Effect of Wirecard on Global Cross-Border Payment Industry

In a surprising turn of events, European fintech giant Revolut has sought help from banks Barclays and HSBC, following the bankruptcy and temporary freeze of UK assets belonging to Wirecard, a German fintech company once worth over $20bn.

Wirecard's downfall, which is not related to the Covid-19 pandemic, has raised questions about trust in fintechs and the potential need for increased regulation. The company, which was listed in Germany's prestigious DAX30 market, has been under scrutiny for years due to allegations about its activities, with The Financial Times reporting on these concerns for a significant period.

The collapse of Wirecard has also brought into question its role as a bank behind various fintech companies, including Payoneer, Curve, and Revolut. It is a criminal matter, and questions are being raised about its business practices.

Despite these challenges, Revolut has recently secured over $500m in funding, reaching a valuation of $5.5bn. The fintech company's representative, Daniel Webber, made statements on LinkedIn regarding the situation, expressing confidence in the company's resilience.

The collapse of Wirecard also highlights the importance of regulatory oversight. While regulators such as the UK's FCA and Singapore's MAS have been supportive of fintech growth, there are calls for more oversight and potential limitations on freedoms to prevent similar incidents in the future.

Fintechs, like Revolut, bring new products to market, increase competition, and generally benefit the end customer. They offer faster, more efficient, and often more affordable services compared to traditional banks. However, incidents like Wirecard's collapse underscore the need for transparency and accountability in the fintech sector.

As the situation unfolds, it is crucial to maintain trust in the fintech industry, ensuring that it continues to innovate and provide valuable services to consumers while adhering to the highest standards of financial integrity.