Connect with us
Prague Gaming & TECH Summit 2025 (25-26 March)

Fintech

22NW Prevails Against Complaints by DIRTT’s Board

Published

3 years ago

on

Seattle, Washington–(Newsfile Corp. – March 4, 2022) – 22NW Fund, LP (“22NW” or “we“) today provided an update on its efforts to bring change to DIRTT Environmental Solutions Ltd. (“DIRTT“). On November 16, 2021, 22NW, the largest shareholder of DIRTT, holding almost 19% of DIRTT’s outstanding shares, requisitioned a special meeting of the shareholders of DIRTT (the “Requisition“) to remove six of the current members of the board of directors of DIRTT (the “Board“) and replace them with six highly-qualified individuals.

22NW Prevails Against the Board Before the Alberta Securities Commission

On January 20, 2022, the Board brought an application (the “Application“) before the Alberta Securities Commission (the “ASC“) seeking various orders against 22NW, another major DIRTT shareholder and certain of their principals. 22NW believes that the Board filed the Application and made various related complaints against it to the ASC as a tactic to entrench itself against the Requisition, damage the business reputations of 22NW and its principals and avoid accountability to DIRTT’s shareholders.

We are pleased to announce that today the ASC has dismissed all claims brought against 22NW by the Board. In dismissing the Application, the ASC stated in oral reasons that it was “dismayed” that the Application had been brought in the first place, and that it was “ill conceived” and an “imprudent use” of DIRTT’s resources.

On November 26, 2021, within nine days of the delivery of the Requisition, 22NW’s Canadian counsel received a letter from DIRTT’s counsel accusing 22NW and another major DIRTT shareholder of a variety of alleged breaches of Canadian securities laws. On December 8, 2021, and again on December 31, 2021, the Board complained to staff of the ASC (“ASC Staff“) about 22NW and another major DIRTT shareholder. On January 20, 2022, the Board filed the Application with the ASC.

22NW believes that the Board has taken steps to confuse the market with its misleading public disclosures concerning the Application. DIRTT’s shareholders deserve to know the truth:

