Fintech

Why is diversity and inclusion important in Fintech? The vision of the sector with Finastra, NMI

Published

8 months ago

11 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 innovative and agile reputation, yet it still faces a significant diversity problem that threatens to stunt its growth and halt the movement of innovation.

Here we speak to fintech leaders to understand the true importance of DEI and why fintechs need to incorporate it into everything they do.

Underrepresentation

Kate Hampton, NMI strategy director

Kate Hampton, Chief Strategy Officer at an integrated payment solutions provider NMI, She said:

“Having worked in the technology and payments industry for nearly two decades, I have gained a deep understanding of the critical importance of addressing DEI in the fintech sector. Women in fintech are still significantly underrepresented, especially at the highest levels, and I often found myself being one of the few, if not the only, women in high-level meetings and discussions. I had a very positive experience, supported by numerous mentors who encouraged me to dream big, however I recognize that many women in fintech do not share the same journey. That’s why it’s important for me to serve as a mentor and set an example for other women in the industry.

“Fintech organizations must actively support and uplift women by creating enrichment opportunities, establishing mentorship programs, and providing a safe space for those seeking support and guidance. Supporting women in fintech can lead to significant changes in the tech workforce, encouraging organizations to prioritize DEI efforts. This change needs to be championed by board members and senior executives, ensuring it starts at the top. The fintech sector has immense potential, and intentional DEI efforts will lead to success for both organizations and their employees. Diversity at all levels undeniably creates better business outcomes, and success in DEI outcomes will also benefit fintech as a whole.”

The right thing

Tyler Menezes, executive director, CodeDay

Tyler Menezes is the executive director of CodeDaywhere she works to provide welcoming and diverse opportunities for underserved students to explore a future in technology.

He said: “For fintech companies, DEI is not just about doing the right thing, it is also a strategic advantage. Embracing different perspectives can unlock new market segments.

“At CodeDay, we focus on helping students from diverse and low-income backgrounds find their place in the tech industry. Conversations with our students often reveal how their financial experiences are different from mine. For example, approximately 25% of low-income households do not use traditional banking services. Many of our alumni have gone on to careers in fintech, where they help develop more inclusive products that appeal to a broader customer base.

“Most fintech products aim to serve a global and diverse audience. Teams that reflect this diversity are better positioned to understand and meet the specific needs of various demographic groups.”

A moral imperative

Michael Bystrov, Chief Revenue Officer at Noda

Michael Bystrovdirector of revenue at Nodean open banking payments platform, said:

“DEI is essential for companies like Noda in the fintech sector as they drive innovation and creativity. At Noda, our team is made up of people from around the world, who bring a wealth of diverse perspectives that are crucial to developing innovative solutions in open banking. This global diversity allows us to better understand and meet the needs of a global customer base, enhancing our competitiveness and reach.

“Additionally, an inclusive workplace increases employee morale and engagement, leading to higher productivity and lower turnover rates, which are vital to maintaining high performance in a rapidly changing industry.

“DEI compliance helps Noda meet regulatory standards, improving its reputation and ability to attract partnerships, investments and talent. Furthermore, membership in DEI underlines Noda’s commitment to social responsibility, in line with his role in promoting fair practices and contributing to a more inclusive financial ecosystem. Overall, DEI is not only a moral imperative but a strategic advantage that promotes innovation, workforce stability and social impact, essential to the success of any fintech company operating in today’s dynamic financial landscape.”

Finance forever

Simon Paris, CEO of Finastra

Simone ParigiCEO at a financial software company Window She said:

“Attention to DEI within fintech is critical to helping advance finance forever, creating a world of more equitable, accessible, affordable and inclusive finance.

“Open finance, supported by open technology and a DEI mindset and culture, can transform societies, reduce bias and shape a progressive future. With fintech we can help fill gaps to promote economic empowerment and better reach the unbanked and underbanked. It helps lift people out of poverty, for example, by creating greater access to trade finance, reducing the cost of cross-border payments, reducing fraud and providing the first steps towards saving, wealth creation and financial management.

“With this type of social change, the industry can support greater financial inclusion. By maximizing digitalization and the power of connected ecosystems to transcend geographic and financial barriers, finance becomes more democratized. More people can access more banking services, whether they belong to the poorest sections of society or to niches with specific needs not sufficiently satisfied by the traditional banking system. At the same time, with the power of open finance, the cost of service is also reduced, making these new markets more attractive to institutions.

“We are fortunate to live in an era where finance is open. Banks and fintechs must continue to take advantage of this opportunity to work together and innovate to achieve results that benefit all of society.”

Promote a healthy culture

Bruce Lowthers, CEO of Paysafe

Bruce LowthersCEO at Paysafe said: “The best companies know the critical importance of having a diverse workforce. Study after study has highlighted improving quality metrics for companies that encourage a healthy, diverse, thinking culture. From a business perspective, our obligation at Paysafe to foster a healthy culture is to provide the structure for people to feel comfortable and supported.

“When we do this through groups like our social networks, people feel comfortable throwing ideas around without worrying about how their peers will react. Creativity flourishes based on trust and that is when people are doing well, improving business processes, creating new products and that is when a company attracts exceptional talent.”

Strategy for success

Elizabeth Hoemeke, CIO, One Inc

Elizabeth HoemekeCIO at digital payments platform, One Inc, She said:

“In the fast-paced world of fintech, where cutting-edge technology is critical to business growth, diversity, equity and inclusion act as an enhancer for innovation. A diverse workforce, made up of a diverse set of backgrounds, experiences and points of view, brings new perspectives to the table and challenges to the status quo. This fosters creative problem solving that allows fintech companies to address complex issues across the business.

“ DEI has also been shown to improve employee engagement. When people feel valued, respected, and empowered to contribute their ideas and opinions, they are more engaged in their work. Second McKinseyCompanies with strong DEI programs financially outperform their competitors because these programs improve employee morale, provide access to larger talent pools, and ultimately lead to a more productive and collaborative work environment where creative ideas thrive.

“As a result, DEI is not just a moral imperative, but a strategy for success that strengthens the entire fintech ecosystem. However, building and sustaining DEI efforts is not a one-off initiative. It must be an ongoing process that, if not actively promoted, can easily erode. A genuine commitment to DEI and an active contribution to a workplace where everyone feels empowerment is necessary for fintechs who want to create a truly inclusive and equitable work culture where everyone can thrive.”

Diverse teams are essential

Dr. Gena Cox, organizational psychologist, executive coach and speaker

Dr. Gena Cox, The organizational psychologist, executive coach and speaker said: “The fintech sector, known for its innovative reputation, faces a significant diversity problem that threatens its ability to drive innovation, build trust and compete globally . In the United States, McKinsey reports a lack of racial, ethnic, and gender diversity at both the employee and leadership levels. The UK faces similar challenges, with women holding just 30% of fintech jobs and 17% of senior leadership roles, and ethnic minorities are significantly underrepresented.

“However, some fintech leaders, such as MasterCard, recognize diversity, equity and inclusion (DEI) as a business imperative. They understand that diverse teams are essential to driving innovation, reaching underserved markets, building trust, attracting top talent, ensuring regulatory compliance and reflecting the diversity of global markets. As the industry faces increasing scrutiny for equity and inclusiveness, embracing DEI is critical for fintech to realize its transformative potential and set a new standard for inclusive finance.”

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

6 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

6 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

6 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

6 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.”