Executive Summary
Welcome back to this week’s Tech Behind Fintech news roundup!
The fintech world kicked off 2025 with a bang, delivering groundbreaking innovations, ambitious IPO announcements, and a few headline-grabbing controversies. From AI-powered startups reshaping financial services, this week showcased the relentless pace of transformation in the industry. Meanwhile, regulatory challenges and high-stakes legal battles served as reminders of the sector’s growing pains.
Let’s dive into this week’s top fintech news!
Trends in Fintech Verticals
Top Data Breaches
Instagram User Database Reportedly Leaked: A reported data breach has allegedly exposed a database containing information on 17 million Instagram users. The compromised data is said to include user IDs, email addresses, phone numbers, and other sensitive details, raising significant concerns about privacy and platform security. The current breach underscores the persistent threat posed by cybercriminals who exploit weak security measures to access sensitive information. Experts warn that such leaks can lead to identity theft, phishing attacks, and other malicious activities targeting affected users.
AT&T, Verizon and others targeted by Salt Typhoon cyberespionage operation: China-linked hackers reportedly managed to sneak into a US telecommunications surveillance system network for 18 months undetected and amass data on over 1 million people, with the full extent of their shenanigans still unknown. Beginning around mid-2023, nefarious cyberintruders who are part of a hacking group known as Salt Typhoon which has ties to Chinese intelligence penetrated Verizon, AT&T and systems used for court-backed surveillance.
China denied engaging in such actions and accused the United States of peddling disinformation. There is growing concern about the size and scope of the reported Chinese hacking into U.S. telecommunications networks and questions about when companies and the government will be able to assure Americans about the issue.
Volkswagen leak exposed location data for 800,000 electric cars: For months, the location information of around 800,000 electric Volkswagen vehicles was available online due to a data leak, according to a report from the German news magazine Der Spiegel. The leak reportedly stemmed from the software running inside Volkswagen vehicles and could’ve allowed a bad actor to trace a driver’s exact movements.
A whistleblower first notified Der Spiegel and the European hacking association Chaos Computer Club of the vulnerability, which also affects EVs from Volkswagen-owned car brands on a global scale, including Audi, Seat, and Skoda.
Latest Funding News
RegTech innovator RZOLUT secures $1.25m: RZOLUT, a leading RegTech company specialising in financial crime and compliance solutions, has announced a successful funding round, raising $1.25m. This angel funding round was led by Green Trunk Ventures (GTV), with participation from several global angel investors.
The company leverages advanced AI-driven platforms to help organisations mitigate risks and ensure compliance in the ever-evolving regulatory landscape. RZOLUT serves clients across diverse industries, including banking, private equity, gaming, and retail, with a presence in North America, Europe, and Asia.
Abstract gains $4.8m to propel AI solutions: Abstract, the artificial intelligence company developing the first regulatory superintelligence platform, today announced it raised $4.8 million in seed funding co-led by Bonfire Ventures and Communitas Capital. This latest investment brings Abstract’s total funding to more than $9 million. The new capital will drive deeper focus on how Abstract’s platform combines disparate data elements – such as from draft legislation, public comments, and regulatory discussions — to deliver peak intelligence and context. Functioning like a team of analysts, Abstract enables users to proactively flag risks and opportunities relevant to their business, unlock broad insights through news and social media channels, and distill relevant, cross-jurisdictional trends in policy.
Jones Raises $15M in Series B Funding: Jones, an InsurTech company revolutionizing insurance verification through AI, has secured $15m in a Series B funding round to advance its innovative solutions for the real estate and construction sectors. Jones specializes in simplifying the collection and verification of insurance certificates (COIs), endorsements, and policies, ensuring compliance with precision.
It integrates seamlessly with key ERP systems, enabling real estate and construction clients to manage over 25,000 projects across 2.5bn square feet in the United States.
Banking and Payments
Cash still king in Europe despite digital payment surge, reveals report: Despite the ongoing rise of digital payments, cash remains a significant payment method, especially for smaller transactions and person-to-person exchanges, according to the latest report from the European Central Bank (ECB). The increase in digital payments is primarily driven by online shopping, where payments now make up 21% of consumers’ daily transactions by number and 36% by value—up from 17% and 28%, respectively, in 2022. Cards lead the charge in online payments, making up 48% of all transactions, while mobile wallets and apps together account for 29%.
Consumers’ stated payment preferences have not changed. In 2024, as in 2022, 55% of Europeans prefer paying with cards and other non-cash means in shops, 22% prefer paying with cash and 23% have no clear preference. On average, consumers deem cards faster and easier to use. They consider cash more helpful for managing their expenses and protecting their privacy.
WhatsApp Pay made available to all Indian users: WhatsApp Pay, a Unified Payment Interface (UPI)-powered payment service, is now available to all Indians, after the company previously announced its intention to enter the payment service market. The feature was available in the Indian market, but only to a select group of users due to NCPI limitations. However, the National Payments Corporation of India (NPCI) lifted the limit and made it available to Indian users.
