Even if you don’t have a lot of capital to invest, you can start investing in companies just by giving your time, and gradually transition to investing with your money.
Critics question plans to unwind Trump-era rules
Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Fintech Opinions
A Tsunami of Regulatory Change Overwhelms Organizations
The GRC Pundit | Jul 29, 2021
Regulatory change is overwhelming organizations. Many industries, like financial services, are past the point of treading water as they actively drown in regulatory change from the turbulent waves of laws, regulations, enforcement actions, administrative decisions, and more around the world. Regulatory compliance and reporting is a moving target as organizations are bombarded with thousands of new regulations, changes to existing regulations, enforcement actions, and more each year. Regulatory change impacts the organization as it reacts to:
- Frequency of change. In the past five years, the number of regulatory changes has more than doubled while the typical organization has not increased staff or updated processes to manage regulatory change. In financial services, according to the latest Thomson Reuters research, there was an average of 257 regulatory change events every business day in 2020, which is just in this one industry. In the past five years, the number of regulatory change updates impacting organizations has grown extensively across industries.
- Global context. Regulatory change is not limited to one jurisdiction but is a turbulent sea of change around the world. Regulations have a global impact on organizations and markets. In Asia, GRC 20/20 finds that there is often more concern over EU and US regulation than over-regulation from Asian countries. Inconsistency across regulations from jurisdiction to jurisdiction brings complexity to regulatory compliance.
See: OSC unveils charter for office to promote innovation and reduce regulatory burden
- Inconsistency in regulations. Managing compliance and keeping up with regulatory changes, exams, and reporting requirements becomes complicated when faced with international requirements. Regulatory jurisdictions have varying approaches such as principle-based regulation (also called outcome-based regulation) that is popular across Europe and other countries around the world, while the United States and other countries approach a prescriptive approach to regulation that is more akin to a check box list of requirements in specifically telling the firm what has to be done. The principle-based approach gives the organization flexibility with the focus on the achievement of an outcome and not the specific process that got them there. There are conflicting challenges in privacy regulations and other laws impacting organizations across jurisdictions.
- Expansion into new markets. It has become complex for organizations to remain in foreign markets as well as enter into new markets. The pressure to expand operations and services is significant as the organization seeks to grow revenue and be competitive, while at the same time being constrained by the turbulent sea of changing regulations and requirements.
- Focus on risk assessment. Regulatory compliance is increasingly pushed to integrate with broader enterprise and operational risk strategies with a focus on delivering a specific assessment of compliance risks. For example, regulators in the US seek to ensure that compliance officers do compliance risk assessments. This is also a theme picked up on by law enforcement agencies like the U.S. Department of Justice (DoJ) and the Securities and Exchange Commission (SEC). The courts, with the United States Sentencing Commission, also evaluate the culpability of an organization on compliance based on compliance risk. The discipline of risk management is becoming a prerequisite for compliance officer skills to ensure that compliance has a seat at the enterprise risk management (ERM) / GRC table.
See: March 1, 2019: NCFA Submission to the Ontario Securities Commission on Regulatory Burden
- Hoards of regulatory information. Organizations are overwhelmed by information from legal, regulatory updates, newsletters, websites, emails, journals, blogs, tweets, and content aggregators. Compliance and legal roles struggle to monitor a growing array of regulations, legislation, regulator findings/rulings, and enforcement actions. The volume and redundancy of information add to the problem. Managing regulatory change requires weeding through an array of redundant change notifications and getting the right information to the right person to determine the business impact of regulatory change and appropriate response. Organizations must search for the marrow of regulatory details and transform it into actionable intelligence, which can be acted upon in a measurable and consistent manner.
- Defensible compliance. Regulators across industries are requiring that compliance is not just well documented, but is operationally effective. This can be seen in the latest DoJ Evaluation of Compliance Program guidance. Case in point, Morgan Stanley is praised by regulators as a model compliance program and is the first company in 35 years of the Foreign Corrupt Practices Acts (FCPA) history to not be prosecuted despite bribery and corruption in their Asian real estate business. One of the points the Securities and Exchange Commission (SEC) and Department of Justice (DoJ) referenced was Morgan Stanley’s ability to keep compliance current in the midst of regulatory change: “Morgan Stanley’s internal policies . . .were updated regularly to reflect regulatory developments and specific risks.”
The amount of regulatory change coming at organizations is staggering. Consider an international bank headquartered in South America that embarked on a project to build a database of regulatory requirements impacting the bank globally. The detail went down to the required level so an individual regulation may have a few requirements to more than a thousand, depending on the regulation. After eighteen months of cataloging over 81,000 requirements, they abandoned the project. The reason was that the content was already obsolete—so much had changed during the process of documenting that they did not have the resources to maintain the volume of regulatory change.
