The Fintech 5 (+2!) with Paula Grieco — SVP at Commonwealth

The Fintech 5 is a series of blog posts consisting of questions and answers designed to help you get to know the people in the Fintech Sandbox community.

Commonwealth is a national nonprofit that builds financial security and opportunities for financially vulnerable people through innovation and partnerships. These are interests we share. Through action-oriented innovation, Commonwealth is reshaping the financial industry to better serve individuals with low-to-moderate incomes (LMI) through collaboration with partners, policymakers, and employers on integrated solutions that transform communities and strengthen the economy.

Commonwealth collaborates with industry leaders to launch cutting-edge financial tools, security benefits, and transformative technologies to drive widespread adoption to create lasting change in financial security and wealth-building. Commonwealth’s mission is to make wealth possible for all through systemic workplace, financial and fintech innovation, and next-gen tech solutions.

Their recent research and initiatives include:

Paula Grieco is a Senior Vice President at Commonwealth, where she oversees a number of the organization’s initiatives, including inclusive investing and financial AI, as well as strategic marketing and development. Paula spoke at Boston Fintech Week in October on the topic of emerging technologies, such as generative AI, and their practical use in retail investing and other financial service solutions.

Paula Grieco — SVP at Commonwealth

#1. Paula, tell us about Commonwealth’s vision to have more than one million new low- and moderate-income investors by 2027, and to serve these investors responsibly.

Participation in capital markets is a proven driver of wealth creation. A growing body of research, both Commonwealth’s own and others, finds that people realize this—including and especially people living on low and moderate incomes (LMI), and that many want to participate and become investors. Yet there is an enormous gap between those who aspire to invest and those who actually participate in capital markets today.

We are embarking on a multi-year, national initiative to enable 1 million new investors—alongside a coalition of industry leaders committed to serving these new investors responsibly. This ambitious undertaking will showcase what is possible, demonstrate what we’ve learned, identify where and what policy actions are required, and foster new conversations about who can and should build wealth. Partnerships and sector collaborations are critical to effecting systemic change in the investing industry. Building the right coalition for this work is vital. The financial services industry will be critical to this coalition, as we see leadership and action by industry as the single most powerful lever of change. We welcome conversations with those entities looking to blaze new pathways for broader wealth creation.

#2. Why does Commonwealth want to get more college students interested in investing?

Actually, research demonstrates that college students are already interested in investing. We have a recent report where 80% of non-investor students from LMI backgrounds express a desire to invest. Commonwealth’s work is to ensure that this early investor market is recognized and served. Early investing presents an important opportunity for the 16.6 million undergraduate students enrolled at academic institutions and those who are recent graduates, providing a fundamental strategy for building long-term wealth and addressing pervasive racial and gender wealth gaps. Federal Reserve data shows white households hold on average eight times more wealth than Black households, with that figure growing to 17 times for the Millennial population and Gen Z.

A shift toward earlier financial engagement is evident: On average, today’s Gen Z adults began saving and investing at 19 years old, compared to baby boomers who started at age 35. Despite this progress, only 18% of young people aged 18-25 are currently investing, highlighting a significant opportunity to increase their involvement and set the foundation for greater financial security. The growing popularity of investing apps among young adults has likely contributed to the rise, creating unprecedented access to wealth-building opportunities for students interested in and actively investing.

However, despite an increase in the number of investors over the past decade, participation in capital markets remains lower among college students living on LMI, according to recent Commonwealth research.

#3. What are some of the barriers student investors from low- to moderate-income households encounter?

Commonwealth’s research reveals that while college students with LMI demonstrate an interest in capital market investing, they face significant barriers to building wealth. Our survey identifies three primary barriers that are likely to deter students with LMI from investing: fear of losing money, gender disparities, and knowledge gaps. These challenges highlight the importance of addressing the systemic concerns that may hinder college students with LMI and provide the necessary support to empower them.

Our work also offers areas of opportunity where industry leaders – financial institutions and fintechs, higher education bodies, and government—may play a role in fostering an inclusive investing ecosystem for college students with LMI. For financial institutions and fintechs, these include developing inclusive products tailored to the needs of these students and integrating streamlined technology features and positive messaging into educational resources and tools.

#4. What should we know about the potential of employer-provided student debt solutions?

Americans owe about $1.76 trillion in student loans, and one in four U.S. adults under the age of 40 has student loan debt. The average U.S. household with student debt owes $55,777. Clearly, student debt is a daunting issue for a significant portion of the population.

More than six in 10 people with student loans report that their student loan debt is a source of stress and emotional challenges (TIAA, 2020). Student loan repayment often takes priority over competing financial goals, preventing many Americans from building short-term savings or investing in retirement savings, and causing them to delay buying homes, getting married, and having children.

Employers can play a critical role in improving the financial well-being of their employees. Tens of millions of workers are feeling financial pressure and this financial stress is bleeding over into the workplace. In our research, we’ve found that nearly one-third of financially stressed employees say their finances are a detriment to their productivity. This is especially true for workers earning LMI. Yet, fewer than one-third of workers have access to workplace benefits that would help them manage critical financial needs. Employers can help build financial resilience for these employees with benefits like student debt assistance.

A 2021 survey by Betterment found that 74% of respondents would be likely to leave their job for an employer that offered better financial benefits; 24% overall, and 49% of Gen Z respondents, noted that student loan financial assistance or repayment programs could entice them to do so.

Many employers are offering student loan repayment assistance as a benefit to their employees to alleviate the student debt burden, and recent policies present new opportunities to do so. For example, the SECURE 2.0 Act allows employers to provide retirement contributions as a match for student loan payments, making retirement savings more possible for employees who are prioritizing paying off education loans.

Our research showed that 40% of respondents said student loan repayment benefits are very or extremely important to their overall employer benefit package. Asked to select the top three benefits they would participate in today if offered by their employer, 60% of respondents selected student debt relief; 47% selected an employer-sponsored retirement plan, and 38% selected an emergency savings solution.

By matching student debt payments with retirement contributions, workers may be able to double their 401(k) balances at retirement. In addition, focusing on student debt reduction and other benefits that address financial vulnerability such as emergency savings can help strengthen the health of the retirement plan benefit by increasing participation and reducing leakage from the plan.

#5. What is an “investor identity” and what can investment firms do to cultivate it among people who aren’t but could be investing today? 

Tens of millions of Americans live paycheck to paycheck with little savings cushion and no meaningful wealth. This is a significant market of “regular working people” who want to save and invest, but are not well served today. This customer wants to invest in capital markets. They want to build wealth. However, there are barriers to their participation, creating a gap between desire and action. Investor identity is one of these barriers.

Investor identity refers to perceiving oneself as the kind of person that can or should invest, and that one belongs in the community of people who invest. It is the feeling that investing is “for me” rather than a space where a customer feels like an outsider. Our research showed that investor identity can be cultivated and developed over time: in fact, 71% of participants told us investing was easier than they thought once they got started.

With support from the Nasdaq Foundation, we launched the “Transforming Investor Identity Research Project,” a groundbreaking, national research and pilot program designed to expand the investing community and make it more inclusive. Over a year, we followed more than 850 beginner investors who each received $150 in seed funding to invest at one of three leading financial platforms: Ellevest, Public, and Stash. Our research unearthed what attracts, motivates, and sustains these new investors so they feel welcome in the wider investing community.

