NCFA Innovation 2019

Category Archives: Fintech AI/ML, Data-driven

How banks are using AI to create smart trading platforms and identify client needs

Investment Executive | Fiona Collie | Feb 22, 2021

AI fintech banking - How banks are using AI to create smart trading platforms and identify client needs

Financial services firms are using AI to create smart trading platforms and identify client needs

Technology is everywhere in the financial services industry, and banks have been building their artificial intelligence (AI) bona fides in recent years.

Components of AI include natural-language processing, which uses technology to analyze the spoken and written language, and machine learning, which uses algorithms to analyze and learn from large amounts of data.

See:  Top 12 AI Use Cases: Artificial Intelligence in FinTech

Since 2016, Royal Bank of Canada (RBC) has focused on AI through its dedicated research division called Borealis AI. In October 2020, Borealis AI and RBC announced the launch of Aiden, an AI-driven electronic trading platform for institutional investors.

Aiden uses “reinforcement learning.” For every trade [Aiden] makes, it also justifies why it just did that,” Agrafioti said. “And that gives people confidence and trust that they understand the context of the algorithm they’re seeing.”

a form of AI based on behavioural psychology that either rewards or penalizes an algorithm when it makes a decision. This is the same type of machine learning used for AlphaGo, a Google-owned computer program that beat a human player at Go, a sophisticated board game, in 2016.

But making trading decisions in a live market is more complicated than playing a board game, noted Foteini Agrafioti, chief science officer at RBC and head of Borealis AI.

“It’s a much more complex environment where we were able to deploy [Aiden] and we’re extremely happy with the results,” she said.

Traditional electronic trading programs are designed to follow specific rules in certain market conditions and must be reprogrammed when they encounter new scenarios — which leads to downtime. Aiden, on the other hand, is dynamic: it can adapt to changing market conditions, Agrafioti said.

See:  FCA and City of London’s Digital Sandbox Pilot – Presentations and Use Cases

Still, Aiden is not completely autonomous. As with other AI platforms, humans can overrule Aiden’s investment decisions when necessary. But before that happens, Aiden has a chance to explain its rationale to a human supervisor — a crucial feature for an AI platform.

Banks also are using AI to leverage one of their most valuable resources: client data. These data may include emails sent to an advisor, financial transactions and the number of times a client has signed in to an online account.

In 2020, Bank of Nova Scotia announced the creation of a global AI platform that uses client data to help identify client needs.

During the first wave of Covid-19, Scotiabank used its AI capabilities to identify clients who were at risk financially as a result of the pandemic. The bank then contacted those people to offer potential solutions — something Scotiabank intends to do again in the future.

“We will continue to focus on providing applicable unique solutions for our customers and being able to tailor those solutions to customer needs,” said Phil Thomas, executive vice-president, customer insights, data and analytics, with Scotiabank.

As Scotiabank and other companies continue to harness customer data, critics wonder how AI platforms use that data, leading to growing demand for “ethical” AI.

Continue to the full article --> here

 


NCFA Jan 2018 resize - How banks are using AI to create smart trading platforms and identify client needs The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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FCA Consultation: Payment Services (Contactless Payments) and Electronic Money – Our Approach

FCA Consultation | Jan 28, 2021

electronic money - FCA Consultation:  Payment Services (Contactless Payments) and Electronic Money – Our Approach

We’ve identified barriers to the success of open banking and future innovation in UK payments.

To address these, we’re proposing amendments to our Technical Standards on Strong Customer Authentication and Common and Secure Methods of Communication. We’re also taking this opportunity to amend our guidance on prudential risk management and safeguarding in our Approach Document (AD), and make general updates to a number of areas and onshoring-related changes. We’re also updating our Perimeter Guidance Manual (PERG).

One section of the CP, relating to contactless payments, will close on 24 February 2021. The rest will close on 30 April 2021.

See:  Accelerating winds of change in global payments

The payments landscape has grown and evolved in recent years, as business models adapt to user needs. The coronavirus (Covid-19) pandemic has accelerated these changes. This consultation will help us make sure regulatory expectations keep pace with the changing landscape.