  • Since Aron English’s initial meeting in September 2021 with Kevin O’Meara and Todd Lillibridge to discuss Mr. English’s potential membership on the Board, the Board has pursued a series of apparent delay tactics specifically designed to deny 22NW’s reasonable request, while insisting on a burdensome candidate review process for 22NW’s board candidates that was not applied to any of the other recently added Board members. Only during the Application process did 22NW learn that the Board was apparently preparing its entrenchment strategy before it even met with Mr. English for the first time to discuss his potential membership on the Board. We were disappointed to learn this, given that 22NW had previously sought to engage with the Board in a constructive and friendly manner, until 22NW felt it had no choice but to deliver the Requisition.
  • 22NW had additional calls with the Board in October and November of 2021 to discuss Mr. English’s potential membership on the Board, which we believe is a reasonable request for a shareholder that owns nearly a fifth of DIRTT’s outstanding shares. However, the Board continued to make excuses and deny 22NW’s request for shareholder representation on the Board during this time. DIRTT then reported exceptionally weak 2021 Q3 results and pursued what we view as an unnecessary dilutive offering, not to mention its second dilutive offering within 12 months. It then became clear to 22NW that the Board was seeking to avoid accountability during a period of alarmingly poor operating results, necessitating immediate shareholder representation on the Board.
  • On November 5, 2021, Mr. Lillibridge and Denise Karkainnen called Mr. English and once again declined to add him to the Board. Mr. English stated that 22NW would requisition a special meeting and replace a majority of the Board if 22NW and the Board could not quickly come to a negotiated arrangement that would provide for immediate shareholder representation on the Board. In our view, the Board had ample notice and warning of the actions 22NW intended to take and the Board’s own intransigence and desire for avoiding accountability to shareholders forced 22NW to make the Requisition when it became clear an amicable arrangement could not be reached.
  • We believe that the proper course of action for a board of directors in the Board’s situation would have been to attempt to settle the matter with its largest shareholder to avoid an expensive and unnecessary distraction. To 22NW’s surprise, the Board never attempted to settle with 22NW and in fact did not even contact 22NW’s representatives after the Requisition was delivered to DIRTT. Instead, the Board “conducted extensive interviews” and determined within just nine days of receipt of the Requisition to pursue an apparent entrenchment strategy through its complaints to ASC Staff and ultimately the ASC. In fact, once the Application process began, it became clear that the Board had no substantive evidentiary justification for making the Application and it was filed for tactical reasons. 22NW estimates that the Board’s decision to pursue this entrenchment strategy has cost DIRTT hundreds of thousands of dollars in unnecessary legal fees, if not more.
  • We did not understand why the Board refused to even entertain a settlement with us until we learned that the Special Committee of the Board formed to evaluate the Requisition was exclusively composed of Board members that 22NW sought to replace through the Requisition. Unsurprisingly, within mere days of the Special Committee’s formation, its four members, Mr. Lillibridge, Ms. Karkainnen, Shauna King and Diana Rhoten, who have no public investing experience between them, instead wrongly concluded that 22NW was acting jointly with another shareholder and caused DIRTT to send 22NW a letter threatening it with various alleged violations of Canadian securities laws. Mr. Lillibridge and Ms. Karkainnen, it should be remembered, were involved in the initial discussions with Mr. English regarding his potential appointment to the Board, representing two of the three members of the Board’s Nomination and Governance Committee.
  • On December 9, 2021, 22NW delivered a proposed settlement term sheet to the Board that we believe was materially more favorable to the Board than the reconstitution of the Board put forward in the Requisition, seeking the removal of Mr. Lillibridge, Ms. Karkainnen and Steven Parry. 22NW’s settlement proposal was summarily ignored, while at the same time the Board made no counter proposal. Instead, the Board issued a series of press releases that in our view were misleading and highly inflammatory about 22NW and its principals.
  • In January 2022, the Board contacted 22NW to initiate potential settlement discussions. 22NW responded by saying that it would agree to have discussions provided the Board ceased its complaints to regulators about 22NW. The Board refused and submitted the Application shortly thereafter.
  • More troubling than this history of unconstructive and distracting dealings with 22NW is the apparent damage the Board is inflicting upon DIRTT and its shareholders as a result of its entrenchment strategy. On January 7, 2022, 22NW filed its definitive proxy statement with the U.S. Securities and Exchange Commission (the “SEC“) and on January 14, 2022, 22NW delivered to the Board non-binding indications of support from 22NW shareholders who 22NW believed totaled over 50% of DIRTT’s outstanding shares.[1] In what 22NW believes was a direct response to the receipt of this evidentiary support for 22NW, the Board terminated Mr. O’Meara as Chief Executive Officer and replaced him with Mr. Lillibridge, who was granted a generous compensation package. Remarkably, the Board’s Compensation Committee approved a one-time RSU grant of 230,414 DIRTT shares and about $42,000 worth of RSUs per month to Mr. Lillibridge. Two days later, the Board filed the Application.
  • Notably during the Application process, Mr. O’Meara did not sign an affidavit or provide testimony, nor did Geoff Krause, DIRTT’s current Chief Financial Officer.
  • In fact, the Board’s primary evidence supporting the Application came from Mr. Lillibridge, with whom Mr. English had only met once and had only spoken to a handful of times in October and November related to 22NW’s request for Mr. English’s appointment to the Board. Remarkably, during the Application proceedings, Mr. Lillibridge admitted that he was not present for most of the discussions referenced in his affidavit and that he had no direct knowledge of many of the claims the Board put forth as evidence for the Application. Furthermore, neither Mr. Lillibridge nor Kim MacEachern, DIRTT’s head of investor relations and the only other person who provided an affidavit in support of DIRTT’s claims during the Application process, ever expressed concerns about the actions or ownership disclosures of 22NW prior to delivery of the Requisition.
  • Despite the Board’s entrenching tactic of repeatedly refusing to provide 22NW with a list of beneficial US shareholders, 22NW believes it has the overwhelming support of a majority of DIRTT’s shareholders. In its press release dated January 20, 2022, and during the Application process, the Board has tried in unconvincing ways to undermine and diminish the supportive indications of interest already delivered to 22NW, clearly missing the broader point that DIRTT’s shareholders have expressed a clear desire for change.
  • The Board seems to have taken the position that any shareholder who is unsupportive of the Board is engaging in a conspiracy if that shareholder communicates its views with other shareholders. 22NW believes that the reality of the situation is that DIRTT’s shareholders have lost confidence in the Board. 22NW has dealt with this reality by seeking to force accountability on the Board through the Requisition.
  • Instead of waiting until the ASC ruled on the Application and being open and transparent about these proceedings with its shareholders, the Board has filed a preliminary proxy statement with the SEC that contained numerous misrepresentations and omissions regarding 22NW and the Application process that appear calculated to damage 22NW and the reputation of its principals.

