Fintech

How can DEI in Fintech help address broader social inequality?

Published

10 months ago

26 June, 2024

This June at Fintech Times we will focus on diversity, equity and inclusion (DEI). No longer just a trending topic, but an essential consideration not only for your business operations but also for your offering, this topic seems more relevant now than ever.

The fintech sector is known for its reputation for innovation and flexibility, but it still faces a significant diversity problem that risks stunting its growth and preventing innovation from moving forward.

When we think about DEI, it’s not just about having diverse teams within an organization, but also about ensuring that our products and services are accessible to as many people as possible.

Fintech has the opportunity to make the world a better and more accommodating place for so many people when it comes to finance; Here we spoke to industry insiders to find out how.

Finance Control

David Daiches, co-founder and COO, INSHUR

David Daiches, co-founder and chief operating officer, of the motor insurance company, INSHUR, She said:

“Having control of your finances is a fundamental human need in our society, and fintech fills this need.

“That’s why INSHUR has developed insurance products embedded into our partner platforms to eliminate friction when onboarding new drivers on demand and provide them with fair and adequate coverage. Many of these drivers come from underrepresented backgrounds and are taking control of their income and work patterns to build a better life for themselves and their families.”

Paycheck to paycheck

Ram Palaniappan, founder and CEO of EarnIn

Ram Palaniappanfounder and CEO of Earn money, a provider of access to earned wages, said:

“Today’s traditional 2- to 4-week pay cycle can worsen social inequality by increasing costs for those living paycheck to paycheck. Bills are rarely paid on payday, and the rigid fixed pay cycle can lead to debilitating late and overdraft fees.

“There are now financial solutions that break this cycle – including access to earned wages – that allow people to access their pay while they work, meaning they have access to their money when they need it most.”

Inclusive economic growth

Angy Watson, Chief of Staff and Chief Transformation Officer, Paymentology

Angy Watson, chief of staff and transformation manager at the card issuer and processing platform, PaymentologyShe said:

“Social progress depends on inclusive economic growth, which ensures everyone, including the United States 1.3 billion people with disabilities in the worldthey can move forward in life and thrive. Financial technology is central to this progress, playing a crucial role in addressing broader social challenges for those who struggle to access traditional financial services.

“For example, by leveraging the best digital innovations, fintech can improve accessibility by incorporating features such as voice commands, screen readers and simplified interfaces, allowing people with visual, hearing and cognitive disabilities to manage their finances independently. Through digital banking and mobile payments, fintech offers convenience, enabling transactions without visiting physical branches, which is especially beneficial for those with mobility issues. Fintechs are also good at providing tailored solutions such as microloans and savings plans, addressing the specific needs of people with disabilities and ensuring they have the support they need to achieve financial independence.”

Hyperpersonalization

Nitika Vyas, CFA and Co-Founder, Aila Money

Nitika VyasCFA and co-founder, Aila Money, a digital financial assistant app, said:

“At Aila Money our mission is to reduce wealth inequalities between genders and socio-economic contexts. As a personal finance education app, our mission is to ensure that everyone has access to the information and tools to feel confident and comfortable with their finances to achieve their life goals. Recognizing that people absorb information differently, we personalize financial insights, training and action through suggestions that also help empower users and give them access to human expertise when needed. We collaborate with behavioral scientists from LSE AND University of the city to ensure our messages empower and engage users. We appreciate the personalized approach; Financial advice and accountability messages can be especially helpful for neurodiverse individuals.

“While the above highlights our company’s initiative in this regard, there are so many ways in which Ffintech has the potential to significantly address broader social inequality by leveraging technology to create more inclusive financial services. For people with disabilities, fintech can offer tailored solutions that meet diverse needs and preferences. Fintech can make a difference through accessibility, personalization, education and community. Exciting things to come!”

Social prejudices

Beautiful Renney, Product Director at Embedded Financial Platform, Liberis She said:

Bella Renney, Product Director, Liberis

“The most rapid impact comes from evolving hiring practices. We need to remove barriers to STEM roles, such as data science or engineering, and significantly expand the talent pipeline. We should no longer treat “computer science degree” as a must in job descriptions.

“Fintechs can work with coding boot camps to hire tech career changers. They could also partner with local universities to host half-term courses or summer holidays to establish pathways into fintech for school leavers with paid internships or apprenticeships. These diversify and expand the talent pipeline.”

“Our business provides greater access to capital across the spectrum. We use AI and ML for decision modeling, which means we have far fewer social biases in terms of access to capital. The companies are all evaluated based on the same criteria and it is a true meritocracy, which often sees companies managed by women surpass the others”.

Double the diversity

Lynda Clarke, Chief Operating Officer of Tribe Payments

Lynda Clarke, Chief Operations Officer, Tribe Paymentspayment technology providers for banks and fintechs, said:

“Amid an uncertain economic outlook, fintechs must face some uncomfortable truths and redouble their diversity efforts if they want to attract talent to continue innovating.