We want to remove identified barriers to continued growth, innovation and competition in the payments and e-money sector (including open banking), while making the sector more resilient and protecting consumers if firms fail.

Who this applies to

Payment service providers (PSPs) and e-money issuers, as well as trade bodies representing them, should read this consultation. Our proposals affect credit institutions providing payment services and/or issuing e-money, as well as payment institutions (PIs), e-money institutions (EMIs) and registered account information services providers (RAISPs).

It also applies to firms that are subject to the temporary permission regime (TPR) and the financial services contracts regime (FSCR) set out in Schedule 3 of the Electronic Money, Payment Services and Payment Systems (Amendment and Transitional Provisions) (EU Exit) Regulations 2018 (Exit SI). It also applies to Gibraltar firms providing payment services in the UK.

See:

It may be of interest to:

  • retailers
  • consumers and micro-enterprises
  • consumer groups
  • those involved in open banking initiatives
  • credit unions
  • businesses providing payment services under exclusions of the Payment Services Regulations 2017 (PSRs)/Electronic Money Regulations 2011 (EMRs)

Background to our approach

In our 2020/2021 Business Plan, we identified the payments sector as a priority for the next 3 years. Our work intends to make sure: consumers transact safely with payment firms; payment firms meet their regulatory obligations while competing on quality and value; and consumers and SMEs have access to a variety of payment services.

In this consultation paper, we’re also proposing changes to the AD to reflect the UK’s withdrawal from the European Union and the end of the transition period.

Continue to the full article and Consultation forms --> here


NCFA Jan 2018 resize - FCA Consultation:  Payment Services (Contactless Payments) and Electronic Money – Our Approach The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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FCA and City of London’s Digital Sandbox Pilot – Presentations and Use Cases

Digital Sandbox Pilot UK | Feb 20, 2021

digital sandbox initiative FCA and City of London 1 - FCA and City of London's Digital Sandbox Pilot - Presentations and Use Cases

The pilot ran from November 2020 through to February 2021. An evaluation process is currently being undertaken by an independent consultant. The pilot will be assessed against the 5 success criteria:

  • Innovation – role played in encouraging innovation in financial services to the Covid-related challenges detailed in the use cases
  • Speed – role played in enabling quicker testing and development of proof of concepts
  • Collaboration – role played in fostering collaboration, facilitating diversity of thinking and creating an ecosystem of key organisations
  • Pilot features – the effectiveness of the key features of the pilot (see below) in stimulating and accelerating innovation
  • Sustainable future – role played in informing and assisting the design and future operating model of a permanent digital sandbox

See:  UK Digital sandbox – coronavirus (Covid-19) pilot

Select Teams and Descriptions

Fraud & scams

Sedicii: An AML solution that allows financial institutions to securely share knowledge about clients or transactions without disclosing any underlying data or information.

EalaX Ltd: A solution that creates digital synthetic twins of real financial data which can then be used to detect fraudulent patterns and complex problems that are being experienced during Covid-19.

MPC4AML: A solution that uses a Privacy Enhancing Technology (PET) known as Secure Multi-Party Computation (MPC) to run risk scores on a transaction network data from multiple banks.

Norbloc: A solution that uses blockchain to allow for a secure and GDPR-compliant sharing of verified KYC files across multiple institutions in real-time to create a single profile per customer.

IT2 Fraud Signals - Trust Stamp, Cifas, Lloyds & OneBanks: A solution that uses biometric data to create an identity token that can be used to match, de-duplicate and verify across institutions while protecting the users personal identity information.

See:  UK: Open Finance: The FCA Consults On How To Transform The Financial Services Market

Vulnerability

PrinSIX Technologies: PrinSIX is focusing on detecting vulnerability within credit applications, testing and deploying dynamic onboarding journeys that identify applicant vulnerability flags and trigger highly personalised digital assessments to improve customer outcomes.

Qpal: A digital assistant focused on financial wellbeing, powered by Open Banking, that automates financial decision for consumers.

Applied Blockchain:  A solution to allow a range of lenders to assess the credit risk of a borrower without requiring direct access to private and sensitive financial data by using privacy-preserving technologies.