The project provides insight into how the development of an investor identity can allow new investors to fully take advantage of the wealth-building opportunities afforded by retail investing by overcoming initial feelings of doubt, discomfort, or not belonging.

Alongside the research, we created a toolkit for practitioners who would like to better understand investors earning LMI and apply best practices to how to enable and support the development of investor identity. All of our recommendations are based on the research and vary in the level of effort required from incremental, “low-hanging fruit” to new strategic initiatives.

These solutions correspond to each stage of the consumer journey (attract, activate, and retain). For instance, in the “attract” stage, you might use identifiers that address this group directly such as “new investors” or “first-time investors” along with warm, welcoming imagery and content that demystifies the investing experience. In the “activate” stage, consider providing opportunities for beginner investors to participate without the risk of feeling embarrassed through things like chatbots, individual live chats, dedicated webinars, and AI tools that provide safe spaces to ask questions.

#6. Which fintech problem or solution are you personally most interested in right now?

I’m actually really interested in two issues. Over 42 million households are living on LMI. I’m personally most interested in democratizing investing for these individuals who have traditionally been underserved by the investment ecosystem. While technology has expanded access in recent years, the gaps remain stark, particularly for Black, Latinx investors, and women.

Having conducted extensive research into the needs and wants of LMI investors, we’ve piloted human-centered solutions that we believe can increase access and close the interest/action investing gap: modest seed funding, access to quality products, relevant and actionable investing knowledge, and a fundamental shift in who we expect can and should be an investor. The next step is to use this growing body of evidence to drive action by financial service providers, by fintechs, by policymakers, and by people living on LMI themselves.

Second, I’m interested in how financial AI can be unlocked to transform financial security for those living on low to moderate incomes. As has been the case historically, next-generation technologies provide new and creative ways to improve financial security and opportunity for everyone, but they can also carry new risks if they’re distributed unevenly.

Financial services leaders, fintech entrepreneurs, social impact innovators, and others shaping the financial system can have a major impact on creating financial security through the thoughtful use of these technologies. Harnessing the power of AI to serve these previously untapped consumer segments also opens up potential new customer opportunities. This is a pivotal moment for innovators to expand and engage their customer base and bring more people into the financial system.

For instance, our Emerging Tech for All research initiative shows that conversational AI provides a key opportunity to improve access for households living on LMI. These households are nearly twice as likely to want to bank through in-person interactions, yet have significantly lower access rates to local bank branches. Conversational AI can provide the personalized and context-sensitive support this group seeks at scale in a way that has never been possible before. In a Commonwealth field test, we also found that a majority (57%) of LMI participants felt that using a chatbot positively impacted their financial situation.

That said, concerns about privacy and security remain barriers to engagement with conversational AI in finance. Overcoming these barriers through clearer communication and transparent policies will be an important part of building the kind of trust that will allow conversational AI to better support customer financial health.

Our 2024 national survey report, Generative AI and Emerging Technologies, additionally offers actionable insights around larger trends in using generative AI, chatbots, and digital financial services.

#7. If you could change one thing about the fintech ecosystem, what would it be?

Financial insecurity and wealth gaps remain widespread. They cause concern across the political spectrum, and they create social and economic harm. If I could change one thing it would be to ensure that the needs of financially vulnerable people are understood, visible, introduced early into relevant conversations, and integrated into solutions. To that end, in 2023, Commonwealth set a bold four-year strategic vision to drive systemic change in the workplace, in emerging technologies, and in financial services, enabling 10 million working families to build $15 billion in equitable financial security and wealth by the end of 2027. Commonwealth remains dedicated to achieving broad financial security and opportunity for all through continued innovation and partnerships.

Bonus question! What is the best career or life advice you have received?

Commit to your goal – but pair that commitment with adaptability in terms of how to reach this goal.  You will inevitably encounter obstacles. The path to achieving a bold vision is rarely exactly as you planned it. I have found that a willingness and ability to pivot and to adapt, to be able to ask yourself, “How else might we do this?” or “What are our other options?” – is highly necessary to be effective.

Another bonus question! What’s the most interesting thing you’ve read recently?

I recently re-read “The Psychology of Money” by Morgan Housel. In the book, Morgan weaves historical and personal anecdotes on success and failures in capital markets as he shares both this theory on “the psychology of money” and evidence-based practical approaches to building wealth.

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The Fintech 5 with Dev Worah — Senior Client Partner at Slalom

The Fintech 5 is a series of blog posts consisting of questions and answers designed to help you get to know the people in the Fintech Sandbox community.

Dev Worah is Senior Client Partner & Head, Capital Markets, Asset & Wealth Management at Slalom, a global consulting company. Dev has over 25 years of experience leading strategy and innovation initiatives. He works with both multinational firms and technology startups and is skilled at guiding financial services firms through business transformations.

Slalom is a sponsor of Fintech Sandbox and Boston Fintech Week.

Dev Worah of Slalom

#1. Dev, what can I do at a Slalom Element Lab?

At Slalom Element Lab, we offer a unique environment where our customers and technology partners can quite literally experience the future. It’s a hands-on space designed to push the boundaries of what’s possible with emerging technologies. We curate interactive experiences tailored to specific industry challenges, enabling our customers to explore and experiment with cutting-edge solutions in a tangible way. The Element Lab empowers customers to not just talk about innovation but to actively shape it. It’s where they can test-drive the latest technology in a high-powered environment, unleash their creativity, and build innovative energy into the DNA of their businesses.

For instance, the Slalom Element Lab can help a brokerage company reimagine, firsthand, how it interacts and services its clients, using technologies like agentic AI, extended reality (XR) and digital twins in context of its retail branches, contact centers, and digital service experiences. With just one half-day curated experience inside our lab, businesses can gain a deeper understanding into these emerging technologies, reset perceptions around what’s possible, and leave energized with a clear action plan on how best to start introducing new capabilities into their organizations.

#2. Which fintech problem or solution are you personally most interested in right now?

In wealth management, I’m passionate about scaling and democratizing access to sophisticated financial and estate planning. Traditionally, high-touch, concierge-level financial advice has been reserved for high-net-worth individuals, leaving most people to navigate complex financial decisions on their own. However, this creates a significant advice gap, hindering many people from reaching their financial goals.

The convergence of human-centered AI, open banking, and evolving regulatory frameworks offers a timely opportunity to bridge this gap and empower individuals to achieve their financial aspirations.

Imagine an AI-powered wealth management advisor—similar to a personal CFO—that understands your goals, preferences, and financial history. By analyzing data and interacting with you and your family, it provides personalized advice, proactive financial health monitoring, and goal-driven planning, all while collaborating closely with your trusted team of financial experts (e.g., attorneys, tax consultants). This digital advisor could leverage vertical LLMs trained on financial data and AI-driven platforms, becoming an always-available resource dedicated to your family’s financial well-being.

Both WealthTechs and incumbents are working toward this vision, and I’m excited to see how the space evolves over the next couple of years.

#3. Where are we in terms of AI adoption in financial services?

