Banking has had more than its fair share of scandals recently, but fintech start-ups are clearly fallible too, writes Lionel Laurent
Banking has had more than its fair share of scandals recently, but fintech start-ups are clearly fallible tooThe spectacular blowup of German fintech darling Wirecard, which has seen $12bn wiped off its market value in three days, is making some old-school bankers feel good about themselves.
It’s also tempting to argue Wirecard isn’t emblematic of fintech anyway. Industry insiders say they’ve long been confused about the mismatch between the German firm’s DAX blue-chip status and its lack of presence on the ground bidding for clients. Wirecard’s bombshell revelation of a $2bn hole in its bank account has little to do with technology and potentially a lot to do with dodgy accounting, as a series of Financial Times articles over the past year had already pointed out.
This isn’t to say that all fintech firms are somehow on a slippery slope leading to a $2bn cash hole. But start-ups are incentivised to focus on growth rather than compliance At a press conference on Tuesday he actually said Wirecard was a “technology” firm as opposed to a financial one directly supervised by his institution. Wirecard says it has a full German banking licence. It’s a revealing slip of the tongue considering what went wrong on his watch.
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