“Since I entered the industry, I have definitely seen dramatic improvements in diversity. However, there is still much work to be done, especially to support women to reach senior positions. The statistics prove it, with only 5% of CEO positions in our industry held by women. We also need to address the dominance of men at networking events – making sure women have the confidence to be in the room will help break this down. This won’t change overnight, so it’s important that women feel comfortable and that men recognize that it’s also their responsibility to make sure everyone feels included.

“To create big change, let’s think small. It might sound strange, but I like the idea that if everyone did something positive every week just to improve 1% (whether it be for their own personal growth, career development, or the betterment of others), that could have a enormous impact over time. . Think about how you can help do those 1% things to move things forward every day. For example, know that if there are only one or two women sitting at the table in a room full of men, they may not feel 100% comfortable. How can you help me with this?”

Polly Jean Harrison
Polly is a journalist, content creator and general opinion maker from North Wales. You have written for numerous publications, usually focusing on topics such as fintech, technology, lifestyle and body positivity.

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Fintech

US Agencies Request Information on Bank-Fintech Dealings

Published

9 months ago

30 July, 2024

FinCrypt Staff

Federal banking regulators have issued a statement reminding banks of the potential risks associated with third-party arrangements to provide bank deposit products and services.

The agencies support responsible innovation and banks that engage in these arrangements in a safe and fair manner and in compliance with applicable law. While these arrangements may offer benefits, supervisory experience has identified a number of safety and soundness, compliance, and consumer concerns with the management of these arrangements. The statement details potential risks and provides examples of effective risk management practices for these arrangements. Additionally, the statement reminds banks of existing legal requirements, guidance, and related resources and provides insights that the agencies have gained through their oversight. The statement does not establish new supervisory expectations.

Separately, the agencies requested additional information on a broad range of arrangements between banks and fintechs, including for deposit, payment, and lending products and services. The agencies are seeking input on the nature and implications of arrangements between banks and fintechs and effective risk management practices.

The agencies are considering whether to take additional steps to ensure that banks effectively manage the risks associated with these different types of arrangements.

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Fintech

What changes in financial regulation have impacted the development of financial technology?

Published

9 months ago

30 July, 2024

FinCrypt Staff

Exploring the complex landscape of global financial regulation, we gather insights from leading fintech leaders, including CEOs and finance experts. From the game-changing impact of PSD2 to the significant role of GDPR in data security, explore the four key regulatory changes that have reshaped fintech development, answering the question: “What changes in financial regulation have impacted fintech development?”

PSD2 revolutionizes access to financial technology
GDPR Improves Fintech Data Privacy
Regulatory Sandboxes Drive Fintech Innovation
GDPR Impacts Fintech Data Security

PSD2 revolutionizes access to financial technology

When it comes to regulatory impact on fintech development, nothing comes close to PSD2. This EU regulation has created a new level playing field for market players of all sizes, from fintech startups to established banks. It has had a ripple effect on other markets around the world, inspiring similar regulatory frameworks and driving global innovation in fintech.

The Payment Services Directive (PSD2), the EU law in force since 2018, has revolutionized the fintech industry by requiring banks to provide third-party payment providers (TPPs) with access to payment services and customer account information via open APIs. This has democratized access to financial data, fostering the development of personalized financial instruments and seamless payment solutions. Advanced security measures such as Strong Customer Authentication (SCA) have increased consumer trust, pushing both fintech companies and traditional banks to innovate and collaborate more effectively, resulting in a dynamic and consumer-friendly financial ecosystem.

The impact of PSD2 has extended beyond the EU, inspiring similar regulations around the world. Countries such as the UK, Australia and Canada have launched their own open banking initiatives, spurred by the benefits seen in the EU. PSD2 has highlighted the benefits of open banking, also prompting US financial institutions and fintech companies to explore similar initiatives voluntarily.

This has led to a global wave of fintech innovation, with financial institutions and fintech companies offering more integrated, personalized and secure services. The EU’s leadership in open banking through PSD2 has set a global standard, promoting regulatory harmonization and fostering an interconnected and innovative global financial ecosystem.

Looking ahead, the EU’s PSD3 proposals and Financial Data Access (FIDA) regulations promise to further advance open banking. PSD3 aims to refine and build on PSD2, with a focus on improving transaction security, fraud prevention, and integration between banks and TPPs. FIDA will expand data sharing beyond payment accounts to include areas such as insurance and investments, paving the way for more comprehensive financial products and services.

These developments are set to further enhance connectivity, efficiency and innovation in financial services, cementing open banking as a key component of the global financial infrastructure.

Sebastian Malczyk

General Manager, Technology and Product Consultant Fintech, Insurtech, Miquido

GDPR Improves Fintech Data Privacy

Privacy and data protection have been taken to another level by the General Data Protection Regulation (GDPR), forcing fintech companies to tighten their data management. In compliance with the GDPR, organizations must ensure that personal data is processed fairly, transparently, and securely.

This has led to increased innovation in fintech towards technologies such as encryption and anonymization for data protection. GDPR was described as a top priority in the data protection strategies of 92% of US-based companies surveyed by PwC.

