The rise and fall of Wirecard: What can we learn?

Wirecard: https://www.wirecard.com/

What is Wirecard?

Global revenues for 2019 for Wirecard
Changing stock prices for Wirecard since the allegations.
Wirecard's global footprint. Source: Wirecard

What happened?

The Fall of Wirecard. Source: FT

How did they get away with it for so long?

What can we learn from it?

  1. There is a lot more to be done in Europe to monitor and regulate FinTech companies. The implementation of these regulations is vital for the assurance of investors and consumer protection;
  2. Businesses and consumers should not put one egg into a basket. Meaning that amid the £1.7bn (US$2.3bn) alleged accounting fraud at Wirecard and its pending insolvency, those that used their technology to process payments, including a host of UK fintech firms such as Curve and Pockit, saw their payments being frozen. This essentially left a myriad of consumers and businesses without access to cash. This represents the ongoing risks of being reliant on one acquiring bank for all of their payment processing.
  3. The heart and soul of the company start from top-to-bottom. Within auditing, a general framework called the fraud triangle is used to explain the reason behind fraudulent behavior. These are an incentive, opportunity, and rationalization. In the case of Wirecard, the first two are quite clear. The firm, which became public and listed on the DAX index, was under pressure to perform for its shareholders. The opportunity to commit fraud came about due to their peculiar organizational structure, due to their use of payment companies across Asia and the UAE. When it comes to the case of rationalization, much of this can be attributed to a combination of the corporate culture within Wirecard itself, as well as the lax attitude of German regulators towards allegations against the company.
Trust and integrity are essential when you do business together.

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Disrupt is a student-led organization that aims to create a community which drives advancement, education, and engagement in FinTech at Northeastern University.

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Disrupt - The FinTech Initiative

Disrupt - The FinTech Initiative

Disrupt is a student-led organization that aims to create a community which drives advancement, education, and engagement in FinTech at Northeastern University.

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