It is now abundantly clear to 22NW that the Board has little regard for working constructively with its shareholders, has wasted hundreds of thousands of dollars (possibly more), damaged DIRTT and its shareholders at a critical time, attempted to damage the business reputations of its largest shareholders and taken a number of steps to entrench itself.

The Track Record of the Board is Abysmal

The Board has communicated to the market that it has a “well-defined strategic plan” to address DIRTT’s core issues, which now includes identifying a replacement for Mr. O’Meara, who was terminated in the middle of 22NW’s campaign to reconstitute the Board.

We wonder how the Board measures success, because by many objective measures we believe the Board’s tenure has been a clear failure. Below are some key facts we use to measure the Board’s success, and why we have no faith in the Board to, in its own words, “Do It Right This Time”:

  • Mr. Lillibridge, Ms. Karkainnen and Mr. Parry were added to the Board in August 2017, August 2015 and December 2011, respectively. Since being added to the Board, DIRTT’s stock price has returned -58.0%, -57.5%, and -14.9%, respectively, significantly underperforming its publicly traded peer group.[2]
  • We believe Mr. Lillibridge, Ms. Karkainnen and Mr. Parry were primarily responsible for DIRTT cycling through four different Chief Executive Officers in about four years. Over the same period, these same individuals have been on the Board while it has received requisitions for special meetings from at least two different, frustrated shareholders.
  • Mr. Lillibridge and Ms. Karkainnen were both members of the three-member Board Compensation Committee (the “Compensation Committee“) in 2018, 2019, 2020 and for part of 2021. Both were responsible for hiring Mr. O’Meara, establishing his compensation terms and working with him to establish the previous strategic plan. In 2020 and 2021, Mr. O’Meara received 2.5x and at least 3.0x his base salary in additional compensation, suggesting his performance was exceeding the measurements of success set by the Compensation Committee. Curiously, Mr. O’Meara’s performance only became an issue to the Board after the Requisition was delivered to DIRTT, and Mr. O’Meara was terminated as Chief Executive Officer just two days before the Board filed the Application. Approximately two weeks later, DIRTT reported operating results in line with Mr. O’Meara’s guidance. It is an astounding omission for the Board to suggest that it terminated Mr. O’Meara’s employment over performance related concerns within weeks of paying Mr. O’Meara a large incentive bonus, when the timeline indicates that the Board fired Mr. O’Meara immediately after receiving written confirmation that 22NW had obtained executed non-binding indications of support from holders who we believe hold over 50% of DIRTT’s outstanding shares.
  • We believe the current “board refresh” the Board refers to is less of a strategic decision and more of a necessity in the face of widespread shareholder discontent. 22NW believes that the gaps being filled on the Board were caused primarily by the mismanagement of the three legacy members, Mr. Lillibridge, Ms. Karkainnen and Mr. Parry. Mr. Lillibridge’s “expertise” in the healthcare sector is frequently cited by the Board in granting him his initial board seat, appointing him chairman of the Board and appointing him as interim Chief Executive Officer. We believe his “expertise” has not translated into success for DIRTT. Since Mr. Lillibridge was added to the Board in 2017 Q3, DIRTT’s total revenues have declined approximately 36%.[3] Over the same period, DIRTT’s net income declined from CAD$4 million to about negative CAD$20 million and DIRTT’s health care revenues declined 68%.[4] Given the incredibly large opportunity within the broader market and the healthcare industry, we are shocked at Mr. Lillibridge’s inability to successfully generate value at DIRTT. We believe that he should not be given another opportunity to form a new plan to correct his historical shortfalls and that he is wholly-unqualified to serve as DIRTT’s interim Chief Executive Officer.

We also believe it is obvious that Mr. Lillibridge, Ms. Karkainnen and Mr. Parry, along with the rest of the Board, have no tangible record of success at DIRTT.