The financial services industry is undergoing a significant transformation driven by AI, though we are still in the early stages of adoption. As we enter 2025, forward-thinking firms are integrating AI solutions into their operations after seeing successful results from AI pilots. Our financial services customers are increasingly leveraging AI to boost efficiency, compliance, and customer experiences. Key applications include automating customer interactions with chatbots and virtual assistants, providing personalized financial advice, and streamlining processes like claims processing, mortgage approvals, and document analysis. AI also plays a crucial role in fraud detection, risk assessment, and regulatory compliance, ensuring security and adherence to evolving standards. In capital markets, AI is enhancing financial analysis, market insights, and algorithmic trading.

While there are challenges, such as data privacy, fairness in decision-making, and the integration of AI into legacy systems, organizations are overcoming these hurdles with a value-based prioritization approach. As these challenges are addressed, we can expect to see significant progress in AI adoption throughout the industry in 2025, unlocking even greater potential for innovation and growth.

#4. How has participation in Boston Fintech Week been beneficial to Slalom?

Slalom’s involvement over the last three years with Boston Fintech Week has delivered significant advantages, unearthing crucial insights into the latest industry trends, emerging technologies, and disruptive innovations impacting financial services. This frontline exposure not only enhances our understanding of where the industry is headed but also enables us to provide our clients with strategic guidance and innovative solutions that align with the rapidly evolving fintech landscape.

In fact, we have leveraged the Boston Fintech Week platform to invite our customers and key partners into more conversations, providing them with unique opportunities to explore potential solutions, connect with innovative startups, and gain a deeper understanding into the evolving fintech landscape. This has allowed us to continue to “bring more” for our customers, while also building a more vibrant fintech community in New England.

#5. What advice do you have for startups about partnering successfully with incumbent firms?

Startups often underestimate the complexity and priorities of enterprise-scale financial services firms. My advice is to focus on understanding the incumbent’s specific pain points and clearly demonstrate how your solution delivers measurable value. Find opportunities and quick wins to exemplify the value of your solution as early as possible. Adapt to their systems and regulatory environment, while approaching the partnership with flexibility and scalability in mind. Relationship-building is equally critical; take time to engage key stakeholders and align your goals with theirs. Finally, be prepared for a longer sales cycle—quick wins through pilots or proof of concepts can accelerate trust and open doors for deeper collaboration.

Bonus Question! What’s the most interesting thing you’ve read recently?

I’m not someone who usually reads books cover to cover, but here are two I’ve been diving into recently that have really stuck with me:

  1. The Power of Regret by Daniel Pink has been a game-changer for me. It’s given me a fresh way to think about regret and how to respond to it. I’m excited to put Pink’s ideas into practice—learning from regrets and using them as a springboard for personal and professional growth.
  2. Mindset by Carol Dweck is another fantastic read. Dweck does such a great job of explaining the power of a growth mindset and shares practical tips for embracing challenges, pushing through tough times, and turning failures into opportunities to learn. Her ideas are so helpful for work, relationships, leadership, and life in general.

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The Fintech 5 (+1!) with Jennifer Perry — Managing Director at J.P. Morgan

The Fintech 5 is a series of blog posts consisting of questions and answers designed to help you get to know the people in the Fintech Sandbox community.

Jen Perry is Co-Head of Technology Banking, Innovation Economy at J.P. Morgan Commercial Banking where she leads a team supporting high-growth technology companies, founders and venture capital firms across sectors, including fintech. Some of you may be familiar with her from her appearance at Boston Fintech Week in 2023.

Jen Perry, Managing Director at JPMorgan

#1.    Jen, what are some of the ways J.P. Morgan works with fintech startups?

The Payments Banking team within J.P. Morgan’s Innovation Economy business works with companies focused on various facets of the payments ecosystem including fintech software, payments-forward applications, insurtech, payroll, billing software and more. The team helps manage these companies’ deposits and day-to-day transfer of money between parties encompassing payment processors, gateways, and financial technology firms, ensuring secure, efficient and convenient transactions globally.

Payments are a critical capability for the firm more broadly, and our team works closely across J.P. Morgan’s lines of business and with third parties to support fintech startups in a variety of ways. We partner with innovative fintechs to launch new payments solutions, foster an ecosystem of hundreds of third parties that integrate with J.P. Morgan Payments, and regularly invest to reinforce strategic partners and acquire key capabilities.

#2.    What solutions does J.P. Morgan offer startups?

Our goal is to support founders and their companies from inception to IPO and beyond. In addition to providing operating accounts and credit cards, we can provide liquidity management, international capabilities, foreign exchange, cap table management and a variety of debt financing options, including venture debt. Our connectivity to J.P. Morgan’s leading global investment banking franchise positions us well to support capital raising and financing, and strategic advisory when a company is considering an exit. For founders and employees, we also offer a full suite of private banking, wealth transfer planning and mortgage solutions to meet their personal banking needs. Ultimately, J.P. Morgan can grow with you through every stage of your company’s life cycle.

#3.    Does J.P. Morgan work with early stage fintech startups?

Yes! Within our Innovation Economy practice sits a team comprised of seasoned banking professionals as well as former founders, investors and startup mentors who understand the needs of pre-seed and seed stage companies. We offer early-stage founders a simple and seamless banking experience, and connections within and outside of the firm to help advance their networks and scale their businesses.

#4.    You lead a commercial banking team. Where do you see the greatest opportunities for innovation in commercial banking?

Over the last several years, fintechs have identified significant opportunities for innovation across the broader financial services industry and have encouraged more traditional institutions to think differently. We believe that banks can learn a lot from fintechs, and vice versa. For example, many banks have placed an increased focus on data science to help better understand their customers and inform digital strategies.

#5.    Which fintech problem or solution are you personally most interested in right now?

We are at a very interesting moment in the broader tech industry, including fintech. I’m eager to see how the next evolution of artificial intelligence will evolve the fintech sector, as well as how companies will maintain environmentally friendly operational practices.

#6.    What is your outlook for fintech startups in 2025?

We are cautiously optimistic that there will be opportunity to raise capital from private investors in 2025, especially for fintechs that can show operational efficiency and a path toward profitability. It will be important for fintechs to truly understand the regulatory aspects of their business and work with partners that can sustain their business long term. Investors are much more judicious than they were just a few years ago, so it’s important that founding teams develop strong support systems that can help prepare them to engage in fundraising or a transaction.

Bonus question! What is the best career or life advice you have received?

As a woman in financial services, a partner once shared with me that while I knew the answers and had a lot to say, people were either not hearing me or listening to me. She noted that it could be a number of reasons – my tone, volume or projection – but that I needed to find a way to make sure people could really hear me. It was hard feedback to receive, but has been invaluable in my professional life.

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The Opportunity for Fintech Sandbox Across the Next Decade: Navigating to the Next Point on the Horizon

By Sarah Biller, Fintech Sandbox Co-Founder

Today’s financial services sector operates amidst a maelstrom of change and opportunity. Who could have guessed that 2024 would be the year the first patent for a system capable of connecting satellites, blockchains and stablecoins for space-based transactions – or, in essence, payment connectivity beyond Earth’s atmosphere – would be filed? As far out as a new space-based economy may sound, innovation is not a new concept to financial services.

Our industry is replete with examples where financial services innovators have leveraged the latest technologies to conduct transactions and open-up new distribution channels that meet the demands of not just current customers or markets, but of those in the future. Equally, there are times in recent memory where we as an industry have lagged.