See: United States: Virtual Currencies Regulatory Overview (and Comparative Guide)
A Tier 1 Canadian bank has expressed a similar regulatory requirement documentation project demise for the same reason. If you print the United Kingdom’s Financial Conduct Authority rulebook, it comes to a stack of paper six feet tall. The U.S. Code of Federal Regulations (CFR) is over 174,000 pages. When printed and laid out end-to-end that is a paper trail that is 25 miles long, nearly as long as a marathon.
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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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Cryptoassets as National Currency? A Step Too Far
IMF Blog | Tobias Adrian and Rhoda Weeks-Brown | Jul 26, 2021
New digital forms of money have the potential to provide cheaper and faster payments, enhance financial inclusion, improve resilience and competition among payment providers, and facilitate cross-border transfers.
But doing so is not straightforward. It requires significant investment as well as difficult policy choices, such as clarifying the role of the public and private sectors in providing and regulating digital forms of money.
Some countries may be tempted by a shortcut: adopting cryptoassets as national currencies. Many are indeed secure, easy to access, and cheap to transact. We believe, however, that in most cases risks and costs outweigh potential benefits.
Cryptoassets are privately issued tokens based on cryptographic techniques and denominated in their own unit of account. Their value can be extremely volatile. Bitcoin, for instance, reached a peak of $65,000 in April and crashed to less than half that value two months later.
See: Ripple Pilots a Private Ledger for Central Banks Launching CBDCs
And yet, Bitcoin lives on. For some, it is an opportunity to transact anonymously—for good or bad. For others, it is a means to diversify portfolios and hold a speculative asset that can bring riches but also significant losses.
Cryptoassets are thus fundamentally different from other kinds of digital money. Central banks, for instance, are considering issuing digital currencies—digital money issued in the form of a liability of the central bank. Private companies are also pushing the frontier, with money that can be sent over mobile phones, popular in East Africa and China, and with stablecoins, whose value depends on the safety and liquidity of backing assets.
Cryptoassets as legal tender?
Bitcoin and its peers have mostly remained on the fringes of finance and payments, yet some countries are actively considering granting cryptoassets legal tender status, and even making these a second (or potentially only) national currency.
If a cryptoasset were granted legal tender status, it would have to be accepted by creditors in payment of monetary obligations, including taxes, similar to notes and coins (currency) issued by the central bank.
Countries can even go further by passing laws to encourage the use of cryptoassets as a national currency, that is, as an official monetary unit (in which monetary obligations can be expressed), and a mandatory means of payment for everyday purchases.
See: Moody’s says Crypto regulation a plus for banks, fintechs
Cryptoassets are unlikely to catch on in countries with stable inflation and exchange rates, and credible institutions. Households and businesses would have very little incentive to price or save in a parallel cryptoasset such as Bitcoin, even if it were given legal tender or currency status. Their value is just too volatile and unrelated to the real economy.
Even in relatively less stable economies, the use of a globally recognized reserve currency such as the dollar or euro would likely be more alluring than adopting a cryptoasset.
A cryptoasset might catch on as a vehicle for unbanked people to make payments, but not to store value. It would be immediately exchanged into real currency upon receipt.
Then again, real currency may not always be readily available, nor easily transferable. Moreover, in some countries, laws forbid or restrict payments in other forms of money. These could tip the balance towards widespread use of cryptoassets.
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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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How to get into angel investing with ‘no’ money
Sifted | Kim Fai Kok | Jul 15, 2021
Even if you don’t have a lot of capital to invest, you can start investing in companies just by giving your time, and gradually transition to investing with your money.
Four months ago, I stepped down after a decade at Swedish unicorn Truecaller to become a full-time angel investor. That’s something I never thought I’d do, especially considering I didn’t know what an angel investor was before joining a startup.
I was once intimidated by the idea of becoming an angel investor — and in particular by the thought of how much money I thought it required — like so many other people I talk to.
Sure, my experience at Truecaller has now given me capital to invest, but it’s possible to get into angel investing with a small amount of money — because that’s exactly what I did.
It all starts with learning
When I joined Truecaller in 2011 as employee number two, I had just graduated from university and had no clue what to expect from working in a startup. Back then, the ecosystem was not as developed as it is now, so finding advisors and people you could learn from was much harder before. However, I reached out to other companies, people and investors I looked up to from all over the world. I looked for the best people in their field — from finance, communications, product management to angel investing.