Correcting Misrepresentations by the Board

Advertisement

In our view, the Board has made several misrepresentations about 22NW, its intentions and actions. To be clear:

  • 22NW has no intention to take DIRTT “private.” 22NW has never acquired any of its portfolio companies and does not intend to do so here.
  • The ASC has clearly rejected the Board’s allegation that 22NW acted jointly or in concert with other DIRTT shareholders. Its public filings regarding DIRTT have been made in good faith and in compliance with applicable securities laws.
  • The Board’s description of events surrounding DIRTT’s recent convertible debenture issuance relating to 22NW in its preliminary proxy statement are highly misleading and factually incorrect. 22NW had no knowledge of this financing, and merely assumed a dilutive capital raise was imminent after speaking with DIRTT’s management and simply conveyed its opposition to any dilutive financing.

22NW Will Ensure that the Board is Held Accountable

22NW fully intends to pursue all actions and reserves all rights with respect to the Requisition. Further, it intends to continue to solicit shareholders for the election of its director candidates at the upcoming annual and special meeting, in an effort to reconstitute the Board. 22NW demands that the Board discontinue its harmful actions and not pursue any additional delay tactics or unnecessary wasteful expenditures.

22NW is extremely frustrated how the Board, which collectively owns less than 1.0% of DIRTT’s outstanding shares, chose to handle the Requisition. 22NW believes that the Board has acted in bad faith and been inexcusably careless in carrying out its responsibilities, as illustrated by the hasty decision to replace Mr. O’Meara.

Should the Board attempt to change the meeting date from April 26th or further harm shareholders or 22NW in any way, 22NW intends to take immediate legal action.

Finally, 22NW wants to express its support for DIRTT’s employees, distribution partners and customers. 22NW is committed to bringing positive change to DIRTT.

FOR MORE INFORMATION

For further information or to receive a copy of the report filed in connection with this press release, please see DIRTT’s profile on the SEDAR website (http://www.sedar.com) and its US proxy materials that are available at no charge on the SEC’s website (http://www.sec.gov), or contact Aron English at 206-227-3078 or [email protected].

[1] In its preliminary proxy statement filed with the SEC on February 25, 2022, the Company has disclosed that the record date for the annual and special meeting of shareholders will be March 7, 2022 (the “Record Date“). As the Record Date has not yet occurred and the Company has not yet disclosed the number of shares outstanding as of the Record Date, we cannot verify the exact percentage of support received.

[2] Measured using TSX: DRT and Capital IQ as the data source. Measurement period includes the last day of the month each director was added through February 28, 2022. Calculation for Mr. Parry using 11/29/2013 as the first measurement day. The peer group was defined as the S&P 600 Building Products Index, which returned +106%, +168% and +219% over the course of Mr. Lillibridge’s, Ms. Karkainnen’s and Mr. Parry’s tenures, respectively.

[3] Per DIRTT’s public filings, assuming a currency conversion rate of 1.25 CAD for 1 USD.

Advertisement

[4] Ibid.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/115728

Related Topics:
Continue Reading
Advertisement

Fintech

Fintech Pulse: Your Daily Industry Brief – Breaking Trends and Insights in Fintech

Published

4 days ago

on

October 31, 2024

By

fintech-pulse:-your-daily-industry-brief-–-breaking-trends-and-insights-in-fintech

 

In the fast-paced world of financial technology, shifts occur daily as companies strive for innovation, customer satisfaction, and enhanced market reach. Today’s briefing covers a spectrum of developments, from Visa Direct’s groundbreaking integration in Korea to challenges plaguing the app economy. We’ll also touch on recent acquisitions, strategic partnerships, and expansions in fintech ecosystems. Here’s what you need to know about today’s most pressing fintech trends.

Visa Direct’s Milestone in South Korea: SentBe’s Card Transfer Service Launch

South Korea’s fintech ecosystem has taken a notable leap forward with SentBe’s implementation of Visa Direct’s Card Transfer Service. This collaboration marks a milestone, positioning SentBe as the first Korean fintech company to offer card-to-card international money transfers, a feature in high demand given the rise in cross-border financial activities. Visa Direct’s real-time card-to-card transfers are a potential game-changer for consumers and businesses alike, facilitating faster and more secure global transactions.

The collaboration exemplifies Visa’s larger strategy of partnering with regional fintech players to broaden its influence across Asia’s dynamic fintech markets. By tapping into SentBe’s growing customer base and extensive user insights, Visa is embedding itself deeper into local markets, simultaneously offering Korean users a more streamlined and efficient money transfer experience.

The service’s design allows individuals and small businesses alike to benefit from quicker transaction processing times, marking a significant evolution from traditional remittance processes that rely on intermediary banks. The move is especially critical in a digital age where customer expectations lean heavily towards instant, seamless financial interactions.

