FinTech Futures: Top five stories of the week – 27 January 2023
Here’s our pick of five of the top news stories from the world of finance and tech this week.
US crypto lender Genesis files for Chapter 11 bankruptcy protection
Genesis commences voluntary Chapter 11 restructuring of lending business
US-based cryptocurrency firm Genesis has filed for bankruptcy protection as it looks to restructure its lending business.
In a statement, the firm says: “Genesis Global Holdco, LLC (GGH) and two of its lending business subsidiaries, Genesis Global Capital, LLC (GGC) and Genesis Asia Pacific Pte. Ltd. (GAP), filed voluntary petitions under Chapter 11 of the US Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York”.
It adds that its other subsidiaries “involved in the derivatives and spot trading and custody businesses and Genesis Global Trading are not included in the filing and continue client trading operations”.
Capital One lays off 1,100 tech staff
US financial services giant Capital One has cut 1,100 technology jobs as the firm looks to get rid of its “Agile job family”, according to media reports.
Reuters reports that the company is planning to integrate the now axed department’s responsibilities into existing engineering and product manager roles, with impacted employees invited to apply for other positions at the firm.
In a statement, a Capital One spokesperson says: “The Agile role in our tech organisation was critical to our earlier transformation phases but as our organisation matured, the natural next step is to integrate Agile delivery processes directly into our core engineering practices.”
Several major US banks reportedly team up on new digital wallet project
A number of US banks are reportedly partnering on the digital wallet project
A number of US banking heavyweights are reportedly teaming up to offer a digital consumer e-wallet in order to grab market share from tech titans Apple and PayPal.
Wells Fargo, Bank of America, JP Morgan Chase and four other banks are working on the e-wallet that links up with consumers’ debit and credit cards, The Wall Street Journal reports, for use in e-commerce transactions.
The WSJ reports that banks are worried about losing control of customer relationships and have Apple firmly in their sights. The tech giant has slowly but steadily made inroads into financial services in recent years, with a savings account product in the pipeline with Goldman Sachs.
JP Morgan Chase, Bank of America, Wells Fargo, US Bank, PNC, Truist and Capital One are also reportedly looking to tackle fraud with the new venture. The e-wallet would do away with the need to type in card numbers, which can raise the risk of fraud and rejected payments.
PayPal faces antitrust investigation in Germany
Germany’s Federal Cartel Office, the Bundeskartellamt, has initiated proceedings against PayPal regarding what the regulator refers to as “practices possibly foreclosing competitors and restricting price competition”.
The Bundeskartellamt’s action is concerned with PayPal’s terms and conditions, which the regulator claims prevent merchants from offering goods or services at lower prices if customers choose a payment method that is cheaper than PayPal.
Additionally, sellers are “not allowed to express a preference for payment methods other than PayPal or, for example, make their use more convenient for customers”, the regulator says.
The Bundeskartellamt claims these terms may make it “more difficult” for other payment methods to “compete successfully” with PayPal or to enter the market in the first place.
Commerzbank files lawsuit against EY over €200m Wirecard losses
EY faces Commerzbank suit over Wirecard losses
German banking group Commerzbank is suing accounting and consultancy firm EY over the €200 million in losses it incurred through the collapse of paytech Wirecard.
Former fintech darling Wirecard imploded in 2020, filing for insolvency after disclosing a €1.9 billion hole in its accounts.
Its collapse came after EY, its auditor for more than a decade, refused to sign off its 2019 accounts, forcing out chief executive Markus Braun and leading Wirecard to admit that €1.9 billion of its cash probably didn’t exist. It ended up owing creditors almost $4 billion.
Commerzbank has now filed a suit against EY in Frankfurt court, Reuters reports, with the bank’s complaint said to be one of a number against EY regarding Wirecard.