See: Advisors Seek Venture-Investing Gold in Fintech
I spent hours crafting personal notes about why I wanted to speak to them and what I wanted to learn. You’d be surprised how helpful people are as long as you’re genuine and are clear about what you need help with. (Of course respecting people’s time and learning when to accept a ‘No’ is also important!)
Those meetings made me a more confident operator and helped me build a strong network across the tech and startup community. This network is what helped me start to see dealflow for potential angel investments and get closer to founders.
Once you have a network, start investing your time
As I started to build up experience of my own, I stopped always being the person asking for advice. Instead, people started coming to me to exchange ideas.
No matter how busy I was, I carved out two to three hours per week to either help or learn from entrepreneurs and operators, be it over lunch, phone calls or walk-and-talks. These exchanges helped me get out of the day-to-day chaos of startup life, to reflect and collect my thoughts systematically.
See: AngelList Pioneers Rolling VC Funds in Pivot to SaaS
Along the way, I realised that the advice and encouragement that I gave to entrepreneurs I met is exactly what they look for with angel investors. Founders started to treat me as a trusted friend and advisor, someone they wanted to text or hop on a call with when they had a conundrum. And they introduced me to other founders. In short, by investing time, if not money, I had landed the kind of dealflow great angels have.
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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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Opinion: Biden administration takes an overdue first step to foster competition and help consumers
The Washington Post | Bill Baer | Jul 10, 2021
Bill Baer served as the assistant attorney general for antitrust under President Barack Obama and the director of the FTC’s Bureau of Competition under President Bill Clinton. He is a visiting fellow at the Brookings Institution.
When the president talks about competition — as he did in Friday’s executive order — most people think about the antitrust lawsuits brought against Google and Facebook by the Justice Department, the Federal Trade Commission and many state attorneys general. Those challenges to dominant tech platforms take us in a good direction. The Justice Department and the FTC have ample power to challenge anticompetitive mergers and behaviors in the tech sector and more traditional markets.
See: Biden Administration Issues Executive Order “Promoting Competition” Including Consumer Data Ownership and Banking.
But litigation takes a long time to produce uncertain results. There are many other tools in the competition toolbox. President Biden is right to issue an executive order making sure we use them all to benefit consumers and small business.
Why should a minimum wage retail worker be restricted from working for a competitor where she could earn a higher wage? The Federal Trade Commission should adopt a rule banning these ridiculous non-compete clauses that inhibit worker mobility. Why can’t we stimulate airline fare competition by providing low-cost foreign and domestic airlines better access to U.S. markets? The Transportation Department has the authority to do just that — and much more, such as requiring full disclosure of hidden baggage and cancellation fees when we book a flight.
Why do those of us living in rural or small-town America have only one costly option for Internet service? The FCC can ensure we have alternatives. Railroads often provide farmers with the only way to get goods to market. How is it that so many railroads face no competition on their routes? The little-known Surface Transportation Board has the authority to prevent the kind of price gouging by railroads that cheat farmers of a fair price. Why, until just this last May, were the hard of hearing not allowed to buy hearing aids online or at a pharmacy without a prescription? Because the Trump FDA refused to use its authority to allow the devices to be sold over the counter.
See: Penrose Report: Power to the People: Stronger Consumer Choice and Competition
The list goes on. Though we live in an age of innovation and venture capital for start-ups has never been more plentiful, key sectors of our economy remain uncompetitive. Without competition, companies can charge consumers more and pay workers less. The federal government has considerable, largely underused power to ensure that we as consumers and workers benefit from competitive markets. And that is what Biden’s executive order on competition seeks to achieve. It identifies some 72 initiatives that federal agencies with authority over banking, agriculture, transportation, shipping and health care, to name just a few, can take to further free market competition, help workers and consumers thrive, and make our lives better.
The Biden initiative, as you might expect, faces opposition. Monopolists won’t easily surrender their profits. But the sad reality of the United States’ free enterprise system is that in far too many sectors, competition has declined or disappeared, and private firms are often free to act like unregulated utilities. They enjoy all the benefits of state-sanctioned enterprises and none of the government oversight.
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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Banking the Underbanked
Scott Galloway | Jul 9, 2021
My north star(s) for philosophy, management, and politics are Star Wars, The Sopranos, and Game of Thrones, respectively. The Iron Bank (GoT) is a metaphor for today’s financial institutions, if present-day banks didn’t need bailouts or to invent fake accounts to juice compensation. Regardless, it was well known throughout Braavos that The Iron Bank will have its due. If you failed to repay, they’d fund your enemies. So today’s Iron Bankers are the venture capitalists funding (any) incumbents’ enemies. If this makes VCs sound interesting/cool, don’t trust your instincts.