When we asked ourselves back in 2014 what factors were stalling industry innovation, we identified data as the essential but missing input. Though the concept of big data had been in existence for almost a decade and half, leaders at financial services firms had been focused for the preceding five years on creating stability against extreme events triggered by the 2008 credit crisis. Data was at best an afterthought. It was locked in siloes, often on prem and not easily procured by entrepreneurs.

For the founders of Fintech Sandbox, our personal experiences as entrepreneurs and investors told us that innovating during times of disruption offers more opportunity for growth and relevance than managing exclusively for continuity. This ability to adjust and to innovate to changing market conditions and customer demands is the essence of resilience.  We concluded that figuring out how to put data in the hands of Fintech founders would catalyze the next generation of products, services and analytics for a rapidly digitizing economy. As Albert Einstein famously quipped, “We can’t solve problems using the same kind of thinking we used when we created them”.

Fintech Sandbox was launched in 2015 to provide free access to critical data and resources to entrepreneurs around the world through our first of its kind Data Access Residency program. We were joined by some of the world’s most important market data providers in this journey and, ten years in, Fintech Sandbox entrepreneurs have built hundreds of new products and services, created thousands of jobs, and attained more than $2.0 billion in private company funding.

Though the volume, variety and velocity of data has increased at rates more than projected across the past decade, we can argue this exponential growth was foreseen. Largely fueled by the availability of diverse datasets and vastly improved data aggregation layers (e.g., machine learning, natural language processing, computer visioning, etc.) and computing power, among other forces, there has been a step change in the capabilities of artificial intelligence that is revolutionizing not only financial services, but all data-driven industries.

From the introduction of real-time payments, to the decreasing cost of quantum computing, to the advent of new cybersecurity tools, to an energy transition fueled by the capital markets, and on to the more recent introduction of generative AI, unprecedented advances in technology are driving extraordinary and positive change in the financial services sector. Yet high quality, differentiated datasets are needed more than ever to meet the demands of an ever-diversifying customer base, a steepening product development curve, and, no surprise, the rapidly advancing agentic artificial intelligence capabilities that will reduce human intervention and alter our financial system again.

It is also true that these capabilities are enabling bad actors to steal identities, fraud to be perpetuated in a blink of an eye, bank runs to accelerate with the speed of an avalanche, and rogue nations to fund acts of terror, among other challenges. The consequence of this “arms race” is a profound need for a safe and secure data environment for entrepreneurs and industry innovators to test the efficacy, safety, and robustness of their defenses and solutions. We see from our work with some of the globe’s most progressive fintech entrepreneurs, that it is not just the ability to reinvent and innovate in front-end systems or investment products, but in infrastructure and compliance, as well.

Fintech Sandbox is well-suited to address this need and, perhaps, the only organization able to convene natural competitors, innovators, academic partners and industry. We are reexamining our learnings on the role of data in driving forward innovative fintech solutions considering these new opportunities, heightened challenges, and incredible technical capabilities (and those to come). Our discussions have centered on how we extend our decade-long support of entrepreneurs building innovative solutions for the financial services sector while ensuring the needs of entrepreneurs who are leaping past a legacy definition of our industry and embedding fintech into health, energy, transportation, consumer goods and other categories are also met.

From our start, we have worked together with entrepreneurs, data providers and industry partners in periods of dislocation and uncertainty. We are proud to have played a central role in advancing innovation in financial services. We are now entering a profoundly important period of change where the opportunity to build a more resilient world economy hinges, in part, on the extension of our capabilities into other sectors. With a decade under our belt, we can say with certainty that the availability of new and differentiated datasets matters more than ever.

The fintech community with the right tools has the power to remake our industry, economies and, even, societies for the better. Our vision at Fintech Sandbox is to expand our support to entrepreneurs who are building for a sustainable future. We know firsthand when ideas are paired with data they turn into reality, and we want to be right in the middle of this important work.

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Fintech VC Trends & Predictions

We may have gotten ahead of ourselves when we named this Boston Fintech Week panel. VC funding for fintech startups isn’t exactly taking off like a rocket just yet, but there are bright spots.

How did we get here? Our all-star panel starts by looking back five years ago, when the zero-interest-rate environment, combined with FOMO, and COVID, and big piles of cash, led investors to miss-price risk. Tourists, without deep fintech experience, piled in.

But then interest rates rose, Silicon Valley Bank fell, Synapse went bankrupt, and we experienced a correction.

Have we returned to pricing risk appropriately? To building high-quality companies?  Is the table set for a recovery? These are just a few of the topics our panelists addressed. Plus:

  • Which fintech sector is harder to finance (even when the companies are doing well).
  • Why deposit stickiness won’t be going forward what it was in the past.
  • What early-stage investors are looking for. (Hint: authenticity and the ability to describe a credible go-to-market strategy.)
  • Why stablecoins are gaining traction.
  • Where investors see shocking levels of performance improvement coming from AI.

 

The Fintech 5 with Dan New — Managing Director at EY

The Fintech 5 is a series of blog posts consisting of questions and answers designed to help you get to know the people in the Fintech Sandbox community.

Dan New is a Managing Director at EY, a member of the Fintech Sandbox Advisory Board, and an integral part of the fintech ecosystem in Greater Boston, where he is based. Dan has extensive experience helping clients improve both the effectiveness of their operations and their internal controls.

He is also passionate about helping clients succeed in, and adapt to, a rapidly changing technology and financial services environment.

Dan New of EY
Dan New

Question #1. Dan, what are some of the ways EY works with fintechs at the startup stage?

We collaborate with fintech startups in many different ways, but there is no “one size fits all”. We first want to know and understand them (and have them get to know us). As the relationship evolves, we could provide:

  • Strategy Services: Strategic guidance on business planning.
  • Regulatory Compliance: Assistance with understanding and complying with financial regulations to mitigate non-compliance risks.
  • Technology Consulting: Support in utilizing technologies like blockchain, AI, and cloud computing for building scalable platforms.
  • Funding and Investment: Aid in preparing for funding rounds, including valuation, due diligence, and investor connections.
  • Networking Opportunities: Access to events and workshops for connecting with industry leaders and potential partners.
  • EY FinTech Adoption Index: Visibility and insights through participation in fintech trend studies and consumer adoption research.
  • EY wavespace™: A network of innovation centers for collaborative growth strategy development and business model refinement.
  • Cybersecurity and Risk Management: Services to enhance cybersecurity measures and manage risks.
  • Core Accounting Firm Services: Tax advisory, external audits and/or attestation reports (SOC).

Our services aim to help fintech startups navigate early-stage challenges and succeed in the competitive financial technology landscape.

#2. How are fintech innovations empowering consumers to take control of their financial health?

Today, consumers are increasingly taking the driver’s seat in managing their financial health, thanks to a myriad of fintech innovations.