DirectID:  A solution that uses transactional data to predict the probability of default based on an individual’s historical and predicted cash flow.

See:  FCA Report (Feb 2020): Sector Views – Key Areas of Harm Identified

SME Lending

Fluence:  A solution that uses natural language processing AI to interpret and analyse financial applications and claims handling processes in order to automatically interpret new applications and claims.

Company Watch Ltd:  A solution to enable finance funding providers to predict, analyse and risk assess the ability of a small business to repay credit within certain time periods.

Fractal Labs:  A solution that uses Open Banking to create a cashflow forecast in order to help  assess the eligibility of SME’s for small working capital loans.

Untangled Finance:  A solution using tokenised assets on a blockchain to enable simple, cost-effective and transparent ways to securitise SME loans and invoices.

Continue to the full list and to watch presentations --> here

 


NCFA Jan 2018 resize - FCA and City of London's Digital Sandbox Pilot - Presentations and Use Cases The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS!



FFCON20 Pitching and Demo Winners - FCA and City of London's Digital Sandbox Pilot - Presentations and Use Cases



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Want to launch an ecosystem? Consider Tokenization

2tokens Blog | Jan 14, 2020

Digital tokens - Want to launch an ecosystem?  Consider TokenizationTokens have been around for 1000s of years, but only recently have we seen the rise of digital tokens. Now, cryptographic tokens offer us an opportunity to redesign value streams and hence existing ecosystems. A well-designed token ecosystem unlocks value by bringing parties together in new ways and stimulates the target behaviour by having cryptographic tokens as built-in incentives. Tokens matter and offer a chance to redesign existing and new ecosystems.

On January 14, 2020, we had the second round table session organised by the 2Tokens initiative. The 2Tokens project aims to clarify the path to realising value from tokenisation. During the first round table session, we discussed why we need tokenisation, what is required to achieve value from tokenisation, and how we should move ahead with it.

Shared Understanding

Tokenisation, tokenomics and token engineering are new concepts and, for many, difficult to understand. Especially since often, these terms are used differently in different contexts. A shared understanding is not only relevant for building tokenised ecosystems, but it will also enable regulators and policymakers to address regulatory concerns in the right way. As such, it will foster a healthy public debate around tokenisation.

See:  Tokenizing Assets and Unlocking Value on the Blockchain

A shared understanding consists of precise terminology and taxonomy, international standards, useful metaphors to share with wider audiences and clear legal and regulatory frameworks. Since the field of tokenisation is very much alive, on-going coordination, education and engagement among all stakeholders is essential. A Token Coalition can manage this, or organisation such as the 2Tokens project, to ensure all stakeholders' requirements are met.  We define the terminology as follows:

  • Tokens: the digital representation of value (e.g. asset) on a blockchain.
  • Tokenisation: the process of changing value (e.g. asset) into its digital representative
  • Tokenomics: the study of the emerging field of the design of crypto tokens and related digital assets using economic incentives, game theory, cryptography and computer science.
  • Token engineering: the practice of using tokens as the foundation for designing value flows and ultimately economic systems
  • Purpose-driven tokenisation: leveraging the exchange of value to drive behaviours of an ecosystem towards a particular goal

Innovative Funding

For any ecosystem, funding is important. Tokenisation, however, changes how this funding can be achieved, going beyond traditional financing from venture capitalists or financial institutions. When an ecosystem plans to use tokens for funding, it can benefit from easy access to capital, anywhere in the world. Compared to traditional financing such as an IPO, the costs of financing are lower, and it is easier to scale as more people have access to the investment opportunity. After all, tokens do not know borders.

See:  BIGG Digital Assets Inc. to Reinvest Free Cash Flows From Operations into Bitcoin

Tokens offer multiple, technical, advantages over traditional funding. First of all, they are programmable. This means that governance and rules can be embedded within the token. For example, the longer you hold a token, the more dividend you will receive. This allows you to drive the behaviour of your investors while raising funds. In addition, tokens are transparent, secure and traceable, giving regulators more control to ensure correct behaviour.

