining moment for fintech in the US.</p><h2>'It's good for fintech to have an independent potential partner'</h2><p>There are other benefits to the fintech "ecosystem" from Worldpay going public too. Dan Cobley, <a href="http://uk.businessinsider.com/ex-google-uk-md-dan-cobley-on-brightbridge-ventures-2015-7">CEO of fintech VC firm Brightbridge</a>, told Business Insider: "It's good for fintech to have an independent scale player outside of the big banks as a potential partner."</p><p>One such partner is Trustly, a Swedish online payment company that this week expanded to 21 new European countries including the UK.</p><p>Johan Nord, Trustly's chief commercial officer, told Business Insider over email: "The company [Worldpay] has long been a driver in the fintech payments industry and is helping to establish alternative payment services to consumers and merchants across Europe as well as further afield."</p><p>Worldpay is more than happy to work with fintech payment startups like Trustly - in fact, the company sees it as good for business.</p><p>When I <a href="http://uk.businessinsider.com/worldpay-to-list-on-london-stock-exchange-2015-9">spoke to </a><a href="http://uk.businessinsider.com/worldpay-to-list-on-london-stock-exchange-2015-9">Worldpay's chief product and marketing officer Kevin Dallas earlier this year</a> he told me: "What you actually have is the whole payment landscape is becoming more complex, not less. The value that someone like Worldpay can bring is helping them navigate that."</p><p>So the fintech startups there are, the more complex it gets, the more business for Worldpay.</p><p>We could look back on Worldpay's stock market listing in a few years and see it as the point fintech in London kicked up a gear. To have a £4.8 billion FTSE 100 goliath batting for the sector is huge.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/pablo-escobar-cocaines-biggest-kingpin-life-death-2015-9">Pablo Escobar: The life and death of one of the biggest cocaine kingpins in history</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="phNnBrdzpKXE2oFtDyJRVBKwhim_ZHgP" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

The &#163;4.8 billion float of the year is a pivotal moment for fintech in London

