EU digital ID, AI's moment in finance, and what happened to Synapse
Weekly Edition | By Marina Mouka
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NEWS ANALYSIS
The collapse?of?Synapse?Financial Technologies has exposed critical vulnerabilities in the Banking-as-a-Service (BaaS) model, shaking confidence in fintech-bank partnerships. Synapse’s?abrupt bankruptcy left over $85 million in limbo?and impacted 200,000?accounts, revealing gaps in oversight?and contingency planning. Fintech firms reliant on?Synapse?faced operational chaos, while customers were locked out?of?critical savings, further eroding trust in the ecosystem. The fallout has?also spotlighted partner banks, now facing lawsuits for?alleged negligence,?and raised questions?about?accountability in BaaS partnerships. Regulatory blind spots, particularly in pooled “For the Benefit?Of”?accounts, have drawn scrutiny, prompting the FDIC?to?propose stricter transparency measures. This incident is?a?wake-up call for fintechs, banks,?and regulators?to?prioritise stronger safeguards, transparency,?and?aligned compliance. While the?Synapse?debacle highlights systemic risks, it?also presents?an opportunity?to?reshape partnerships, ensuring?a?more resilient future for the industry. Read More
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NEWS
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The?European Commission has adopted critical?technical?standards?for?the? European?Digital? Identity?(eID)?Wallets, marking a significant step towards their deployment by Member States by 2026. These regulations establish uniform rules?for?functionalities like secure data storage, privacy-focused design, and cross-border interoperability. Users will control their data through a privacy dashboard, ensuring no tracking or profiling. A robust certification framework guarantees security and reliability, reinforcing trust in this universal?digital?identification tool. The eID Wallet will streamline access to public and private services across the?EU, enabling seamless actions like opening bank accounts, verifying age, or renewing prescriptions—all while upholding stringent data protection?standards. With publication in the?EU’s Official Journal imminent, Member States will begin developing?wallets?tailored to these specifications. By simplifying cross-border interactions and safeguarding personal privacy, the eID?Wallets? promise to revolutionise?digital?identity?across?Europe, offering both convenience and security.
INSIGHTS
Artificial Intelligence (AI) is reshaping finance, with 92% of firms reporting?AI?initiatives exceeding ROI expectations, according to KPMG’s latest survey. Adoption is highest in financial planning (78%), accounting (76%), and treasury management (64%), where?AI?drives efficiency and data-driven insights. However, tax departments lag behind due to regulatory complexities and reliance on legacy systems. The report categorises organisations into?AI? leaders, middle-ground implementers, and beginners. Leaders, comprising 41% of surveyed firms, allocate 13% of IT budgets to?AI—set to rise to 17%—and achieve superior returns through robust strategies combining internal and external expertise. Challenges persist, with 57% of finance leaders citing data privacy and cybersecurity as barriers. Governance is advancing, with 39% incorporating?AI?risks into financial reporting. Read More
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