To keep an eye on security and performance issues, the NPCI has limited the number of users WhatsApp can onboard for its payment service. For the previous two years, WhatsApp Pay was limited to a maximum of 100 million users.
The Bank Behind the Fintech Revolution Stumbles After Customer Funds Go Missing: Evolve Bank at its peak managed around $10 billion for financial technology firms, including Stripe and Affirm. It caters to fintechs that offer technologically friendly savings accounts for everyday people with sweeteners like high interest rates. Most fintechs don’t hold their customers’ funds and instead use banks like Evolve in the background. Problems at the bank spilled into the open when a software company called Synapse went bankrupt in April. Synapse connected fintechs to banks like Evolve to store their own customers’ funds. Synapse’s job was to ensure that everyone’s funds were accounted for, while Evolve would open accounts and issue debit cards to the customers. The funds of over 100,000 fintech customers were kept in large, commingled accounts under Synapse’s management at Evolve, its primary bank partner for years. After Synapse filed for bankruptcy, thousands of customers suddenly couldn’t use their debit cards or move money out of their accounts at Evolve. Evolve stopped processing payments and said it needed to determine how to distribute funds to customers. A month later, a court-appointed mediator disclosed that as much as $96 million in fintech customer funds might be missing from accounts at Evolve and other banks. Now, Evolve is facing lawsuits over the missing funds, and some clients are starting to back away from the bank. Both Evolve and Synapse blame each other for the misplaced funds.
Wealthtech
Pemberton Capital Advisors partners Broadridge for portfolio management tech: Global Fintech leader Broadridge Financial Solutions, Inc. (NYSE:BR) announced today that Pemberton Capital Advisors LLP, a leading European private credit manager, has adopted Broadridge’s Sentry Private Credit Portfolio Management solution. Pemberton selected Broadridge’s technology to help it gain greater operational efficiencies and scale its private debt and collateralized loan obligation (CLO) businesses to meet growing demand.
Insurance Technology (Insurtech)
California Burning: The Insurance Battle Begins for LA Wildfire Victims: The inferno that swept through Los Angeles this week left behind more than charred landscapes and ruined homes; it also unleashed a secondary crisis that many residents may find equally devastating: the battle to reclaim their insurance benefits.
U.S. insurance stocks slid on Friday as analysts estimated insured losses from the wildfires menacing Los Angeles could reach as high as $20 billion, potentially making it the costliest disaster in California’s history.
Analysts are evaluating the financial impact of the disaster, with J.P.Morgan doubling its forecast of insured losses to over $20 billion. Wells Fargo also expects similar insured losses and said the total economic hit from the disaster could be well above $60 billion.
To help provide critical stability amid the devastation caused by the fires, California Insurance Commissioner Ricardo Lara invoked moratorium powers to suspend all policy non-renewals and cancellations from insurance companies for one year.
African Specialty Risks introduces Baobab, the first Africa-focused Lloyd’s Consortium: Launched on January 1, 2025, Baobab offers up to USD $21 million in capacity across multiple risk classes, including Political Risk, Trade Credit, Political Violence & Terrorism, Property, Energy, Construction, and Liability. The Consortium aims to expand throughout the year by attracting additional capacity partners.
Baobab is led by ASR Syndicate 2454 and supported by other prominent Lloyd’s Syndicates. It leverages ASR’s extensive local knowledge, market expertise, and distribution networks in Africa and the Middle East, providing much-needed access to risks originating from these regions. Despite their economic potential, risks from Africa currently account for only 2% of the Lloyd’s market, highlighting a significant gap in coverage.
BOXX launches Cyber Assist for business travelers: World Travel Protection and Cover-More Group are part of Zurich Insurance Group, a key investor in BOXX. The new solution, Boxx says, provides comprehensive protection against cyber threats encountered during travel, including:
- Real-time threat monitoring: Proactive identification and alerts to potential cyber threats.
- Identity protection: Assistance with identity theft recovery and fraud resolution.
- Cybersecurity education: Resources and training to help travelers stay safe online.
Initially available in Australia, Cyber Assist will be rolled out globally through a partnership with Cover-More Group, expanding Boxx Insurance’s reach and offering comprehensive cyber insurance and protection services to both business and leisure travelers worldwide.
Clearcover Expands into Non-Standard Auto Insurance Market in Texas: Clearcover has announced the launch of Clearcover General Agency (CGA) to serve the non-standard auto insurance market in Texas. Policies will be underwritten by Old American County Mutual Fire Insurance Company, bringing Clearcover’s digital-first insurance solutions to more drivers. The expansion enables Clearcover to offer its cost-effective, customisable coverage, while empowering agents and partners to tap into the estimated US$80 billion non-standard market.*
Regulatory Technology (Regtech)
JPMorgan Files Two Lawsuits in Greece and UK Over Viva Wallet: JPMorgan Chase & Co. filed two new lawsuits over its investment in Greek fintech Viva Wallet in a messy dispute with its join venture partner Werealize.com Ltd.