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span><a href="https://transferwise.com/blog/2015-01/naked-and-body-painted-in-london-find-out-why/">TransferWise</a></span></p><p class="caption">TransferWise employees during a publicity stunt for the fintech company. TransferWise is one of London's leading tech success stories.</p></div><p></p></div></div>The CEO of £1.4 billion accountancy software giant Xero says London is a world leader in fintech - financial technology - and will remain that way post-Brexit.</p><p>Rod Drury, founder and CEO of Xero, told Business Insider during a recent interview in London: "We love the fintech innovation happening in London, it's absolutely world-class. When you see the apps that are being built here, they will go global. We're really impressed by the quality of the finch thinking that goes on here."</p><p>London has become <a href="http://uk.businessinsider.com/how-fintech-transforming-finance-2015-9">a European hub for financial technology - fintech - companies since the 2008 financial crisis.</a> London boasts both a global finance hub in the City of London and Canary Wharf and a flourishing tech scene, centred around Old Street roundabout in East London, making it the perfect city for fintech.</p><p>Hundreds of millions of pounds have been poured into the sector in London and leading fintech companies that have emerged in the capital over the last decade, include <a href="http://uk.businessinsider.com/funding-circle-ceo-samir-desai-on-lending-club-2015-accounts-and-us-business-2016-9">small business loans marketplace Funding Circle</a>, valued at over $1 billion, and <a href="http://uk.businessinsider.com/transferwises-2016-accounts-marketing-revenue-loss-profit-2016-9">online money transfer service TransferWise</a>.</p><p>However, many fear that Britain's vote to leave the European Union could disrupt the growing sector by putting off investors and talent. Tom Blomfield, the founder of startup bank Monzo, <a href="http://uk.businessinsider.com/uk-fintech-fears-brexit-attracting-talent-london-hub-passporting-investment-2016-7">told BI shortly after the June 23 referendum: "We had a gem here and I think we've just smashed it up."</a></p><p>Drury says he thinks London's fintech sector will survive the turbulence of Brexit, saying: "I think the <keyword id="6354868" type="COUNTRY" weightage="60" keywordseo="UK">UK</keyword> is [a world leader in fintech] and I think it is for a few reasons. One, it's very dense. This is a world banking sector and it's very, very dense. You see it with the amount of fintech companies starting here, they get to scale quite quickly. The US is relatively fragmented. I think that's why the UK finch solutions are some of the top in the world."</p><p>He added that Xero hopes to become "the foundation of the next generation of fintech." Xero acts as a platform for other finance businesses to build their apps on top of. For example, London startups like <a href="http://uk.businessinsider.com/london-fintech-startup-gocardless-has-raised-13-million-in-new-funding-2016-3">GoCardless (direct debit)</a>, <a href="http://uk.businessinsider.com/fintech-marketinvoice-investment-polish-mci-capital-brexit-2016-7">MarketInvoice (invoice financing)</a>, and Receipt Bank (expenses) all integrate with Xero to offer their services through the platform.</p><p><div class="KonaFilter image-container display-table float_left"><div><div class="image on-image"><p class="source"><span>Xero</span></p><p class="caption">Rod Drury, Xero CEO and founder.</p></div><p></p></div></div>Drury says: "Small business is incredibly fragmented and accounting software is the only natural channel. it's incredibly difficult to sell to them and it takes hundreds of millions of dollars of capital to have the time to build a significant enough product to be a true platform. Salesforce is a platform, Xero is a platform - we've got 500 add-ons that connect through.</p><p>"We're the core system of record for a lot of fintech. A lot of fintech companies are great apps but it takes a long time and a lot of money to build a true platform."</p><p>Drury said Brexit hadn't changed Xero's plans for the UK, where it employs 172 people and has close to 200,000 customers. Drury says he expects the uncertainty surrounding Brexit to lead to more people setting up on their own, which should provide a boost for Xero.</p><p>Xero's UK MD Gary Turner added: "Brexit is kind of interesting but we've got a tonne of stuff to be getting on with anyway." He cited the Treasury's "Making Tax Digital" initiative, working with the UK's large number of startup banks, and helping more established banks modernise their back office as just some of Xero's UK priorities.</p><p>Microsoft recently announced that it will <a href="http://uk.businessinsider.com/microsoft-increasing-uk-prices-of-enterprise-products-2016-10">increase the price of its enterprise software in the UK</a> following the <a href="http://uk.businessinsider.com/pound-falls-against-the-dollar-and-euro-on-october-17-2016-10">collapse of the pound in the wake of the Brexit vote.</a> Asked if Xero would similarly hike prices, Drury said: "We're still adding lots and lots of services. It's not a primary strategy to put up price.</p><p>"We've done a few little price things over the years. Really it's more about adding more and more value. Online accounting is more or less done in terms of the accounting, now we're moving to the front office and business apps, which we've already proved by all the add-on partners who are building new apps."</p> <p class="tagline"><div id="categorypromo" style="border:1px solid silver; min-height:90px; padding:10px;vertical-align:top;"><a href="http://read.bi/fintechleadgen"></a><strong> EXCLUSIVE FREE REPORT:</strong><br />5 Top Fintech Predictions by the BI Intelligence Research Team. <strong><a href="http://read.bi/fintechleadgen">Get the Report Now »</a></strong></div></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/what-happens-when-interest-rates-go-negative-ken-rogoff-2016-10">Here's what happens when interest rates go negative</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="M2c3ZwNjE6GPPIfI9mJGscYp5wQYmgrZ" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

XERO CEO: London's fintech scene is 'world class' and will stay that way post-Brexit