See: Getting tangible about intangibles: The future of growth and productivity?
Lately, I’ve spent a decent amount of time on the phone with my bank in an attempt to get a home equity line, as I want to load up on Dogecoin. (Note: kidding.) (Note: mostly.) If Opendoor and Zillow can use algorithms and Google Maps to get an offer on my house in 24 hours, why does it take my bank — which underwrote the original mortgage — so much longer?
Let’s start with this: Twenty-five percent of U.S. households are either unbanked or underbanked. Half of the nation’s unbanked households say they don’t have enough money to meet the minimum balance requirements. Thirty-four percent say bank fees are too high. And, if you’re trying to get a mortgage, you’d better hope the house isn’t cheap.
Inequity is a breeding ground for disruption, leaving underserved markets for insurgents to seize and launch an attack on incumbents from below. We have good reason to believe that’s happening in banking.
Insurgents
A herd of unicorns is at the stable door, looking to trample Wells Fargo and Chase. Fintech is responsible for roughly one in five (17%) of the world’s unicorns, more than any other sector. In addition, there are already several megalodons worth more than financial institutions that have spent generations building (mis)trust.
How did this happen? The fintechs are zeroing in on everything big banks aren’t.
Example #1: Innovation. Over the past five years, PayPal has issued 26x more patents than Goldman Sachs.
Example #2: Cost-cutting. “Neobanks” offer the basic services of a bank, with one less expensive and cumbersome feature: the branch. A traditional bank branch needs $50 million in deposits to generate an adequate return. Yet nearly half (48%) of branches in the U.S. are below that threshold. Neobanks don’t have that problem, and there are now at least 177 of them. Founders frame these offerings as more progressive, less corporate. Dave, a new banking app, offers a Founding Story on its website (illustrated with cartoon bears) about three friends “fed up” with their banking experience, often incurring $38 overdraft fees. Fed up no longer: Dave provides free overdraft protection and has 10 million customers.
See: Economist Spotlight: Imagining a world without banks
Example #3: Less inequity. NYU Professor of Finance Sabrina Howell’s research found fintech lenders gave 18% of PPP loans to Black-owned businesses, while small to medium-sized banks provided just 2%. Among all loans to Black-owned firms, Professor Howell found 54% were from fintech startups. Racial discrimination is the most likely explanation, as lenders faced zero credit risk.
Example #4: Serving the underserved. Unequal access to banking is a global botheration. Almost a third of the world’s adults, 1.7 billion, are unbanked. In Argentina, Colombia, Nigeria, and other countries, more than 50% of adults are unbanked.
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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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SEC faces backlash as it lays out regulatory agenda
Investment Executive | James Langton | Jun 14, 2021
Critics question plans to unwind Trump-era rules
Following a surge in retail trading this year, the U.S. Securities and Exchange Commission (SEC) is considering rules to address the “gamification” of trading on mobile apps, yet critics say it’s missing the mark by seeking to undo work carried out under former U.S. president Donald Trump.
In its latest regulatory agenda, which sets out an array of short- and long-term actions the regulator is planning, the SEC said it’s considering measures to enhance retail investor protection. For instance, the commission is considering potential rules to address “gamification, behavioural prompts, predictive analytics, and differential marketing.”
Whether the SEC addresses the issue remains to be seen — work in this area is still at the “pre-rule” stage.
Other areas that are facing possible scrutiny include tougher investor protection in the exempt market; a possible consultation on the role of index providers and other third-party firms, and their implications for the asset management industry; and possible rules to combat fraud and manipulation in the security-based swaps market.
See: US financial regulator warns against strict cryptocurrency rules
These potential new areas for SEC action are in addition to its existing rule making efforts in an array of areas, including climate risk disclosure, board and workforce diversity, market structure modernization, and enhancing shareholder democracy.
However, the proposed agenda is coming under fire from a couple of the SEC’s conservative commissioners —
Hester Peirce and Elad Roisman — who issued a joint statement saying
"the agenda is missing some important priorities including rules to provide clarity for digital assets, allow companies to compensate gig workers with equity, and revisit proxy plumbing.”
These omissions may reflect the fact that the SEC is also looking to scrap some of the work done under the previous administration, they suggested.
“As far as we can tell, the agency has received no new information which would warrant opening up any of these rules for further changes at this time. We are disappointed that the commission would dedicate our scarce resources to rehashing newly completed rules,” they said.