With tokenised funding becoming the norm in the coming years, we can expect a shift from ownership to temporary ownership, as exchanging assets will become easy. As a result, previously illiquid assets will become liquid, thereby drastically changing economies. Anything can be tokenised and made liquid, including real estate (fractional ownership), CO2 rights, mobility, futures, art or even entire clubs and sport contracts to increase fan engagement.

Key to tokenised funding is the right infrastructure. This includes secondary markets to easily exchange security tokens, clear regulations so companies know what they have to comply with, and an intuitive user interface to facilitate ease of investment. When the right tools are available, tokens will revolutionise funding opportunities.

Change Management

Developing an ecosystem is one thing; getting people to use it is a different challenge. Although tokens can drive behaviour, people will need to change their behaviour to participate in tokenised ecosystems. It can be expected that there is a resistance to change because people don’t understand the new ways of interacting.

See:  For Digital Assets, Private Markets Offer the Greatest Opportunities

To tackle this resistance, it is crucial for ecosystem owners to create awareness and understanding the change implied when using tokenisation; what is it, why is it important, how will it change the ecosystem and what are the benefits? In addition, it is important to take into account to define and communicate the scale of change and eliminate certain (wrong) assumptions. Starting with a minimum viable ecosystem to build engagement and showing why a tokenised approach is important can help in market adoption.

When talking about tokenisation of an ecosystem, or multiple ecosystems for that matter, we should also take into account the following subjects:

  • Responsibility: define responsibility, who is responsible, what creates what and who might be responsible for possible negative consequences of the tokenisation of the ecosystem?
  • Weaker parties: Weaker parties might need a helping hand to participate in the tokenisation of ecosystems.
  • Ethics: is the tokenised ecosystem designed with ethics in mind?
  • Skin in the game: who are the parties at risk when tokenising an ecosystem? Who can quickly adapt and who might need more help? It is important to try to keep everyone on board. Diversity within and between ecosystems could add a lot of value.

With the above components in place, it becomes easier to design and grow a tokenised ecosystem.

Tokenisation and the Law

When designing tokenised ecosystems, legal compliance is essential to stand apart from unethical and fraudulent counterparts. Therefore, legal design thinking is relevant at the core of every project.

See:  Privacy laws might prove to be a blessing in disguise for crypto

It is important to have a clear view of the legal aspects of new developments to obtain regulatory cooperation and closely collaborate (for example, using sandboxes) with regulators and policymakers when designing the tokenised ecosystem. While the community should welcome regulation, regulators and policymakers need to develop regulations that do not stifle innovation. This requires more cooperation and open dialogue between those innovators and the regulators.

Continue to the full article --> here

 


NCFA Jan 2018 resize - Want to launch an ecosystem?  Consider Tokenization The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Has fintech made banking better?

DUCA Impact Lab | Keith Taylor | Feb 18, 2021

Has fintech made banking better - Has fintech made banking better?

Fintech is responsible for a long list of innovations. Helping people make better financial decisions could be next.

Building banking that is not just different, but better, is a common refrain when speaking with fintech entrepreneurs. It is natural to wonder then, what roles are fintech companies playing now in building ‘better banking’, and more importantly, what opportunities are there to better deliver on this promise?

The DUCA Impact Lab was established by DUCA Financial Services Credit Union to explore these types of questions, and to ultimately work with its partners to build and test models of banking that benefit all.  Each year, the DUCA Impact Lab, in partnership with Angus Reid Group, examines national perspectives on fair banking in Canada. The study surveys a national pool of banking consumers on their perceptions of fairness in their banking experiences. It evaluates a number of fair banking factors such as transparency, credibility, pricing, as well as access to products and services. It then compares these consumer perspectives with responses from bank employees working in a sales or lending capacity at different types of lending institutions, including fintech’s.

See:  State of Fair Banking 2020

Reflecting on the study results for 2020 reveals some key considerations for fintech companies as they continue to innovate and build on their presence in the financial services marketplace. For example:

More people need access to quality advice.