  • Personal Finance Management Tools. These platforms aggregate financial data from various sources, providing users with a holistic view of their finances. With features like expense tracking, budgeting, and financial goal setting, consumers can make informed decisions and take proactive steps towards financial stability.
  • Open Banking. Open banking is another game-changer, breaking down the walls that once kept consumer data in the hands of a few institutions. By leveraging APIs, fintech companies can offer services that use consumers’ banking data (with their permission) to provide personalized advice, better loan rates, and more competitive savings products.
  • Peer-to-Peer Lending Platforms. The borrowing landscape is also transforming. Peer-to-peer (P2P) lending platforms bypass traditional banking channels to connect borrowers directly with investors.
  • Micro-Investment Apps. Investing is no longer the exclusive domain of the wealthy. Micro-investment apps have lowered the barrier to entry, allowing consumers to invest small amounts of money regularly.

As we look to the future, one thing is clear: the power to shape your financial destiny is increasingly in your hands. My colleague and friend, Matt Hatch (EY’s America’s FinTech Leader), recently wrote a blog post on similar topic which adds additional insights.

#3. How has participation in Boston Fintech Week been beneficial to EY?

We have been a sponsor, attendee and active participant in Boston Fintech Week since the start and have benefited from this participation in several ways:

  • Brand Visibility: Increased awareness and marketing opportunities to startups.
  • Thought Leadership: Establishing EY as a thought leader through panel discussions and presentations.
  • Networking: Connecting with fintech startups, financial institutions, tech providers, investors, and regulators.
  • Market Insights: Gaining knowledge of industry trends and innovations to help refine our services and strategies.
  • Talent Acquisition: Recruiting top fintech talent.
  • Client Engagement: Strengthening relationships with existing clients and better understanding their needs.
  • Innovation Ecosystem: Collaborating within the fintech community.
  • Regulatory Dialogue: Engaging with regulators to better understand the evolving regulatory framework.
  • Showcasing Solutions: Demonstrating our fintech success stories.

Overall, participation in Boston Fintech Week has helped us strengthen our position in the fintech sector, create new business opportunities, and stay connected with the latest industry developments. We are looking forward to Boston Fintech Week 2024 (October 14 -18, 2024)!

#4. Where do you see the biggest opportunities to apply AI to compliance and risk management challenges?

The application of Artificial Intelligence to compliance and risk management presents numerous opportunities to enhance efficiency, accuracy, and effectiveness, including:

  • Regulatory Compliance Monitoring: Real-time monitoring and interpretation of regulatory changes.
  • Transaction Monitoring and AML: Analysis of transaction data to detect fraudulent or money laundering activities.
  • KYC and CDD: Automation of data collection, verification, and risk assessment in customer due diligence, plus ongoing risk profile monitoring.
  • Risk Assessment and Management: Analysis of vast data sets for risk identification and predictive analytics for forecasting.
  • Credit Scoring and Lending: Advanced AI models for more accurate credit risk assessments, supporting informed lending decisions and broader credit access.
  • Fraud Detection and Prevention: Anomaly detection and pattern recognition to adapt to evolving fraud tactics using historical data.
  • Regulatory Reporting: Automated data gathering and report generation for regulatory compliance, enhancing accuracy and efficiency.
  • Cybersecurity: Continuous network monitoring for potential breaches and real-time threat response.
  • Model Risk Management: Validation of AI model performance and compliance with risk thresholds and regulatory standards.

Overall, the biggest opportunities lie in the ability of AI to handle large volumes of data with speed and precision, uncover insights that might be missed by humans, and adapt to new patterns and trends.

#5. Which fintech problem or solution are you personally most interested in right now?

Some of the fintech problems and solutions that are generating significant interest in the industry include:

  • Financial Inclusion: Fintech solutions that aim to provide financial services to the unbanked and underbanked populations are of great importance. Technologies like mobile banking, microfinance, and digital wallets can help increase access to financial services for those who have traditionally been excluded from the financial system.
  • Regulatory Technology: Regtech solutions which aim to simplify and streamline compliance with financial regulations using technologies like AI, machine learning, and big data analytics.
  • Payment Innovations: The continuous evolution of payment technologies, including contactless payments, instant payments, and cross-border payment solutions, is a key area of interest.
  • Blockchain and Cryptocurrencies: The application of blockchain technology in fintech extends beyond cryptocurrencies. It includes solutions for supply chain finance, smart contracts, and tokenization of assets. Cryptocurrencies themselves are also a hot topic, with discussions around their regulation, integration into traditional finance, and potential as an investment.

Bonus question! What is the best career or life advice you have received?

I was told by a mentor if I did not care about you, I would not take the time to provide critical feedback. At the time, I did not want to hear the critical feedback, but it made me a better person, employee and advisor to my clients. The feedback helped with:

  • Growth and improvement
  • Self-awareness
  • Adaptability
  • Quality of work
  • Motivation
  • Trust
  • Professional relationships
  • Problem-solving

They could have easily left the meeting and said, “Great meeting” (even if it was not). I would have felt good (in the short term) but would not have helped my long-term growth. But by taking the time to provide quality, actionable feedback, it made me better. I have never forgotten this. It was not always easy to hear, but by approaching criticism with an open mind and a willingness to learn, I was able to transform feedback into positive change and continuous improvement.

Bonus bonus question! Which podcasts do you listen to?

I listen to various podcasts while out for walks, in the car, or just to clear my mind. Some podcasts I listen to regularly include:

  • All-in
  • Industry veterans (close friends who have different political, business and life views) cover all things economic, tech, political, and social.
  • Various podcasts on my favorite Boston sports teams (city of Champions 😊).
  • Business Wars
  • Business Wars uncovers bitter feuds and highlights what drives the world’s biggest companies, their leaders, inventors, and executives, to new heights and untold riches – or to ruin.
  • The Rewatchables
  • Film podcast discussing movies we cannot seem to stop watching. If you enjoy movies, this is a great listen about movies you have probably seen several times.

# # #

The Fintech 5 with Michelle Bonat — Chief AI Officer at AI Squared

The Fintech 5 is a series of blog posts consisting of questions and answers designed to help you get to know the people in the Fintech Sandbox community.

Michelle Bonat, CAIO at AI Squared, merges finance and technology expertise to spearhead AI initiatives. With an MBA from Kellogg, she founded a fintech startup, led AI innovation at Chase Bank, and patented her technology. At JPMC, she served as AI CTO, driving transformative projects. Her career includes time as a software executive at Oracle, and product leadership at Ariba and startups, showcasing her strategic prowess. Passionate about diversity, she mentors, judges, and teaches coding to underrepresented groups. A sought-after speaker, she addresses AI, tech, and innovation. Bonat’s leadership at AI Squared reflects her commitment to solving impactful problems with AI and data, delivering cutting-edge solutions for enterprises. Her career trajectory underscores her vision and execution capabilities honed over years of experience in technology and finance.

Michelle Bonat

Question #1:  Michelle, what is an AI Playbook and why is it important?

Recently, I created an AI Playbook that can be used by any organization. An excerpt of this playbook is below. You can find more details here.

A Step-by-Step Guide to Creating your Organization’s AI Playbook: Boat or Moat?

This AI playbook helps you determine if your AI strategy should be geared towards more of a boat (advancing your position) or a moat (defending your position).

An AI playbook is a strategic document that outlines an organization’s approach to implementing and leveraging artificial intelligence (AI) technologies. It includes a series of steps, best practices, and guidelines for integrating AI into various aspects of the business.