Source: Electronic Payments International

Fintech App ‘Trap’ Enrages Consumers Struggling to Cancel Subscriptions

In the modern subscription-based economy, some fintech companies are facing backlash over what customers perceive as the ‘trap’ of endlessly renewable subscriptions that are nearly impossible to cancel. A recent expose revealed mounting frustrations among consumers who signed up for digital services but later found themselves locked into subscriptions they could not easily terminate. The piece highlights the darker side of user retention strategies deployed by some companies to mitigate churn by making cancellation processes intentionally convoluted.

The app-based economy relies on recurring revenue, which remains a vital lifeline for startups and established firms alike. However, industry insiders argue that lack of transparency and difficult cancellation processes have an adverse impact on customer trust, leading to a growing dissatisfaction that may ultimately backfire on these companies. As consumers grow more savvy, fintechs relying on these practices could risk higher attrition rates, regulatory scrutiny, and brand erosion.

This emerging issue has raised questions about ethical standards and customer-centric models in fintech. As competition intensifies, companies must balance growth with transparent practices that foster customer loyalty, rather than coercion.

Advertisement

Source: Forbes

Pinwheel and Terafina Partner to Streamline Omnichannel Customer Onboarding

Pinwheel, a fintech infrastructure company known for its payroll and income data connectivity solutions, recently announced a partnership with Terafina, a leader in omnichannel sales and service platforms for financial institutions. This collaboration aims to simplify and enhance the onboarding process for new customers, providing them with seamless experiences across multiple channels, whether online, mobile, or in-branch.

The partnership combines Pinwheel’s data integration capabilities with Terafina’s expertise in customer onboarding, allowing financial institutions to create more personalized and flexible account opening processes. With consumer expectations evolving towards instant service and mobile-first access, this integration empowers banks and credit unions to meet these needs by delivering cohesive and smooth digital onboarding journeys.

In an industry where customer acquisition and retention are increasingly dependent on first impressions, the significance of streamlined onboarding cannot be overstated. By improving access to real-time employment and income data, this partnership enhances user verification and compliance while also allowing institutions to better assess applicants’ creditworthiness, which is crucial in today’s lending environment.

Source: PR Newswire

nCino Acquires FullCircl in $135 Million Deal: Expanding the Scope of Relationship Management

Fintech giant nCino recently completed its acquisition of FullCircl, a move that underscores its ambition to broaden its reach in the financial services sector. FullCircl, known for its focus on customer relationship management (CRM) solutions tailored to financial institutions, brings a robust set of tools that will allow nCino to enhance its cloud-based banking platform. The acquisition, valued at $135 million, positions nCino as a stronger player in the relationship management space, especially crucial for institutions looking to build deep, long-term client relationships.

With this acquisition, nCino aims to expand its footprint in Europe and boost its offerings in the CRM space, providing banks and credit unions with innovative tools for client engagement and retention. The integration of FullCircl’s CRM capabilities will also support nCino’s existing portfolio, which includes loan origination and digital banking solutions, strengthening its position as a one-stop platform for financial institutions.

This acquisition is part of a growing trend of consolidation in the fintech sector, where larger firms acquire specialized players to fill critical service gaps and offer more comprehensive solutions. By building a holistic platform that spans multiple functionalities, nCino is better equipped to compete in the increasingly crowded digital banking software market.

Source: The Paypers

DriveWealth’s European Expansion: A Strategic Base in Lithuania

DriveWealth, a digital brokerage technology firm, has chosen Lithuania as the launchpad for its European operations. By establishing a base within Lithuania’s burgeoning fintech hub, DriveWealth is strategically positioning itself to tap into the European market, leveraging the country’s favorable regulatory environment and proximity to major EU economies.

Advertisement

The expansion is particularly significant given the increasing demand in Europe for retail investing platforms that provide accessible and affordable market entry. DriveWealth’s solutions enable digital brokers and financial platforms to offer customers fractional shares and real-time trading experiences, which have proven highly popular in markets like the U.S. This move aligns with DriveWealth’s long-term growth strategy and its commitment to democratizing access to investing across the globe.

Lithuania’s supportive regulatory framework and well-developed fintech infrastructure make it an ideal location for DriveWealth’s entry into Europe. The country’s fintech-friendly policies allow innovative financial service providers to set up and scale efficiently. DriveWealth’s presence in Lithuania not only adds to the growing cluster of fintech firms but also reinforces the country’s reputation as a rising fintech powerhouse within the EU.

