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Fintech threat to big banks disappears in 2022 as rates rise – report

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By Hannah Lang

(Reuters) – Competitive threat from fintech firms to big banks grows over time Weakened over the past year, as rising interest rates constrain funding, Moody’s (NYSE: A new report MCO) Find Investor Services.

A venture capital fund is reduced in 52 particularly hurts fintech firms that rely on outside capital to fund their operations and acquire customers, Moody’s analysts wrote in a Wednesday note.

The report cites data from CB Insights showing a decline in global fintech funding % from50 arrive10.

Traditional banks, which have long benefited from well-known brands and customer relationships, have received steady deposit funding over the past year, making them better than many Fintech companies have an edge, Moody’s said.

Moody’s said banks had long recognized that technology could disrupt business models and allowed technology groups to enter the banking sector. “They have been aggressively defending against such risks through increased technology spending or through partnerships.”

According to Moody’s, fintech companies Typically face more regulatory hurdles than banks and may have encountered new requirements in some jurisdictions in recent years. For example, in Australia 2021renew It has established a national licensing framework for new depository institutions and is considering how to strengthen supervision of consumer credit.

“As has happened in previous market cycles, it is likely that a large number of emerging fintech companies with weak business models will disappear, and a few will survive down and prove to be really disruptive over time,” Moody said. 100



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