Top Gen AI use cases in ESG?

Top Story of the Week

How can firms leverage generative AI for their ESG-related processes? - Environmental, social and governance (ESG) and artificial intelligence (AI) are two of the biggest trends in the finance world, but working together they can potentially transform how businesses operate.

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Research highlight

The UK accounts for more than a third of European FinTech deals in Q1 2024

Key European FinTech investment stats in Q1 2024:

• European FinTech deal activity totalled at 333 deals in Q1 2024, a 41% reduction from the previous year
• European FinTech companies raised a combined $2.4bn in Q1 2024, a 23% drop from Q1 2023
• Blockchain & Digital Assets was the most active FinTech subsector with 67 transactions, a 20% share of deals

In the first quarter of 2024, the European FinTech sector witnessed a notable decline in deal activity, with only 333 deals recorded, marking a significant 41% reduction compared to the previous year. Additionally, despite continued investment, European FinTech companies collectively raised $2.4bn during this period, indicating a 23% drop from the funding levels observed in Q1 2023.

Monzo, a digital bank, had the largest European FinTech deal in Q1 2024 after raising $430m (￡340m) in their latest venture round, led by CapitalG. Following this round, the company has reached a post-money valuation of $5bn (￡4bn). In this latest funding round, Monzo is defying the current funding market, notably with substantial involvement from Google. CapitalG, the growth fund under Google's parent company Alphabet, alongside participation from GV, Google's venture fund. Additionally, HongShan Capital, formerly known as Sequoia Capital China, joins as an investor, alongside existing backers like Passion Capital and Tencent. Monzo reported profitability in the first two months of 2023. For the year ending February 2023, it reported net operating income of ￡214.5m, almost doubling YoY from ￡114m. Losses reduced slightly, to ￡116.3m from ￡119m the previous year.

Blockchain & Digital Assets was the most active FinTech subsector with 67 deals, a 20% share of deals. RegTech was the second most active FinTech subsector with 60 deals, a 18% share of deals. Banking Infrastructure was the third most active FinTech subsector with 48 deals, a 14% share of deals.

The latest European FinTech regulation comes from The EU Council and Parliament which have reached a provisional agreement on key aspects of the anti-money laundering package aimed at safeguarding EU citizens and the EU's financial system against money laundering and terrorist financing. Vincent Van Peteghem, the Belgian Minister of Finance, highlights that this agreement forms a crucial part of the EU's new anti-money laundering system, enhancing the coordination and effectiveness of national efforts in combating financial crime. The agreement entails comprehensive harmonization of rules across the EU, addressing loopholes exploited by criminals, and enhancing due diligence measures for various sectors including the crypto industry, luxury goods traders, and the football sector. It also imposes stricter regulations on cash payments, establishes rules for beneficial ownership transparency, and mandates enhanced due diligence for transactions involving high-risk third countries. Additionally, the agreement strengthens the responsibilities and capabilities of Financial Intelligence Units (FIUs), granting them direct access to relevant information for better detection and prevention of money laundering and terrorist financing activities.

Weekly FinTech deal roundup

FinTech investment reminds static in quiet week for deals - The FinTech sector saw only 17 deals in total this week, as the industry continues to record stable but slow growth overall.

Read the full story here .

RegTech news

• Why banks are increasing their RegTech spend year-on-year - As technology continues to expand its reach within the financial services market, many banks are looking over their shoulder at the vast litany of risks that a tech-dominated market includes. With this in mind, many firms are looking at a technology to help them in this fight – RegTech. Read the full story here.
• Navigating the intricacies of PEP identification in FinTech compliance - Politically Exposed Persons (PEPs) represent a significant risk for money laundering and corruption within the financial sector. Alessa, a leading provider of Anti-Money Laundering (AML) compliance software, emphasises the critical importance of accurately identifying and screening PEPs before any business engagement. Read the full story here.
• How AI transforms KYC into a continuous compliance powerhouse - In the dynamic landscape of anti-money laundering (AML) efforts, financial institutions are facing intensified scrutiny to stay a step ahead of increasingly sophisticated criminal tactics and rigorous regulatory demands. Read the full story here.