Arid Islam

Financial Expert, Sterlinx Global

Regulatory Sandboxes Drive Fintech Innovation

Since the UK’s Financial Conduct Authority (FCA) pioneered sandbox regulatory frameworks in 2016 to enable fintech startups to explore new products and services, similar frameworks have been introduced in other countries.

This has reduced the “crippling effect on innovation” caused by a “one size fits all” regulatory approach, which would also require machines to be built to complete regulatory compliance before any testing. Successful applications within sandboxes give regulators the confidence to move forward and address gaps in laws, regulations, or supervisory approaches. This has led to widespread adoption of new technologies and business models and helped channel private sector dynamism, while keeping consumers protected and imposing appropriate regulatory requirements.

George Blandford

Co-founder, UK Linkology

GDPR Impacts Fintech Data Security

A big change in financial regulations that has had a real impact on fintech is the 2018 EU General Data Protection Regulation (GDPR). I have seen how GDPR has pushed us to focus more on user privacy and data security.

GDPR means we have to handle personal data much more carefully. At Leverage, we have had to step up our game to meet these new rules. We have improved our data encryption and started doing regular security audits. It was a little tricky at first, but it has made our systems much more secure.

For example, we’ve added features that give users more control over their data, like simple consent tools and clear privacy notices. These changes have helped us comply with GDPR and made our customers feel more confident in how we handle their information.

I believe that GDPR has made fintech companies, including us at Leverage, more transparent and secure. It has helped build trust with our users, showing them that we take data protection seriously.

Dr. Rhett Stubbendeck

CEO & Co-Founder, Leverage Planning

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Fintech

M2P Fintech About to Raise $80M

Published

9 months ago

30 July, 2024

FinCrypt Staff

Application Programming Interface (API) Infrastructure Platform M2P Financial Technology has reached the final round to raise $80 million, at a valuation of $900 million.

Specifically, M2P Fintech, formerly known as Yap, is closing a new funding round involving new and existing investors, according to entrackr.com. The India-based company, which last raised funding two and a half years ago, previously secured $56 million in a round led by Insight Partners, earning a post-money valuation of $650 million.

A source indicated that M2P Fintech is ready to raise $80 million in this new funding round, led by a new investor. Existing backers, including Insight Partners, are also expected to participate. The new funding is expected to go toward enhancing the company’s technology infrastructure and driving growth in domestic and international markets.

What does M2P Fintech do?

M2P Fintech’s API platform enables businesses to provide branded financial services through partnerships with fintech companies while maintaining regulatory compliance. In addition to its operations in India, the company is active in Nepal, UAE, Australia, New Zealand, Philippines, Bahrain, Egypt, and many other countries.

Another source revealed that M2P Fintech’s valuation in this funding round is expected to be between USD 880 million and USD 900 million (post-money). The company has reportedly received a term sheet and the deal is expected to be publicly announced soon. The Tiger Global-backed company has acquired six companies to date, including Goals101, Syntizen, and BSG ITSOFT, to enhance its service offerings.

According to TheKredible, Beenext is the company’s largest shareholder with over 13% ownership, while the co-founders collectively own 34% of the company. Although M2P Fintech has yet to release its FY24 financials, it has reported a significant increase in operating revenue. However, this growth has also been accompanied by a substantial increase in losses.

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Fintech

Scottish financial technology firm Aveni secures £11m to expand AI offering

Published

9 months ago

30 July, 2024

FinCrypt Staff

Aveni, Investment Management, AI, NLP, UK

By Gloria Methri

Today

To come
Aveni Assistance
Aveni Detection

Artificial intelligence Financial Technology Aveni has announced one of the largest Series A investments in a Scottish company this year, amounting to £11 million. The investment is led by Puma Private Equity with participation from Par Equity, Lloyds Banking Group and Nationwide.

Aveni combines AI expertise with extensive financial services experience to create large language models (LLMs) and AI products designed specifically for the financial services industry. It is trusted by some of the UK’s leading financial services firms. It has seen significant business growth over the past two years through its conformity and productivity solutions, Aveni Detect and Aveni Assist.

This investment will enable Aveni to build on the success of its existing products, further consolidate its presence in the sector and introduce advanced technologies through FinLLM, a large-scale language model specifically for financial services.

FinLLM is being developed in partnership with new investors Lloyds Banking Group and Nationwide. It is a large, industry-aligned language model that aims to set the standard for transparent, responsible and ethical adoption of generative AI in UK financial services.

Following the investment, the team developing the FinLLM will be based at the Edinburgh Futures Institute, in a state-of-the-art facility.

Joseph Twigg, CEO of Aveniexplained, “The financial services industry doesn’t need AI models that can quote Shakespeare; it needs AI models that deliver transparency, trust, and most importantly, fairness. The way to achieve this is to develop small, highly tuned language models, trained on financial services data, and reviewed by financial services experts for specific financial services use cases. Generative AI is the most significant technological evolution of our generation, and we are in the early stages of adoption. This represents a significant opportunity for Aveni and our partners. The goal with FinLLM is to set a new standard for the controlled, responsible, and ethical adoption of generative AI, outperforming all other generic models in our select financial services use cases.”