<p><em><div class="KonaFilter image-container display-table float_right no-rightrail"><div><div class="image"></div></div></div>This story was delivered to BI Intelligence "<a href="http://www.businessinsider.com/intelligence/fintech-research-briefing-daily-newsletter-research?IR=T&amp;utm_source=businessinsider&amp;utm_medium=content_marketing&amp;utm_term=content_marketing_subscription_text_link_cryptocurrencies-vs-the-irs-2017-3&amp;utm_content=subscription_content_marketing_text_link&amp;utm_campaign=content_marketing_subscription_link&amp;vertical=fintech">Fintech Briefing</a>" subscribers. To learn more and subscribe, please <a href="http://www.businessinsider.com/intelligence/fintech-research-briefing-daily-newsletter-research?IR=T&amp;utm_source=businessinsider&amp;utm_medium=content_marketing&amp;utm_term=content_marketing_subscription_text_link_cryptocurrencies-vs-the-irs-2017-3&amp;utm_content=subscription_content_marketing_text_link&amp;utm_campaign=content_marketing_subscription_link&amp;vertical=fintech">click here</a>.</em></p><p dir="ltr"><a href="http://e.businessinsider.com/click/9092397.3768/aHR0cHM6Ly93d3cuaXJzLmdvdi9pcmIvMjAxNC0xNl9JUkIvYXIxMi5odG1s/56c34aced7aaa8f87d8b56a7Bfb878067" target="_blank" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://e.businessinsider.com/click/9092397.3768/aHR0cHM6Ly93d3cuaXJzLmdvdi9pcmIvMjAxNC0xNl9JUkIvYXIxMi5odG1s/56c34aced7aaa8f87d8b56a7Bfb878067&amp;source=gmail&amp;ust=1489241597573000&amp;usg=AFQjCNEFXsRoucUHHpPFJ0OzPhbyCIjS2A">Since 2014</a>, cryptocurrencies like bitcoin have been considered property, not currencies, by the US Internal Revenue Service (IRS), meaning they are subject to property tax laws.</p><p dir="ltr">Last year, the IRS came to the <a href="http://e.businessinsider.com/click/9092397.3768/aHR0cDovL2ZvcnR1bmUuY29tLzIwMTcvMDEvMDEvYml0Y29pbi1pcnMtdGF4LXN3ZWVwLXVzZXItYmF0dGxlLw/56c34aced7aaa8f87d8b56a7Bf1675b4a" target="_blank" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://e.businessinsider.com/click/9092397.3768/aHR0cDovL2ZvcnR1bmUuY29tLzIwMTcvMDEvMDEvYml0Y29pbi1pcnMtdGF4LXN3ZWVwLXVzZXItYmF0dGxlLw/56c34aced7aaa8f87d8b56a7Bf1675b4a&amp;source=gmail&amp;ust=1489241597574000&amp;usg=AFQjCNG__CHHTrrysmrj0nd3jrK-tW5ZFQ">conclusion</a> that bitcoin owners "may fail, or may have failed, to comply with one or more provisions of the internal revenue laws" and decided the best way to investigate was to <a href="http://e.businessinsider.com/click/9092397.3768/aHR0cDovL3d3dy5jb2luZGVzay5jb20vYml0Y29pbi1qdWRnZS1hcHByb3ZlZC1pcnMtY29pbmJhc2UtdXNlcnMv/56c34aced7aaa8f87d8b56a7Ba7fe66c4" target="_blank" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://e.businessinsider.com/click/9092397.3768/aHR0cDovL3d3dy5jb2luZGVzay5jb20vYml0Y29pbi1qdWRnZS1hcHByb3ZlZC1pcnMtY29pbmJhc2UtdXNlcnMv/56c34aced7aaa8f87d8b56a7Ba7fe66c4&amp;source=gmail&amp;ust=1489241597574000&amp;usg=AFQjCNFmz5rrlscHGNzk4QNFw42cAzC1_Q">order</a> major bitcoin exchange Coinbase to hand over all US user records from 2013-2015.</p><p dir="ltr">Coinbase reacted in January by <a href="http://e.businessinsider.com/click/9092397.3768/aHR0cDovL2ZvcnR1bmUuY29tLzIwMTcvMDEvMTcvY29pbmJhc2UtaXJzLWJpdGNvaW4v/56c34aced7aaa8f87d8b56a7B331a1756" target="_blank" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://e.businessinsider.com/click/9092397.3768/aHR0cDovL2ZvcnR1bmUuY29tLzIwMTcvMDEvMTcvY29pbmJhc2UtaXJzLWJpdGNvaW4v/56c34aced7aaa8f87d8b56a7B331a1756&amp;source=gmail&amp;ust=1489241597574000&amp;usg=AFQjCNH_BQBbopru_6PwcS1mif7ZsYN8Lg">launching</a> a legal appeal against the order, claiming it was too broad and would involve innocent bitcoin owners. In the latest installment of this saga, an industry group, the Digital Assets Tax Policy Coalition, has been <a href="http://e.businessinsider.com/click/9092397.3768/aHR0cDovL3d3dy5zdGVwdG9lLmNvbS9uZXdzLTI1MjYuaHRtbA/56c34aced7aaa8f87d8b56a7B7124f0cf" target="_blank" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://e.businessinsider.com/click/9092397.3768/aHR0cDovL3d3dy5zdGVwdG9lLmNvbS9uZXdzLTI1MjYuaHRtbA/56c34aced7aaa8f87d8b56a7B7124f0cf&amp;source=gmail&amp;ust=1489241597574000&amp;usg=AFQjCNEMyImksrTVT1dF4VpjFX3kk_ofJQ">formed</a> to help the exchange fight the IRS.