Source: Finance Magnates

Key Takeaways and Strategic Insights

As seen from today’s top stories, several overarching themes shape the fintech landscape:

  1. Global Partnerships and Local Expansion: Visa’s collaboration with SentBe exemplifies how partnerships enable fintech firms to break into regional markets by addressing specific customer needs.
  2. Transparency in Subscription Models: The customer backlash against difficult-to-cancel fintech services raises concerns about the sustainability of current subscription models.
  3. Innovation in Customer Onboarding: Pinwheel and Terafina’s partnership highlights the importance of streamlined onboarding processes as a means to increase customer satisfaction and improve retention.
  4. Mergers and Acquisitions to Fill Service Gaps: nCino’s acquisition of FullCircl illustrates a broader trend of consolidation, where fintech companies acquire specialized players to broaden their product portfolios.
  5. Regional Hubs as Strategic Launch Pads: DriveWealth’s decision to establish a base in Lithuania underscores the importance of regional fintech hubs in providing a supportive environment for global expansion.

Today’s roundup underscores the adaptability of fintech companies as they navigate emerging challenges and opportunities. From addressing regional financial needs to innovating customer experience, fintech firms continue to redefine what it means to engage in modern finance. As the industry grows, so too does the necessity for ethical practices, robust infrastructure, and agile customer solutions. In this competitive environment, the companies that prioritize transparency, customer satisfaction, and strategic expansion will set the standard for the future of finance.

 

The post Fintech Pulse: Your Daily Industry Brief – Breaking Trends and Insights in Fintech appeared first on HIPTHER Alerts.

Continue Reading

Fintech

Fintech Pulse: A Snapshot of Global Expansion, Regulatory Moves, and Transformative Tech in Fintech

Published

6 days ago

on

October 30, 2024

By

fintech-pulse:-a-snapshot-of-global-expansion,-regulatory-moves,-and-transformative-tech-in-fintech

 

In today’s fast-paced fintech ecosystem, the global narrative is pivoting towards integration, regulation, and technological advancement as new entrants aim for U.S. markets, emerging startups seek growth capital, and financial giants align with innovative trends. Here’s a breakdown of recent developments that underline the dynamism in fintech and the paths to profitability and compliance as technologies reshape financial services globally.

Singapore’s MAS Advocates for a Borderless Fintech Network

The Monetary Authority of Singapore (MAS) recently emphasized the importance of cross-border collaboration in the global fintech ecosystem, with chairman Ravi Menon outlining a vision for a seamless fintech network. This network would transcend geographic and regulatory boundaries, allowing Singapore and its fintech entities to engage in mutually beneficial partnerships worldwide. Menon highlighted that Singapore’s strategic geographic position and regulatory environment make it a natural hub for fintech collaborations that advance financial inclusion and foster innovation.

This call for a borderless approach underscores the need for interoperability among financial systems globally, particularly as digital payments and decentralized finance become increasingly prevalent. Singapore’s initiatives signal that regions with supportive fintech policies can potentially drive new growth avenues in the digital economy.

Source: Channel News Asia

Thredd’s McCarthy to Fintech Entrants: Be Sponsor-Bank Ready for the U.S. Market

Fintech firms eyeing the U.S. market face a challenging regulatory landscape. John McCarthy of Thredd advises that those looking to enter the U.S. market should prioritize establishing sponsor-bank partnerships. The U.S. regulatory framework mandates that fintech companies collaborate with sponsor banks to access the financial system, making this step a critical milestone for fintechs aiming to operate stateside.

McCarthy’s guidance highlights an increasingly common barrier for fintech companies: navigating complex regulatory requirements to gain a foothold in the lucrative U.S. financial sector. For many, this means rethinking business models to comply with financial regulations, even as they innovate. This approach has led several fintech firms to secure sponsorship deals with established banks, enabling them to deliver compliant financial services to U.S. consumers.

Source: PYMNTS

Spidr Fintech Lands Funding to Drive Growth with Wells Fargo Backing

Spidr, a rising fintech star, has successfully raised capital, attracting the attention of Wells Fargo and other financial institutions. The fresh funding will fuel Spidr’s ambitious expansion plans, further positioning it as a formidable player in the fintech space. This backing from Wells Fargo represents a trend where major financial institutions are investing in or partnering with fintech startups to gain a competitive edge and meet evolving consumer expectations.