The majority of consumers interact with a financial advisor once per year, or less. In fact, 29% say they have never met with one. Even for those that do meet with an advisor, chances are they either don’t trust, or are indifferent to the advice they get (75% of consumers combined). This is particularly troublesome, given that the right advice is desperately needed - nearly 45% of people with debt say they have neither a budget, nor specific financial goals. Lenders surveyed who work in fintech take an overly ‘sales first’ view of their companies compared with peers, and are significantly less likely to view the primary focus of their company as helping people (21%), when compared to 35% at banks, and 48% at credit unions. Perhaps there’s an opportunity to do both.

Trust is a short-term opportunity, but long-term potential risk for fintech’s.

Nearly as many Canadians distrust financial institutions as trust them, with a winnable 46% of consumers who are somewhere in the middle. Also consider that only 22% of big bank customers think they are getting a good deal on their financial service products; this should translate into opportunities for new entrants and alternatives to the big banks. The level of trust consumers have in fintech companies is generally similar to other lending options to start, but borrower experience becomes more negative post fulfillment.  For example, fintech customers are more than twice as likely to respond that their debt has impacted their ability to afford basic health care services such as prescription drugs. Mitigating these risks has benefits for everyone.

See:  How Banks, Fintechs, and Customers Win Together

The Fintech sector has produced some amazing innovations, improving the way financial institutions are able to offer a range of services, facilitate transactions and understand customer needs. Extending this innovative thinking to focus on consumer experiences and well being is a natural fit.

About the author:

Keith Taylor is the Executive Director of the DUCA Impact Lab at DUCA Financial Services Credit Union, an innovation hub focused on building banking that benefits all. He works with a range of collaborators such as fintech’s, community organizations, academics and others to build and test solutions to inequity in the banking system.

Fintech Confidential issue 3 cover 1 - Has fintech made banking better?

This article appears as a featured article in NCFA's digital magazine, Fintech Confidential (Issue 3). Click to read the latest thought leadership, insights and trends about Fintech in Canada:

Checkout NCFA's digital magazine, Fintech Confidential (Issue 3, Dec 2020) --> here

 

 


NCFA Jan 2018 resize - Has fintech made banking better? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Symend Announces US$43 million Series B Extension to Accelerate Global Expansion

Symend | Release | Feb 9, 2021

Symend series B extension - Symend Announces US$43 million Series B Extension to Accelerate Global Expansion

Behavioral science and analytics company prepares for imminent global expansion and future additions to its engagement product portfolio to serve the entire customer lifecycle.

CALGARY, Alberta--(BUSINESS WIRE)--Symend, a leading digital engagement platform that uses behavioral science and data-driven insights to empower customers to resolve past due bills, announced a US$43 million extension following its US$52 million Series B in May 2020.

See:  With $73 million CAD, Symend closes one of the largest Series B rounds in recent Alberta history

The Series B+ was led by global technology venture firm, Inovia Capital, with participation from a consortium of investors, bringing Symend’s total funding to date to over US$100 million.

“We are big believers in Symend’s mission to add lasting value to enterprises, by helping their customers avoid collections,” said Dennis Kavelman, Partner at Inovia Capital.

“Their approach is differentiated and effective because it combines behavioral science and data science to drive a personalized approach for each customer. With this new investment, Symend is well funded to execute its strategy of scaling globally, and to partner with large enterprises in many industries.”

Kavelman is also a former RIM (Blackberry) executive and current member of Symend’s board of directors. Symend welcomed two additional board members in 2020 including John Connors, Managing Partner at Ignition Partners and former Microsoft executive, and Matthew J. Schiltz, former CEO at Conga and DocuSign. Connors and Schiltz joined the board alongside Eric Updyke, CEO at Spirent Communications, and Maor Amar, Managing Partner at Impression Ventures.

Symend’s platform is purpose built to serve complex enterprises in telecommunications, financial services, utilities and media across North America and is on track to significantly expand its client roster globally in 2021. Symend recently opened an office in Australia to serve the Asia-Pacific (APAC) market, with plans to expand into Latin America (LATAM) and Europe, the Middle East and Africa (EMEA).

Symend currently serves two-thirds of the major telecommunications providers in North America and is successfully serving a multinational bank, quickly gaining traction with other major players in financial services.