</p><p dir="ltr">The coalition aims to work proactively with the US government to inform cryptocurrency policy. It was formed by the Digital Chamber of Commerce (DCD), a blockchain trade association, and law firm Steptoe and Johnson, and will be based in Washington, DC. Other members of the coalition do not want to be named out of fear they could also end up subject to the IRS' demands, according to <a href="http://e.businessinsider.com/click/9092397.3768/aHR0cHM6Ly93d3cuYmxvb21iZXJnLmNvbS9uZXdzL2FydGljbGVzLzIwMTctMDMtMDgvYml0Y29pbi10YXgtZmlnaHQtYnJld2luZy1hcy1kaWdpdGFsLWNoYW1iZXItc2V0LXRvLWJhdHRsZS1pcnM/56c34aced7aaa8f87d8b56a7B26ed3a92" target="_blank" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://e.businessinsider.com/click/9092397.3768/aHR0cHM6Ly93d3cuYmxvb21iZXJnLmNvbS9uZXdzL2FydGljbGVzLzIwMTctMDMtMDgvYml0Y29pbi10YXgtZmlnaHQtYnJld2luZy1hcy1kaWdpdGFsLWNoYW1iZXItc2V0LXRvLWJhdHRsZS1pcnM/56c34aced7aaa8f87d8b56a7B26ed3a92&amp;source=gmail&amp;ust=1489241597574000&amp;usg=AFQjCNGxGS_uf5azIQ22iY7rdOBl9FPvBQ">Bloomberg</a>. The coalition's main objective is to help the IRS develop a strategy that enables the agency to ensure bitcoin owners are paying the correct taxes, without the need for actions as wide-sweeping and burdensome as last year's order.</p><p dir="ltr">The formation of the coalition should help drive clearer US regulation for cryptocurrencies and boost the industry. Since the 2014 decision to classify bitcoin as property, the IRS has issued little in the way of clear guidance to bitcoin owners. Meanwhile, last December's order caused anxiety within the industry, and is likely holding back consumers interested in cryptocurrencies from purchasing such assets. The coalition's formation should help solve these issues by putting pressure on the IRS to form clearer guidelines, and in turn, that should ease anxiety among bitcoin owners, driving further growth in the cryptocurrency industry.</p><p>Despite having one of the largest fintech industries in the world, the U.S. is noticeably behind other regions when it comes to one factor crucial to the future growth of this burgeoning sector - regulation. </p><p>The U.S. regulatory environment is holding back fintechs and hindering their chances of success. </p><p>Sarah Kocianski, senior research analyst for <a href="http://www.businessinsider.com/intelligence/bi-intelligence-fintech-and-payments-research-bundle?IR=T&amp;utm_source=businessinsider&amp;utm_medium=content_marketing&amp;utm_term=content_marketing_subscription_text_link_cryptocurrencies-vs-the-irs-2017-3&amp;utm_content=subscription_content_marketing_text_link&amp;utm_campaign=content_marketing_subscription_link&amp;vertical=fintech">BI Intelligence</a>, Business Insider's premium research service, has compiled <a href="http://www.businessinsider.com/intelligence/research-store?IR=T&amp;utm_source=businessinsider&amp;utm_medium=content_marketing&amp;utm_term=content_marketing_store_text_link_cryptocurrencies-vs-the-irs-2017-3&amp;utm_content=report_store_content_marketing_text_link&amp;utm_campaign=content_marketing_store_link&amp;vertical=fintech#!/The-US-Fintech-Regulation-Report/p/79242078/">a detailed report on U.S. fintech regulation</a> that examines the current regulatory landscape in the U.S. and how it's impacting the fintech industry. In addition, it discusses the methods fintechs are using to meet regulations as best they can, and details the fintech-specific initiatives that have already been launched by regulators and their likelihood of success. It also considers the future of fintech regulation in the U.S. and how it may shape the fintech sector long term.