Here are some key components that should be included in a organization’s AI playbook:

  1. Business Objectives and Use Cases: Define AI objectives, identify use cases, prioritize based on business needs, develop a rating system, revisit monthly, evaluate quarterly.
  2. Data Strategy: Establish a comprehensive data strategy covering collection, governance, quality, storage, privacy, and security. Ensure ethical compliance and quality management.
  3. Ethical and Regulatory and Governance Considerations: Establish ethical AI guidelines, conduct risk assessments, engage stakeholders, ensure regulatory compliance, and establish model governance procedures.
  4. AI Development Lifecycle: Define your AI lifecycle: ideation, data prep, model dev, testing, deployment, monitoring. Specify team roles.
  5. Model Selection and Evaluation: Define criteria for AI model selection, evaluation metrics, and validation procedures. Specify rules for use of external services like ChatGPT.
  6. Implementation Roadmap: Implement AI in phases with timelines, milestones, and resource allocation. Pilot, scale, iterate based on feedback. AI relies on circular development cycles.
  7. Ethical and Responsible AI Principles: Embed ethical AI principles: fairness, transparency, accountability, bias mitigation in development and deployment. Enforce these principles.
  8. Risk Management and Compliance: Identify AI risks: legal, regulatory, reputational, operational. Develop mitigation strategies, ensure compliance.
  9. Security and Privacy Measures: Utilize secure AI: safeguard data, systems from cyber threats, breaches. Use privacy-preserving techniques, encryption.
  10. IP Protection: Define your IP strategy: Copyrights, Trademarks, Patents, Open Source. Determine an offensive or defensive patent approach. Choose license options.
  11. Cross-Functional Collaboration: Encourage cross-departmental collaboration: data scientists, engineers, analysts, legal, stakeholders. Define team structures and communication.
  12. Training and Capacity Building: Offer AI training: workshops, resources, certifications. Empower staff with skills for effective AI use.
  13. Continuous Improvement and Optimization: Establish continuous improvement for AI: feedback loops, performance monitoring, refinement based on real-world usage. Ensure auditable processes.
  14. Documentation and Knowledge Sharing: Share AI best practices, lessons, case studies. Create repositories for code and models. Consider an internal data, feature, and model sharing marketplace.
  15. Stakeholder Communication and Engagement: Engage stakeholders: employees, customers, partners, regulators, media. Promote transparency, trust. Educate on AI processes. Hold monthly updates.

By incorporating these components into a comprehensive AI playbook, your organization can establish a structured and disciplined approach to AI governance and maximize the value and impact of your AI investments while mitigating risks and ensuring ethical and responsible AI deployment. By completing this playbook your optimal approach “Boat” vs “Moat” becomes more clear. This playbook is a living document that grows with your organization.

#2.  How do we keep historical biases out of generative AI?

Thank you for this question! Keeping historical biases out of generative AI is a complex challenge that requires a multi-faceted approach. Here are some strategies to keep it on point:

  1. Diverse Training Data: Ensure that the training data used to train the AI model is diverse and representative of different demographics, cultures, and perspectives. Use training data that reflects your customers. This can help mitigate biases that may arise from a narrow or skewed dataset.
  2. Bias Detection and Mitigation: Implement techniques to detect and mitigate biases in the training data and model outputs. This may involve using fairness-aware learning algorithms and techniques such as adversarial debiasing or counterfactual data augmentation.
  3. Human Oversight and Evaluation: Incorporate human oversight and evaluation throughout the development process to identify and address biases. This can involve expert review, bias audits, and user testing to assess the fairness and inclusivity of the AI system. Consider red teaming, a method of testing AI models to identify vulnerabilities and prevent harmful behavior,
  4. Transparency and Accountability: Promote transparency in the AI development process by documenting data sources, model architectures, and decision-making processes. Establish clear accountability mechanisms to address instances of bias and ensure responsible AI deployment.
  5. Bias Impact Assessment: Conduct thorough impact assessments to understand how biases in the AI system may affect different groups and communities. Take proactive measures to mitigate potential harms and ensure equitable outcomes.
  6. Continuous Monitoring and Updating: Implement systems for continuous monitoring and updating of AI models to identify and address biases that may emerge over time. This may involve collecting feedback from users and stakeholders and retraining the model with updated data.
  7. Ethical Guidelines and Standards: Adhere to ethical guidelines and standards for AI development, such as those outlined in frameworks like the IEEE Global Initiative on Ethics of Autonomous and Intelligent Systems or the Principles for AI developed by organizations like the Partnership on AI. Get familiar with the recently passed EU AI Act. While the scope for this is currently Europe, we expect it to be adopted at some point globally, much like GDPR got its start in Europe.

By incorporating these strategies into the development and deployment of generative AI systems, we can work towards minimizing historical biases and promoting fairness, diversity, and inclusivity in AI applications.

#3.  What are the biggest risks arising out of generative AI in financial services? What do you worry about?

Generative AI in financial services holds great promise for tasks such as fraud detection, risk assessment, portfolio optimization, and customer service. These are “classic” use cases in financial services that have benefitted from including AI into these processes. Now with GenAI coming into use, we’re seeing organizations incorporating GenAI into these critical processes. However, there are numerous potential risks associated with the use of GenAI in organizations:

  1. Data Privacy and Security: Generative AI models trained on financial data may inadvertently expose sensitive information about individuals or organizations, leading to privacy breaches and security vulnerabilities. Using external foundation models and services like ChatGPT may exacerbate this. Make sure your organization establishes rules for usage of these external services.
  2. Algorithmic Bias: Biases present in the training data used to train generative AI models can lead to biased outcomes in decision-making processes, such as loan approvals or investment recommendations, potentially perpetuating or exacerbating existing inequalities. Particularly in finance, which is highly regulated, we need to pay attention to the origins of the training data.
  3. Model Robustness and Reliability: Generative AI models may produce outputs that are not sufficiently robust or reliable for critical financial decision-making, leading to errors or unexpected behaviors that could have significant financial consequences. This could create end user frustration and inaccurate or harmful results.
  4. Adversarial Attacks: Generative AI models may be vulnerable to adversarial attacks, where malicious actors manipulate input data to produce undesirable outcomes, such as generating fake transactions or bypassing fraud detection systems.
  5. Regulatory Compliance: The use of generative AI in financial services may raise regulatory concerns related to transparency, accountability, and compliance with laws and regulations governing financial transactions, data protection, and consumer rights. Imagine talking to a regulator and explaining the the output given to a customer or employee may be different every time.
  6. Systemic Risk: If widely adopted, generative AI models could introduce new sources of systemic risk to financial markets, such as amplifying market volatility or creating unforeseen correlations between assets.
  7. Ethical Considerations: The deployment of generative AI in financial services raises ethical questions about fairness, accountability, and the potential impact on individuals and society, particularly in terms of financial inclusion, access to credit, and the distribution of economic opportunities.

To mitigate these risks, financial institutions should implement robust governance frameworks, adopt best practices for data management and model validation, invest in cybersecurity measures, prioritize fairness and transparency in AI development, and engage with regulators and stakeholders to address regulatory and ethical concerns. Beyond this, ongoing research and collaboration between industry, academia, and policymakers are essential to address emerging challenges and ensure the responsible and ethical use of generative AI in financial services. I’m happy to report that this collaboration is already underway.

#4.  If you could change one thing about the fintech ecosystem, what would it be?