See:  4 Digital Transformation Lessons that Banks Need to Learn from Covid-19

Symend validated the need for its solution along the entire customer journey by providing clients with rapid response capabilities through the COVID-19 pandemic. By relieving pressure from call centres overwhelmed by inquiries from uncertain customers, Symend created capacity for clients to respond to evolving customer needs when they needed it most.

Over the past year, Symend’s team of behavioral scientists, data scientists and data analysts have significantly strengthened its consumer data platform, which is foundational to its engagement platform. Through rigorous experimentation, Symend is continuously building an extensive library of proven behavioral-based engagement strategies shaped by in-depth customer insights to continuously optimize behavior. This will guide Symend’s product portfolio expansion as it further develops strategies in customer retention and acquisition.

“Given the challenges that service providers have faced during the pandemic, we are seeing a massive uptick in enterprises that are committed to investing in solutions that will ensure they are better prepared for the future, better the lives of their customers, and drive better business results for their core operations during both good and challenging times,” said Hanif Joshaghani, CEO at Symend.

Symend has rapidly accelerated recruitment, growing from 50 people to over 225 in 2020 and expects to double in size in 2021. The rapid growth of the team is led by Calgary success story Benevity’s former Chief People Officer, Vivian Farris, who joined Symend in September 2020. To support the expansion and restructuring of product and technology within the company, Symend attracted several senior executives from major hubs including the San Francisco Bay Area, Seattle and Chicago.

View the original press release --> here


NCFA Jan 2018 resize - Symend Announces US$43 million Series B Extension to Accelerate Global Expansion The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS!



FFCON20 Pitching and Demo Winners - Symend Announces US$43 million Series B Extension to Accelerate Global Expansion



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Podcast and Paper: Roxana Mihet on Financial Innovation and Rising Inequality

IMF Podcast | Jan 21, 2021

WAccess to data and intel - Podcast and Paper:  Roxana Mihet on Financial Innovation and Rising Inequalityith the great strides in financial technology in recent years, the lower data processing costs and fees associated with investing in the stock market should have led to broader increases of household wealth. But in this podcast, economist Roxana Mihet says while fintech has reduced barriers to access and held out the promise of gains for all, it may have worsened capital income inequality.

Mihet is Assistant Professor of Finance at HEC Lausanne, and her recent study suggests the most likely beneficiaries of financial innovation are those who have access to the valuable data that inform good investments. Mihet was recipient of the ECB's Young Economists Award in 2020 for her work on Financial Innovation and the Inequality Gap. She was invited by the IMF's Strategy, Policy and Review Department to present her research.  Transcript

Roxana Mihet is an Assistant Professor of Finance at the Faculty of Business and Economics of the University of Lausanne, and a faculty member at the Swiss Finance Institute.

Overview of Research Paper

Information-based models of capital income inequality that link return heterogeneity to investor sophistication levels need to assume an increase in data costs to generate an increase in inequality.

Empirically, this assumption contradicts the fact that investment markets have become more informative over time, and theoretically, it also overlooks the possibility poorer investors can avoid paying a large fixed cost for data, simply by buying shares in a fund.

See:

In this paper, I study the impact of financial innovation on capital income inequality in a theoretical framework where investors, heterogeneous in their sophistication, have a costly choice between not investing, investing through a fund of average quality, and searching for an informed fund.

The model predicts that while financial innovation can make the investment sector more efficient and boost financial inclusion, some financial innovation also brings risks. For example, when the cost of financial data processing falls, more wealthier investors trade on information.

This makes participation less valuable for the marginal stock market participant, who is a relatively poorer investor in some average (uninformed) fund and who exits the market altogether, foregoing the equity premium.

This amplifies the inequality gap and also jointly explains why in the last decades, in spite of a dramatic reduction in data processing costs and fund fees, the US stock market has become more informative, yet the stock market participation rate has been on the decline.

Download the Paper (80 page pDF) Fintech and the Inequality Gap -> here

 


NCFA Jan 2018 resize - Podcast and Paper:  Roxana Mihet on Financial Innovation and Rising Inequality The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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