</p><p><strong><em>Here are some of the key takeaways from the report:</em></strong></p><ul><li>The U.S.' regulatory system involves many different players at the federal level, as well as a regulator for each state. This complexity not only makes the U.S. regulatory environment harder for fintechs to navigate in the first place, but it's a major barrier to the development of a coherent fintech policy.</li><li>The U.S. regulatory landscape means it is falling behind other major fintech regions such as the UK and EU in certain segments. These regions already have established fintech regulatory policies. </li><li>U.S. fintechs are using a number of models to achieve compliance, but none are ideal. As a result, many are finding it hard to achieve the scale necessary for success. </li><li>Some U.S. regulators have realized the need to act regarding fintech regulation, and are launching initiatives with the aim of making compliance easier. That said, a coherent fintech regulatory policy for the U.S. is still a long way off. </li></ul><p><strong> </strong><em><strong>In full, the report:</strong><br /></em></p><ul><li>Examines the current regulatory landscape in the U.S. </li><li>Explains how it is negatively affecting the fintech industry.</li><li>Outlines the initiatives currently in play from major regulatory agencies. </li><li>Considers the future of U.S. fintech regulation and its potential impact on the fintech sector. </li></ul><p><em>Interested in getting the full report? Here are two ways to access it:</em></p><ol><li>Subscribe to an <strong><em>All-Access </em></strong>pass to BI Intelligence and gain immediate access to this report and over 100 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. » <strong><a href="http://www.businessinsider.com/intelligence/bi-intelligence-fintech-and-payments-research-bundle?IR=T&amp;utm_source=businessinsider&amp;utm_medium=content_marketing&amp;utm_term=content_marketing_subscription_text_link_cryptocurrencies-vs-the-irs-2017-3&amp;utm_content=subscription_content_marketing_text_link&amp;utm_campaign=content_marketing_subscription_link&amp;vertical=fintech">START A MEMBERSHIP</a></strong></li><li>Purchase &amp; download the full report from our research store. » <strong><a href="http://www.businessinsider.com/intelligence/research-store?IR=T&amp;utm_source=businessinsider&amp;utm_medium=content_marketing&amp;utm_term=content_marketing_store_text_link_cryptocurrencies-vs-the-irs-2017-3&amp;utm_content=report_store_content_marketing_text_link&amp;utm_campaign=content_marketing_store_link&amp;vertical=fintech#!/The-US-Fintech-Regulation-Report/p/79242078/">BUY THE REPORT</a></strong></li></ol><p class="tagline"><div id="categorypromo"><p><h2><span>Learn more:</span></h2><ul><li><a href="http://read.bi/pay1">Credit Card Industry and Market</a></li><li><a href="http://read.bi/pay2">Mobile Payment Technologies</a></li><li><a href="http://read.bi/pay3">Mobile Payments Industry</a></li><li><a href="http://read.bi/pay4">Mobile Payment Market, Trends and Adoption</a></li><li><a href="http://read.bi/pay5">Credit Card Processing Industry</a></li><li><a href="http://read.bi/pay6">List of Credit Card Processing Companies</a></li><li><a href="http://read.bi/pay7">List of Credit Card Processing Networks</a></li><li><a href="http://read.bi/pay8">List of Payment Gateway Providers</a></li><li><a href="http://read.bi/pay9">M-Commerce: Mobile Shopping Trends</a></li><li><a href="http://read.bi/pay10">E-Commerce Payment Technologies and Trends</a></li></ul></p></div></p>

