It appears the Paradise Papers show how fintechs are more susceptible to scrutiny and backlash than their legacy counterparts.
In a column for Bloomberg, Lionel Laurent illustrated how one fintech in particular, Wirecard, is up for more of a challenge following the release of the Paradise Papers than well established companies implicated by the papers, like Apple.
“Shares remain unmoved” for the likes of Apple and Nike, Laurent writes. But for Wirecard, a German payments and banking services provider named in the Paradise Papers coverage by the German newspaper Sueddeutsche Zeitung, shares are down 4 percent following the reports.
While both the legacy institutions and Wirecard deny wrongdoing, it would seem market mechanisms only damage the more cash strapped startup.
According to Bloomberg, Wirecard was connected to allegedly illegal transfers for gambling providers through the report. But even the report itself acknowledges that German law and EU law pertaining to online gambling are incongruous.
“Overall,” writes Laurent, “there’s the sense that if this type of press attention leads to increased oversight or regulatory scrutiny, it will be flashy fintechs that suffer more than old-school banks, whose problems are well-known. Tech-savvy challengers trade on an ability to acquire customers, stake out market share and strike mergers.”
All things that bad press could potentially hamper.
Cadence is a fintech reporter and writer at Fintech Unltd, where she covers the changing landscape of financial technologies. Previously, Cadence interned at Psychology Today, Business Insider and the Wisconsin State Journal. Cadence is interested in how science and technology intersect with power and culture and is curious about the world we are creating for tomorrow, consciously or not. She graduated from the University of Wisconsin–Madison in 2017 with degrees in Journalism and Chinese. Send tips and story ideas to Cadence at [email protected] You can also follow her on Twitter @cadencebambenek.