Advertisement

For Spidr, the capital injection aligns with a robust strategy for market penetration, and it’s an opportunity to leverage Wells Fargo’s extensive network and resources. Spidr’s latest round of funding signifies that traditional banks are increasingly open to collaborations with fintech entities, a trend that is reshaping the financial services landscape as banks seek to stay competitive in the digital age.

Source: Charlotte Business Journal

Elphinstone’s Trikl: Innovating Digital Payments in MENA

Elphinstone, a digital payments startup based in MENA, is introducing its innovative solution, Trikl, aimed at transforming payments across the region. The startup’s recent developments underscore its commitment to creating accessible and user-friendly payment systems tailored for the MENA market’s unique dynamics. By addressing specific needs such as currency exchange complexities and local payment preferences, Trikl is positioning itself as a key player in the digital payments landscape.

Trikl’s approach is particularly noteworthy as it caters to the MENA market’s diverse consumer base and taps into the region’s growing appetite for digital financial services. This development represents a promising advancement in digital payment solutions, fostering greater financial inclusion and enabling smoother transactions across borders in MENA.

Source: Menabytes

Hong Kong Sets Rules on Responsible AI to Get Ahead of Disruptive Tech

Hong Kong has unveiled regulatory guidelines on responsible AI use, a proactive move that places it among the leading jurisdictions in AI governance. This development signals Hong Kong’s recognition of the transformative impact of AI on financial services, as it sets clear boundaries on how AI can be used responsibly in financial applications. With AI continuing to disrupt financial services, responsible usage is becoming a priority, particularly in regions where financial systems are heavily reliant on technology.

These guidelines aim to balance innovation with accountability, addressing concerns over data privacy, ethical considerations, and risk management. Hong Kong’s stance on AI regulation reflects its commitment to safeguarding both consumers and financial institutions, setting a high standard for other regions to emulate in terms of regulatory foresight.

Source: South China Morning Post

 

 

Advertisement

The post Fintech Pulse: A Snapshot of Global Expansion, Regulatory Moves, and Transformative Tech in Fintech appeared first on HIPTHER Alerts.

Continue Reading

Fintech

Fintech Pulse: Today’s Key Industry Developments, Appointments, and Regulatory Challenges

Published

1 week ago

on

October 28, 2024

By

fintech-pulse:-today’s-key-industry-developments,-appointments,-and-regulatory-challenges

 

The Changing Landscape of Global Fintech

The financial technology (fintech) industry continues to evolve at a rapid pace, making headlines worldwide. Today’s briefing dives into transformative moves and strategic shifts within fintech companies across diverse geographies. From innovative alliances to prominent executive appointments and ambitious expansions into banking, the industry is positioning itself for a future that intertwines financial inclusivity, regulatory compliance, and customer-centric technology. Let’s unpack these developments.

XTransfer’s Hong Kong Fintech Week Entry: Scaling Financial Access in China

XTransfer, a Shanghai-based cross-border financial services firm, has joined the Hong Kong Fintech Week to showcase its solutions, marking a significant milestone in its journey to bridge financial gaps for small and medium-sized enterprises (SMEs) in China. Founded in 2017, XTransfer addresses common barriers faced by Chinese SMEs in accessing international financial networks due to regulatory complexities. The firm’s platform facilitates smoother cross-border transactions by helping businesses navigate regulatory and compliance challenges seamlessly.

The strategic choice to participate in Hong Kong Fintech Week highlights XTransfer’s commitment to strengthening connections within the Asian financial hub. The firm seeks to tap into the region’s wealth of potential clients and partners, as Hong Kong continues to be a pivotal gateway for businesses engaging in cross-border trade with China. The move is also symbolic of the broader fintech community’s push to create inclusive and accessible financial networks, even amid evolving regulatory landscapes.

Source: XTransfer Joins Hong Kong Fintech Week to Expand Global Presence (Yahoo Finance)

Propelld’s New Chief Business Officer: Driving Growth and Product Innovation

Propelld, an Indian ed-finance company, recently appointed Manoj Shetty as its new Chief Business Officer (CBO), signaling a strong commitment to enhancing its market penetration and product offerings. Known for his extensive experience in fintech, particularly in business development and scaling, Shetty is expected to spearhead Propelld’s ambitions to bring tailored financing solutions to India’s education sector.