Cryptocurrencies vs. the IRS

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Currency Cloud</span></p><p class="caption">Currency Cloud CEO Mike Laven.</p></div><p></p></div></div>Fintech - or financial technology - is one of the hottest areas of technology right now, with money pouring into the sector, startups springing up all over the place, and plenty of column inches devoted to the phenomenon.</p><p>Investors and founders hope that technology can help them revolutionise everything from lending and payments to bond trading, letting them do things faster, better, and cheaper than big banks have traditionally.</p><p>Even Barclays' former CEO Antony Jenkins is on board, <a href="http://uk.businessinsider.com/ex-barclays-boss-anthony-jenkins-on-fintech-and-bankings-uber-moment-2015-11">saying recently that disruption to traditional financial services from fintech startups could lead to an "Uber moment" for banks</a>.</p><p>But at the Fintech Connect Live conference in London on Tuesday, <a href="http://uk.businessinsider.com/currency-cloud-raises-18-million-sapphire-ventures-rakuten-2015-6">Currency Cloud CEO Mike Laven</a> voiced an uncomfortable truth about the sector - it's still a relatively niche concern.</p><p>Asked about how well fintech is doing right now, Laven, whose business is a cloud-based payments platform, told the crowd:</p><p style="padding-left: 30px;">You have to differentiate between mind share and market share. You can add up a lot of the market share of these guys and it would be pretty small. But we've got a lot of mind share with all the press coverage and conferences.</p><p>Laven's point is that the fintech sector is still a minnow swimming in the ocean of financial services, it just appears bigger because of all the hype. Laven joked that if you can't eat out at least once a week at some sort of fintech conference or event, your company isn't doing well.</p><h2>The 'Level39 bubble'</h2><p>On another panel Julian Cork, COO of peer-to-peer buy-to-let mortgage platform Landbay, called the problem the "Level39 bubble" - referring to <a href="http://uk.businessinsider.com/the-15-most-exciting-fintech-startups-in-level39-2015-7">the fintech hub set up in Canary Wharf</a>.</p><p>Within this bubble, the narrative is that plucky startups are on course to beat the banks by offering consumers a better deal. There's a lot of back slapping and navel gazing.</p><p>But the truth is most people in Britain still rely on traditional banks and established financial service players.</p><p>Laven said: "<span>I am not one who believes that if we close our eyes and wish really hard, the banks will go away. They'll still be here 20 years from now.</span></p><p><span>"The only question is how well institutions will respond - can they get there? Banks really have to fear smarter banks, because some will get it and some won't."</span></p><p><span>Banks have to fear banks - not fintech startups. </span>Not only is this bruising to the fintech's ego, it also presents a serious problem for the legion of startups springing up.</p><p>Consumer-facing businesses like payments, peer-to-peer lending, and crowdfunding - three of the hottest areas for fintech startups in the <keyword id="6354868" type="COUNTRY" weightage="60" keywordseo="UK">UK</keyword> - depend on ordinary people using them for growth. Awareness and uptake of fintech and alternative finance is crucial.</p><p><a href="http://uk.businessinsider.com/liberums-cormac-leech-on-online-direct-lending-2015-10">A great slide deck on the online lending industry from Cormac Leech</a>, an analyst with investment bank Liberum, highlights the problem many fintech startups have. Leech focuses on peer-to-peer lenders but there's plenty of read across to any other consumer facing business.</p><p>Less than 45% of people in the UK have heard about peer-to-peer and only around 15% would consider lending using it, according to Liberum - far from mainstream. </p><p>Those figures are also pretty flat, Leech says, suggesting that most of the explosive growth in peer-to-peer lending in the UK has come from early adopters increasing the amount they lend over these platforms, not more people signing up.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Liberum</span></p></div><p></p></div></div>Many big platforms are now turning to institutional investors to get cash to fuel their growth, a subtle change to their original proposition. And at the smaller end of the market, <a href="http://uk.businessinsider.com/bovill-says-26-of-p2p-lenders-applying-for-fca-authorisation-have-pulled-the-plug-2015-10">some platforms are simply throwing in the towel</a>.</p><p>In payments, meanwhile, <a href="http://uk.businessinsider.com/transferwise-passes-500-million-monthly-transfers-rival-smallworldfs-warning-money-transfer-2015-6">TransferWise has around 2% of the UK international money transfer market</a>, sending £500 million a month over its platform. That's no mean feat for a four-year-old business.</p><p>But Nick Day, CEO of money transfer business SmallWorldFS, <a href="http://uk.businessinsider.com/transferwise-passes-500-million-monthly-transfers-rival-smallworldfs-warning-money-transfer-2015-6">made the point to me back in June</a> that it's still nowhere near the size of a Western Union or MoneyGram. He told me: "They put out PR about how they grew 200% last year, but it's from peanuts to 3x peanuts."</p><h2>'M<span>indshare changes consumer demand'</span></h2><p>So why do journalists like me wastes so much oxygen on fintech? The main reason is the money going into the sector.</p><p><a href="http://uk.businessinsider.com/william-garrity-associates-global-fintech-heat-map-2015-9">$50 billion has been pumped into fintech startups around the world over the last 5 years</a>, with the amount growing every year. In the UK alone $5.4 billion has been invested between 2010 and 2015.</p><p>These VC backers are betting that fintech will be a game changer, either revolutionising systems within banks or heralding a huge shift in consumer behaviour. They may not be a Facebook or Google today, but one day they might be.</p><p>The worry for fintech startups though is that banks and existing financial service providers also see this changing wind and adopt their own in-house solutions to head off the challenge from plucky fintech startups.</p><p><div class="KonaFilter image-container display-table float_right click-to-enlarge"><div><div class="image"><a title_source="BI Intelligence" title_caption="Big players like Western Union are investing in digital - and it's paying off." class="zoomin" href="https://static-ssl.businessinsider.com/image/5668000bdd0895965d8b4669-960/unnamed.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>BI Intelligence</span></p><p class="caption">Big players like Western Union are investing in digital - and it's paying off.</p></div><p></p></div></div>There are already plenty of examples of this: <a href="http://uk.businessinsider.com/5-banks-join-r3-blockchain-banking-project-team-unveiled-2015-11">around 30 banks are exploring potential uses for the blockchain</a>, the software behind bitcoin; <a href="http://www.lendacademy.com/goldman-sachs-is-entering-p2p-lending-first-bank-to-launch-a-platform/">Goldman Sachs is launching its own peer-to-peer lending platform</a>; and investment in digital from Western Union boosted its online revenues by 28% in the third quarter, compared to just 3% growth for revenues overall.</p><p>Laven said: "What you'll see is that mind share changes consumer demand and prices will go down and transparency will increase."</p><p>So where does that leave all the startups? The Funding Circles and TransferWises of the world are likely to be big successes - they've got everything going for them right now. But there's a huge number of fintech companies lower down the food chain who will struggle to make it work and may not really understand just what they're getting into.</p><p>There are over 70 fintech startups exhibiting at Fintech Connect Live this week. It will be interesting to see how many make it to next year.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/frank-perkins-hixon-jr-insider-trading-story-investment-banker-mistress-child-2015-11">How a successful investment banker used insider information to bankroll his mistress and child</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="I3cGV5eDpNp-um-fuwDxzHgv3f6qYrGH" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