If I could change one thing about the fintech ecosystem, it would be to systematically and permanently enhance financial inclusion on a global scale. Despite significant advancements in financial technology, there are still millions of people worldwide who lack access to basic financial services such as banking, credit, and insurance. This lack of access perpetuates economic inequality and limits opportunities for individuals and communities to thrive. While I was at JPMorgan Chase. I was so impressed with the strides the company took to work on this, yet there still remains an enormous amount to be done.

To address this, I would focus on:

  1. Developing Solutions for Under-Served Populations that are economically viable for the ecosystem: Encouraging fintech innovation that specifically targets under-served populations, such as the unbanked and underbanked, by providing affordable and accessible financial products and services tailored to their needs. This shouldn’t be a charity; it should function as a business.
  2. Improving Financial Literacy and Education: Investing in financial literacy programs and initiatives to empower individuals with the knowledge and skills to make informed financial decisions and effectively utilize fintech tools and services.
  3. Easing Regulatory Barriers while Maintaining Protections: Working with regulators and policymakers to create a supportive regulatory environment that fosters innovation while ensuring consumer protection and mitigating risks associated with fintech solutions.
  4. Promoting Collaboration and Partnerships: Encouraging collaboration and partnerships between fintech companies, traditional financial institutions, governments, NGOs, and other stakeholders to leverage their respective strengths and resources in advancing financial inclusion efforts.
  5. Harnessing Technology for Social Impact: Leveraging emerging technologies such as blockchain, artificial intelligence, and mobile connectivity to develop innovative solutions that address specific barriers to financial inclusion, such as access to credit, identity verification, and remittance services.

By prioritizing financial inclusion within the fintech ecosystem, we can work towards creating a more inclusive and equitable financial system that empowers individuals and promotes economic prosperity for all.

#5.  What fintech problem or solution are you focused on or most interested in right now?

I’m fascinated by a few opportunities in fintech and the broader ecosystem.

  • How enterprises can leverage AI safely, securely, and in a way that both leverages their own data and at the same time respects (and reflects) their own customers. I expect quality and efficiency tradeoffs we’re all making to improve. For example, should I use ChatGPT for my enterprise to quickly spin up a GenAI system, even if it may take my data? Should I use a foundation model to accelerate an AI experiment even if it may be biased and not reflect my customers, and possibly (probably) be trained on data that does not reflect my customers? Instead of LLMs (Large Language Models) think about SLMs (Small Language Models).
  • Empowering companies around AI regulation. In March of 2024, European lawmakers passed the first major regulatory act around AI (Read about it here). This EU AI Act is expected to take effect this summer for Europe. It provides ground rules to cover how AI is being used. It is the world’s first comprehensive legal framework for regulating artificial intelligence. The AI Act aims to create a safe, ethical, and transparent legal framework for developing, marketing, and using AI in the EU. The act also aims to foster innovation and investment in AI, improve governance and enforcement, and create a single EU market for AI. Similar to how GDPR resulted in global convergence on general data protection and transformed how US privacy laws protect consumers in the US, it is expected that this recent AI legislation in Europe will impact AI regulation in the US. This is an opportunity for entrepreneurs to assist with this regulatory lift.
  • How the fintech ecosystem can be more efficient and equitable with funding ideas. Fintechs and startups in general spend a lot of time connecting with funders, which is time spent they could be working on their business.

Bonus question! What is the best career or life advice you have received?

One of the best pieces of advice I’ve received is to embrace lifelong learning. In both career and life, the world is constantly evolving, and new opportunities and challenges arise. By committing to continuous learning and personal development, you not only stay relevant in your field but also open yourself up to new possibilities and growth opportunities.

I’m fortunate to be a Kellogg graduate, a school which embraces lifelong learning for their alumni. Recently I participated in the Kellogg Global Leaders Summit for alumni where we gathered for a few days in Miami to share learnings, and I was proud to give back and speak to this community about AI.

For me, this also translates to how I like to build workplace teams. I optimize hiring for people that embrace a lifelong learning philosophy. The AI techniques they know today may pass in popularity, but people that have a hunger to learn and experiment will always have an edge in fast moving tech arenas.

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Meet Proov.ai — A Demo Day[s] 10 Presenting Startup

This year, FinTech Sandbox Demo Day[s] will take place across two days, April 9 & April 11. The presentations will be virtual and the event, as always, is free. Demo Days are exciting because we get to showcase startups that are on the very cutting edge of innovation and you get to see what they’re up to before they’re discovered.

Today, we’re talking to Maya Urman Bahar, Co-Founder & CEO of Tel Aviv based Proov.ai. Bridging the gap between data science and compliance teams, Proov.ai disrupts fintech regulation with automated model validation, revolutionizing Model Risk Management for banks. Proov.ai is presenting on Thursday, April 11.

Q. Maya, tell us a bit about Proov.ai. What problems are you solving?

A. All Models in financial institutions need to be governed to meet regulations. The approval process is lengthy, costly, manual and unorganized. FinTech Data Science teams are forced to constrain and compromise the accuracy of the models to meet regulatory review requirements.

Q. What is your company’s origin story?

A. Einat and I, having worked together at a fintech company, encountered the widespread challenge of a lengthy and costly model approval process, which not only compromised the accuracy of our models but also directly impacted the company’s bottom line. Recognizing the inefficiency and unsustainability of the current approach in the era of AI, we were inspired to set out on a mission to revolutionize Model Risk Management (MRM).

Q. Can you describe what it’s been like to be part of the Fintech Sandbox community?

A. It is amazing to be part of such a group of accomplished people!

Q. Why is data access important to your startup?

A. Data access is essential to our startup as it allows us to create synthetic data using Generative Adversarial Networks (GAN). We require access to diverse types of data, including bureau, transactional, and demographic data, to generate synthetic datasets that accurately represent real-world scenarios. Synthetic data is crucial for maintaining security, ensuring privacy, and simulating extreme conditions without risking sensitive information. This approach enables us to train our models effectively and develop robust solutions for model validation.

Q. What milestones has Proov.ai achieved so far?

A. We developed our first phase of the product. Are working on a POC with a BAAS provider.

Q. What trends in fintech are you most excited about?

A. Gen-AI and LLMs.

Q. How does Proov.ai think about leveraging AI in a differentiated way?

A. Our company takes a differentiated approach to leveraging AI by focusing on the core use of AI technology in our platform:

1. Generative Adversarial Networks (GAN): We utilize GANs to generate synthetic data, creating diverse datasets that closely represent real-world data. This synthetic data forms the foundation for testing against various protected features, ensuring the robustness and fairness of our models.

2. Comprehensive Training Data: We train our models on comprehensive datasets, including bureau, transactional, and demographic data. This enables us to develop more accurate and reliable models.

3. Deep Learning: We employ deep learning techniques to conduct stress tests and fairness assessments at a very deep level. This allows us to evaluate the resilience and equity of our models under various scenarios, ensuring their reliability.

4. Large Language Models (LLMs): Our platform leverages LLMs to generate insightful documentation. This streamlines the communication and decision-making processes.

Q. What’s next for Proov.ai?

A. As our technology continues to evolve, with a current focus on Gen-AI-based documentation, our primary goal is to gain traction by broadening our reach and onboarding additional banks and fintech partners. We are also exploring new ways to enhance our platform’s capabilities and deliver even more value to our clients.