Propelld focuses on providing student loans and education financing to underserved sections of India, leveraging advanced data analytics to assess borrowers’ potential rather than conventional credit scores. Shetty’s addition to the leadership team suggests that Propelld aims to double down on its innovative data-driven model to better serve the unique financial needs within education.

As the industry grows more competitive, having a seasoned executive like Shetty could be instrumental for Propelld to fortify its unique value proposition. His track record indicates a capacity for handling the nuanced needs of financial services catering to niche markets, and he may well position Propelld to scale sustainably in the expanding ed-finance space.

Source: Propelld Names Manoj Shetty as Chief Business Officer (IBS Intelligence)

Advertisement

Solo Funds Faces Legal Hurdles: The Class-Action Lawsuit Dilemma

In a move that could impact peer-to-peer lending’s regulatory path, Solo Funds faces a class-action lawsuit, alleging that the company’s lending practices breached consumer protection laws. As a platform designed to offer emergency loans to consumers facing cash flow issues, Solo Funds charges “tips” rather than conventional interest rates, a tactic intended to circumvent traditional lending regulations. However, plaintiffs argue that these tips effectively function as disguised interest, making Solo Funds’ practices deceptive and exploitative.

This lawsuit is a critical test for the burgeoning peer-to-peer lending segment, which has grown immensely in recent years as consumers seek alternatives to traditional financial institutions. The outcome may force similar platforms to reassess how they balance operational flexibility with regulatory compliance, potentially reshaping the industry’s approach to short-term lending.

With growing scrutiny on fintech lending platforms, the legal proceedings could also open a wider debate on how fintech firms should transparently operate within the bounds of financial laws. If Solo Funds is found liable, it may prompt stricter regulatory frameworks, affecting peer-to-peer platforms that rely on nontraditional models to attract users.

Source: Lending Fintech Solo Funds Faces Class-Action Lawsuit (TechCrunch)

Slice’s Transformation: A Fintech Company’s Foray into Traditional Banking

India-based Slice, originally a credit-based fintech, has announced its transition into a full-fledged bank, allowing it to offer conventional banking services in addition to its credit solutions. By securing regulatory approval to operate as a bank, Slice aims to expand its product range and deepen its relationship with a fast-growing consumer base in India. This move exemplifies a larger trend of fintech firms seeking to bridge the gap between traditional banking and innovative financial services.

Slice’s venture into banking will also set an intriguing precedent for other fintech companies in India and beyond. The company has successfully carved a niche among young users with its simple, digital credit products. As a bank, it can now offer savings accounts, lending products, and other services, thus creating a one-stop platform that could enhance customer retention and lifetime value.

The expansion to full banking status raises questions about how effectively Slice will manage its dual roles as a fintech innovator and a traditional bank, especially in a market as large and complex as India’s. It also marks a pivot point in the narrative of fintech companies morphing into full-service financial institutions, a trend that is gaining traction globally.

Source: India Fintech Slice Expands to Become a Bank (TechCrunch)

FullCircl’s 2025 Identity Verification Report: Insights into Compliance Challenges

FullCircl, a leading regulatory technology provider, recently released its “2025 State of Identity Verification” report, shedding light on the evolving landscape of identity verification and the challenges businesses face in maintaining compliance. As financial crimes become more sophisticated, firms increasingly invest in identity verification tools to stay ahead. According to the report, over 75% of financial institutions rank identity verification as a critical priority, citing the surge in fraudulent activities as a prime concern.

The report also highlights an industry-wide push towards digital identity systems and the use of artificial intelligence in detecting fraud patterns. As regulatory demands tighten and compliance risks rise, firms are urged to adapt swiftly. FullCircl’s findings underscore a need for seamless, real-time verification solutions that do not compromise customer experience—a delicate balance to maintain as identity verification protocols become more stringent.

Advertisement

The insights from FullCircl’s report reveal a heightened industry focus on ensuring robust identity frameworks that foster trust without hindering the ease of digital transactions. This growing demand aligns with broader trends where digital trust is crucial in retaining customers and enhancing their satisfaction.

Source: FullCircl Releases 2025 State of Identity Verification Report (PR Newswire)

 

 

The post Fintech Pulse: Today’s Key Industry Developments, Appointments, and Regulatory Challenges appeared first on HIPTHER Alerts.

Continue Reading

Trending