InsurTech news

• Navigating the hype: Is generative AI the future of InsurTech - The buzz around Generative Artificial Intelligence (AI) in the insurance sector is undeniable. Each keynote, panel, and networking break at business conferences seem to orbit the potential of AI to revolutionise the industry by generating content, streamlining processes, and enhancing efficiency. Yet, this growing excitement begs a critical question: Is Generative AI truly the breakthrough the insurance sector needs??Read the full story here.
• The future of healthcare: How insurers are using technology to cut costs - Healthcare costs continue to be a major concern across the globe, with a slight dip projected in 2024, offering a glimmer of hope. dacadoo, a digital health technology platform that puts the customer engagement at the centre of business, recently explored how digital health technology can help insurers become 'affordability champions.'? Read the full story here.
• Mastering customer experience: The role of AI in response time - In today's fast-paced business environment, the importance of swift customer response time cannot be overstated. Imagine sending an email with high hopes of a prompt reply, only to be met with silence as days pass by. This lack of engagement can swiftly sour a potential customer relationship, leaving individuals feeling undervalued and ignored. With 88% of customers equating the quality of service to the overall experience provided by a company, the pressure mounts for businesses to prioritise timely responses. Read the full story here.

Don't Miss Out - Global InsurTech Summit will be hosted on 17th April 2024!

Meet the people who matter in InsurTech! The Global InsurTech Summit will host hundreds of vetted senior decision-makers alongside the most disruptive InsurTech founders and tech innovators in Europe.

Find out more here.

WealthTech news

• 6th annual WealthTech100 names the companies you can’t afford to miss - The 6th annual WealthTech100 list has been launched today by FinTech Global, naming the technology companies transforming the operations of investment firms, private banks and financial advisors. Read the full story here.
• Navigating the Pitfalls of Miscommunication in Financial Advising - Miscommunication between financial advisors and their clients can lead to misunderstandings that, while seemingly minor, have the potential to damage professional relationships significantly. Read the full story here.
• Tietoevry’s Lifecare system unites with Satakunta for enhanced services - Tietoevry Care has announced a partnership with the Wellbeing Services County of Satakunta, a regional authority dedicated to health and social services in Finland.? Read the full story here.

CyberTech news

• Cybersecurity in 2024: A deep dive into FinTech’s top concerns and strategies - Nearly 40% of compliance professionals across asset management, investment adviser, and private markets firms remain unprepared for the cybersecurity risks posed by AI, reveals the 2024 Cybersecurity Benchmarking Survey. Read the full story here.
• RTP Global and Picus Capital invest $2.5m in SydeLabs to bolster GenAI security - SydeLabs, a startup specialising in security and risk management for Generative AI, has announced a significant milestone in its journey. Read the full story here.
• US Department of Energy injects $15m into university cybersecurity hubs - The US DoE has made headlines with its announcement of a $15m investment aimed at fortifying cybersecurity within the energy sector. Read the full story here.

ESG FinTech news

• Navigating the ESG landscape: Key drivers behind the sustainable investments spike - In a study by Deloitte and The Fletcher School at Tufts University, it has emerged that an overwhelming majority of global investors are now incorporating ESG considerations into their investment strategies. Read the full story here.
• Unlocking the secrets of the double materiality assessment for CSRD compliance - The Double Materiality Assessment (DMA) is a cornerstone of the CSRD framework, pivotal in determining the sustainability-related information that organisations are compelled to disclose. Read the full story here.
• Iceberg Data Lab clinches $10m Series A for ESG data expansion, led by Beringea - Iceberg Data Lab, a frontrunner in climate and biodiversity data solutions for financial institutions, has successfully completed the initial close of its Series A funding, securing US$10m (￡8m). Read the full story here.

Other FinTech news

• FullCircl launches new tool for regulated business prospecting - FullCircl has unveiled ‘Find Companies’, a tool designed to enhance the intelligence and efficiency of prospecting strategies in the market. Read the full story here .
• AI’s role in enhancing transaction monitoring and compliance - In the complex landscape of global finance, the battle against money laundering and terrorism financing is intensifying.?Read the full story here.
• Nuvei and Advent International forge strategic alliance in $6.3bn private equity deal - Nuvei, a pioneering force in the global payments landscape, has announced a landmark agreement to transition to a private entity under the stewardship of Advent International. Read the full story here.