To hear more about Proov.ai and 11 other exciting fintech startups, be sure to register for FinTech Sandbox Demo Day[s] 10!

Meet Starlight — A Demo Day[s] 10 Presenting Startup

This year, FinTech Sandbox Demo Day[s] will take place across two days, April 9 & April 11. The presentations will be virtual and the event, as always, is free. Demo Days are exciting because we get to showcase startups that are on the very cutting edge of innovation and you get to see what they’re up to before they’re discovered.

Over the next few weeks, we’ll highlight a few of this year’s presenting entrepreneurs. Today, we’re talking to Catherine Xu, Co-Founder of Brooklyn-based Starlight, which is unlocking the $140 billion in government benefits left unclaimed each year for households in need by using AI-powered coaching. Starlight is presenting on Tuesday, April 9.

Catherine Xu, Co-Founder of Brooklyn-based Starlight, which is unlocking the $140 billion in government benefits left unclaimed each year for households in need by using AI-powered coaching.

Q. Cat, tell us a bit about Starlight. What problems are you solving?

A. Today, 41% of America is financially vulnerable. At the same time, there is over $140 billion unclaimed in government financial assistance programs that could provide households with a financial bridge in tough times. Starlight helps financial institutions connect their customers to government programs that give them the financial help they need. Our white-labeled technology platform proactively identifies and matches customers to relevant programs and provides personalized guidance through the application process.

Q. What is your company’s origin story?

A. My co-founder and I had left our jobs in big tech to focus on problems facing underserved communities. For six months, we were Fellows with the Robin Hood Foundation, doing on-the-ground research and running co-design sessions with different communities, e.g., gig/frontline workers, young parents. Starlight formed after we heard repeatedly from communities about the awareness and process challenges when it comes to government benefits.

Q. Can you describe what it’s been like to be part of the Fintech Sandbox community?

A. Being a part of Fintech Sandbox has allowed us to connect with like-minded financial innovation groups such as Commonwealth, a national nonprofit focused on financial security.

Q. Why is data access important to your startup?

A. Data access helps us to quickly test some of our key use cases, including the usability of data to proactively identify individuals who could qualify for benefits.

Q. What milestones has Starlight achieved so far?

A. Reaching 5000 workers, using financial data to match them to benefits they may be eligible for but not know about, and helping them save on average $1000/year. We also forged early pilot partnerships with fintechs and nonprofits like Steady and Neighborhood Trust Financial Partners.

Q. What trends in fintech are you most excited about?

A. Hyper-personalized digital experiences that effectively employ data and proactively meet the financial needs of each member/customer. New sources for non-interest revenue for financial institutions, in lieu of regulatory changes around fees, and more customer-centric products that address holistic financial health and recovery.

Q. How does Starlight think about leveraging AI in a differentiated way?

A. Using AI to more efficiently process unstructured data at scale, including inferring needs from user-permissioned financial data. Using AI to deliver hyper-personalized experiences, such as financial resources delivered at the right time and in the right format.

Q. What’s next for Starlight?

A. Expanding partnerships with credit unions and community banks, with Starlight providing an easy-to-integrate, value-added product that helps grow balances and reduce delinquencies.

To hear more about Starlight and 11 other exciting fintech startups, be sure to register for FinTech Sandbox Demo Day[s] 10!

Meet Hansa — A Demo Day[s] 10 Presenting Startup

This year, FinTech Sandbox Demo Day[s] will take place across two days, April 9 and April 11. The presentations will be virtual and the event, as always, is free. Demo Days are exciting because we get to showcase startups that are on the very cutting edge of innovation and you get to see what they’re up to before they’re discovered.

This week and next we’ll continue highlighting this year’s presenting entrepreneurs. Today, we’re talking to Henry Magun, CEO of Hansa, which is based in New York. Hansa is helping small business owners ensure the data that financial service providers use to find, qualify, and underwrite their businesses is up-to-date, accurate, and consistent. Hansa is presenting on Tuesday, April 9.

Today, we’re talking to Henry Magun, CEO of Hansa, which is based in New York. Hansa is helping small business owners ensure the data that financial service providers use to find, qualify, and underwrite their businesses is up-to-date, accurate, and consistent.

Q. Henry, tell us a bit about Hansa. What problems are you solving?

A. Hansa facilitates efficient information exchange between SMBs and the financial service providers that want to serve them, before an SMB even submits an application for funding. Despite the fact that there are 30 million SMBs in the US and that the SMB financing market tops $1.4T, small business owners still struggle to get access to the financial products and services they need to thrive.

A leading cause of this is that financial institutions don’t have access to 1st-party, verified data about SMBs. Without it, they are forced to use out-of-date and frequently incorrect data to inefficiently market their products to wide bands of SMBs, and SMB owners are inundated with offers for products they don’t qualify for. Hansa is closing this data gap. We empower small business owners to participate in creating the data that is used to find them, helping them feel confident that they’ll be considered for services they qualify for, and won’t be bothered with those they aren’t.

Q. What is your company’s origin story?

A. My mother is a small business owner, and through her, I saw how much inefficiency exists in the way that financial products are marketed and sold to SMBs today. This hurts the SMBs the most, as the onus ultimately falls on them to do the work to determine what products they might qualify for. I saw how much time and effort it took for my mother to find the right products that fit her business, and knew that there could be a better way.

Q. Can you describe what it’s been like to be part of the Fintech Sandbox community?

A. The Fintech Sandbox community has been incredibly impactful for Hansa. We’ve had opportunities to meet other amazing startups in our space, as well as build deep relationships with the program’s partners. The members of the Fintech Sandbox management team have all been huge advocates for us, and have gone out of their way to give us as many opportunities as possible to spread the word about Hansa.

Q. Why is data access important to your startup?

A. Hansa’s mission is to empower SMBs to use their data to their advantage, by helping them leverage it to get access to the financial projects they need. A necessary component of this is helping them access the data that already exists about their businesses. That’s where Hansa’s partnerships with data providers come in. We work with companies like Equifax (a Fintech Sandbox partner), to enable small business owners to access, understand, and monitor the data that financial services providers are using to make decisions about them every day.

Q. What milestones has Hansa achieved so far?

A. We have signed up hundreds of SMBs that proactively share information about their businesses with Hansa and have direct access to dozens of loan products from our partner lenders. We’ve built early partnerships with other SMB data companies to help our members understand their existing data presence. We’ve developed a data furnishment product to help SMBs build business credit history by paying off their existing loans.

Q. What trends in fintech are you most excited about?

A. Rapid growth of embedded lending. Use of AI to custom-tailor financial product experiences and content to match the needs of individual customers. Digitization of SMB finance and data management.

Q. How does Hansa think about leveraging AI in a differentiated way?

A. The capital needs and financial profiles of small businesses vary immensely, and AI enables Hansa to offer customized and hyper-specific funding and credit building experiences for business owners.

Q. What’s next for Hansa?

A. Expanding our partnerships with lenders, SMB data companies, and financial services providers to help SMBs get the products they need, when they need them. Launching our full SMB-facing application covering access to capital, credit building, cost saving and more.

To hear more about Hansa and 11 other exciting fintech startups, be sure to register for FinTech Sandbox Demo Day[s] 10!