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Fasanara Bi-Weekly Digest



Trendy Fintech and Private Al

The Latest Fintech News:

  • IMF Report on Fintech Trends, Adoption & Challenges

  • Five Trends Shaping Fintech Into 2020

  • The Tipping Point for Indian Fintech

  • Mindtree Study: Gaining Value from AI Experimentation

  • Stripe, the world’s most valuable Private Fintech Company, Is Getting Into Lending

  • New P2P Entrants Have A ‘Second Move Advantage’.


IMF Report on Fintech Trends, Adoption & Challenges

According to a recent policy paper by the IMF and the World Bank where they surveyed central banks, finance ministries, and other relevant agencies in 189 countries, fintechs are not only expanding financial inclusion but also helping to boost economic growth in many countries.

Sub-Saharan Africa, for instance, is seeing the most growth in mobile money innovation, adoption, and usage. With a weak traditional banking infrastructure and a large rural population, the introduction of smartphones has enabled the region to become a global leader in mobile money accounts per capita, mobile money outlets, and volume of mobile money transactions.

In addition, cyber-security and data protection were identified as the two biggest threats to Fintech systems with the spillover effects spread across different sectors and countries. Despite the high awareness of cyber risks in most countries and frameworks in place to protect the financial systems, 79% of the higher income jurisdictions identified cyber risks in Fintechs as a major problem for the financial sector.

The survey suggests that only one-third of jurisdictions analysed the concentration risks emanating from the technological interdependencies threatening the financial infrastructure. While a high proportion of rich countries (83%) reported some monitoring of such threats, only half of the low-income countries had any checks and balances in place.

Five Trends Shaping Fintech Into 2020

Fintech has become a fast-moving field, and the next year should be no different with five trends in particular shaping fintech into 2020. Expect to see big banks continue to innovate, upping customer expectations for smaller banks and credit unions. Millennial customers will continue to be an increasingly valuable segment for small and midsize lending activity and other banking services. Paychecks will unbundle further to help customers manage their cash flow. And technologies, including AI, will automate rote work and free up bankers for high-touch customer service and complex transactions.

Mindtree Study: Gaining Value from AI Experimentation

According to findings of a recent survey by technology services and digital transformation company Mindtree, organisations worldwide are achieving their vision to industrialise artificial intelligence (AI) but many can do more to gain real business value.

The survey, which gathered data from 650 global IT leaders from key business markets, found 85 per cent of organisations have a data strategy and 77 per cent have implemented some AI-related technologies in the workplace with 31 per cent already seeing major business value from their AI efforts.

The study showed certain business functions such as sales (35 per cent) and marketing (32 per cent) gaining the most value from AI as it accelerates the delivery of improved customer experiences. The most popular technologies deployed by global organisations are machine learning (34 per cent), chatbots (34 per cent) and robotics (28 per cent).

Stripe, the World’s Most Valuable Private Fintech Company, Is Getting Into Lending

Stripe, the $22.5 billion payments company, announced the launch of a lending arm called Stripe Capital on Thursday. The new venture is meant to help online companies borrow money to grow their businesses — which in turn, helps Stripe’s business.

The San Francisco-based company joins a list of other technology companies competing with banks to offer loans to small businesses. PayPal and Square, fintech rivals in the payments business, both reported significant growth in their loan portfolios in the second quarter. E-commerce giant Amazon offers similar products to merchants on its payments network through “Amazon Lending,” an invitation-only program with loans as low as $1,000.

One advantage these tech companies have over traditional banks is data. Stripe and others are shunning a FICO score, the traditional way of assessing creditworthiness. Instead, they use payment history from their own platforms. Stripe, for example, will draw data from “advanced algorithms” to trends like payment volume, percentage of repeat customers, and payment frequency.

New P2P Entrants Have a ‘Second Move Advantage’

There are still plenty of opportunities for new entrants to expand the P2P market. In particular, there’s a clear ‘second move advantage’ for new potential entrants who have an opportunity to build systems and processes ready for the new Financial Conduct Authority (FCA) rules regarding SMCR – the new governance rules are not just about assigning responsibility to individuals. An effective control framework is required to document and demonstrate ‘reasonable steps’ have been taken.

The FCA has highlighted that whilst some areas of a firm’s business may be unregulated (like commercial lending), there still remains an overarching expectation that the standards of good conduct will be maintained – and that senior management will be held to account, if they are not. For new entrants, and for incumbents, it is this key point around getting the strategy right which is very important, as chasing an unobtainable forecast is a sure-fire way to create conduct risk problems in your business. That said, shrewd firms who take a realistic view of risk and reward should continue to prosper in the sector for many years.


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