In a Greek lawsuit the bank is claiming €916 million ($943 million) over allegations that Viva’s chief executive officer, Haris Karonis, and three other executives deprived JPMorgan of the value of its 2022 investment, according to a person familiar with the matter.
The second case in the UK filed this week against Werealize.com claims it breached shareholder agreements with JPMorgan, the person said. Karonis’ Werealize.com owns around 51% of Viva Wallet and JPMorgan the rest, but the agreement gave the lender a right to buyout Karonis.
ECA concerns over price interventions in the card market: The European Court of Auditors has raised concerns over how the EU goes about price interventions in the card market and its approach to open banking data sharing.
The European Union (EU) has long championed digital payments as a safer, faster and more cost-effective alternative for consumers and businesses.
While the value of retail digital payments in the EU surged to over €1 trillion in 2023 – doubling since 2017 – a new report from the European Court of Auditors (ECA) highlights gaps in the bloc’s approach, particularly concerning price interventions and Open Banking practices.
Blockchain and Cryptocurrency
Ripple Adopts Chainlink Standard To Enhance RLUSD’s Utility Throughout DeFi: Ripple, the global digital asset infrastructure provider for financial services, is joining forces with Chainlink, a provider of infrastructure powering the movement of tokenised real-world assets. Through the new partnership, Ripple will leverage the Chainlink standard to bring pricing data around its USD-denominated stablecoin, Ripple USD (RLUSD), onchain. By adopting the Chainlink standard for verifiable data on the Ethereum blockchain, Ripple hopes to bolster the utility of RLUSD across the onchain economy.
To support RLUSD as an asset, many DeFi applications first require a high-quality, reliable source of price data to manage risks.
Frax launches BlackRock-backed, Securitize tokenised stablecoin: Decentralised cryptocurrency protocol stablecoin Frax Finance has launched a new stablecoin, frxUSD, which will run on BlackRock’s USD institutional Digital Liquidity Fund (BUIDL). With the partnership, Frax Finance seeks to offer a secure, transparent and verifiable backing mechanism to further connect traditional finance with decentralised systems. Stablecoin frxUSD is a rebranded evolution of Frax’s flagship stablecoin FRAX, which aims to offer direct fiat redemption capabilities and greater compliance with US financial systems.
Artificial intelligence
Microsoft accuses group of developing tool to abuse its AI service in new lawsuit: Microsoft has taken legal action against a group the company claims intentionally developed and used tools to bypass the safety guardrails of its cloud AI products. According to a complaint filed by the company in December 2024 in the U.S. District Court for the Eastern District of Virginia, a group of 10 unnamed defendants allegedly used stolen customer credentials and custom-designed software to break into the Azure OpenAI Service, Microsoft’s fully managed service powered by ChatGPT maker OpenAI’s technologies. Microsoft alleges that the defendants used stolen Azure OpenAI Service API keys belonging to U.S.-based customers to create a “hacking-as-a-service” scheme. Per the complaint, to pull off this scheme, the defendants created a client-side tool called de3u, as well as software for processing and routing communications from de3u to Microsoft’s systems.
VCs say AI companies need proprietary data to stand out from the pack: In 2024, AI companies globally raised over $100 billion in venture capital, marking an 80% increase from 2023 and accounting for nearly a third of total VC investments that year. The rapid growth of the AI industry has led to a crowded market with overlapping companies and startups that may not fully utilize AI. Investors face challenges in identifying potential category leaders, with many VCs emphasizing the importance of proprietary data as a key differentiator for AI startups. Access to unique data can enable companies to deliver superior products and create a competitive edge, especially for those building vertical solutions.
Investors are looking for AI startups with unique data, strong technical innovation, and compelling user experiences to establish a moat. Beyond data, strong leadership, tech integrations, and understanding of customer workflows are important factors for AI startup success.
This Week on Tech Behind Fintech
Join us on Tech Behind FinTech on Friday, January 17th, 2025, at 12 PM EST for an insightful episode featuring Deniz Johnson, COO of Stratyfy. Deniz will share her expertise on how ethical AI is driving fairness and transparency in financial services, reshaping how credit decisions are made. 🔍 What You’ll Learn: • Reducing Bias: Explore how AI can help identify and mitigate bias in financial decision-making, creating fairer outcomes. • Transparency in AI: Understand the importance of clarity and control in AI systems for regulated industries. • Human and Machine Synergy: Discover how blending precise data with domain expertise ensures responsible and impactful decisions. Whether you’re a FinTech leader, AI enthusiast, or advocate for fairness in finance, this conversation offers invaluable insights into the role of ethical AI in building a more inclusive financial system.
LinkedIn: https://www.linkedin.com/events/7283611512445759488
YouTube: https://www.youtube.com/watch?v=QPlGyuLhuM8
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