You Searched For "fintech sector" and got 13 results

RBI releases draft framework for Fintech sector self-regulatory organisations

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European fintech faces an 'existential crisis' as funding has dropped 'from surplus to scarcity,' McKinsey report says

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As investments fall sharply in the fintech sector, Asia becomes the new silver lining

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Removed Angel Tax, taking policy measures to promote fintech sector: PM Modi

PTI

Fintech businesses in the UK raised $901 million in 2015 - but the wind is changing

Oscar Williams-Grut,Sam Shead

RBI Governor asks fintech players to form self regulatory organisation

PTI

It's going to be 'a critical year' for one of the hottest areas in tech

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You Searched For "fintech sector" and got 13 results

RBI releases draft framework for Fintech sector self-regulatory organisations

IANS

European fintech faces an 'existential crisis' as funding has dropped 'from surplus to scarcity,' McKinsey report says

Shalini Nagarajan

Fintech sector spreading its wings in India, attracting talents from across industries

BI India Bureau

Fintech SRO aims to enhance credibility of sector, promote ethical conduct

Anagh Pal

As investments fall sharply in the fintech sector, Asia becomes the new silver lining

BI India Bureau

Removed Angel Tax, taking policy measures to promote fintech sector: PM Modi

PTI

Fintech businesses in the UK raised $901 million in 2015 - but the wind is changing

Oscar Williams-Grut,Sam Shead

RBI Governor asks fintech players to form self regulatory organisation

PTI

It's going to be 'a critical year' for one of the hottest areas in tech

Matt Turner

The &#163;4.8 billion float of the year is a pivotal moment for fintech in London

Oscar Williams-Grut

XERO CEO: London's fintech scene is 'world class' and will stay that way post-Brexit

Oscar Williams-Grut

Cryptocurrencies vs. the IRS

BI Intelligence

'Banks really have to fear smarter banks' - this CEO nails the dirty secret about fintech startups

Oscar Williams-Grut

Popular Keywords

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The £4.8 billion float of the year is a pivotal moment for fintech in London