See:
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SEC v. Ripple: Implications of Ripple’s Fair Notice Defense
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FFCON21 On-Demand Video: Digitally Connected Retail Investors and IPO Innovations
“We hope chair Gensler will reconsider the need to revisit freshly minted rules, but we look forward to working with him and our fellow commissioners on other rulemaking initiatives reflected on the agenda and on addressing issues of perennial importance such as elder investor fraud and small business capital formation,” they concluded.
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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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As financial institutions buy into AI, these factors will be key to successful transformations
MNP | Dev Misrha | Jul 2, 2021
When the Canadian government unveiled a world-first national artificial intelligence strategy, it was a signal for homegrown companies to start paying to this emerging technology, no matter the industry — and financial institutions heard the call.
Financial institutions are particularly suited to benefit from AI, with massive amounts of data that can be used to automate processes and the resources to make solutions more secure. But what does success look like? That's the question MNP thought leaders and other panelists explored during a session on how AI is transforming interactions with financial institutions at FFCON's digital summit.
The scope of AI transformations is enormous
“Financial services providers are adopting AI for everything from mundane task automation, to creating consistent customer services and experiences, diving deep into behavior analysis, as well as delivering efficient fraud prevention and detection,” says Massimo Iamello, an assurance and accounting partner at MNP. “They also need to manage the risks and concerns that arise along the journey of transformation.”
The rise in cloud technology has allowed AI applications to flourish, and financial institutions are taking advantage as they slowly migrate from on-premise legacy systems. Dev Mishra, MNP’s solution lead for data engineering, AI and machine learning, says the cloud has enabled businesses to start up AI initiatives more quickly — meaning more customer data can inform AI applications as it’s generated. In the past, businesses had to rely on manual surveys, which aren’t always accurate.
See: 7 Things You Need To Know Before Investing in Artificial Intelligence
Financial institutions are also making acquisitions for tech talent who can immediately put valuable customer data to use. MNP recently acquired T4G, a 25-year-old Canadian company that helps businesses collect, organize, and use their data for business insights and applications.
“MNP has the base, the experience and employees with potential backing, while T4G is on the cutting edge with very senior and experienced consultants who’ve worked exclusively in the data space for decades,” says Mishra. “They were just lacking the scale and the firepower.”
Freeing humans for more complex tasks
Mishra summarizes the use of AI in financial services in three ways: adding new revenue streams, reducing operational costs and improving the customer experience.
The growing accuracy of AI voice recognition means bots can now verify your personal information. Customers can speak naturally to bots about problems like password resets, which are easier to automate, leaving room for human customer service agents to answer more complex questions.
“The days of IVR [interactive voice recognition], where you have to press one or two, are gone; now you just talk naturally like you’d speak to a human being,” says Mishra.
While AI can automate simple tasks, it can also be used to enhance security. As technology evolves, so does the ability of fraudsters, and Mishra says AI has strong use cases in fraud detection. MNP worked with a Canadian government body to automate auditing of employee insurance and travel claims, which reached up to 70,000 claims a year. The AI MNP developed could track anomalies like duplicate claims, saving the client up to $3 million a year and reducing time spent reconciling the claims for weeks to hours.
Biased algorithms a growing concern
Mishra notes the importance of ensuring enterprises create unbiased AI applications. Machine learning, which uses data and algorithms to make predictions, requires datasets to train itself. If those datasets already have bias present, it could build an application that is itself biased.
See: The research frontier: where next for AI and collective intelligence?
For this reason, many large companies have responsible AI frameworks to ensure they use AI in an ethical and responsible way. Mishra provides an example of predicting students’ SAT scores where gender is included as a variable for prediction.
“Imagine you predicted a woman’s score is dependent on her gender, but did not factor in the same correlation for men. You’ve introduced a bias without knowing,” he says. “However, if you're predicting whether you have COVID, that is a medical use case. It is maybe more prone to males, so gender becomes a critical variable.”
Many banks may start to use facial recognition to verify the age of potential customers. If some groups of people aren’t adequately represented in a dataset, the AI could categorize people from some ethnicities are younger or older than they are. “It's very important for data scientists building these models to understand the models and remove bias,” Mishra says.
Keeping security front of mind
For financial institutions thinking of exploring AI, Mishra says security, privacy and compliance with policies is critical. While major cloud providers like Microsoft invest billions into cyber security, financial institutions must also have the right governance processes in place.
“Cloud as a platform offers security, but it’s the governance around cloud that will decide whether the application is secure,” says Mishra.
About the author:
For more information on how you can leverage AI in your organization, contact Dev Mishra MBA, MBAN, BEng, at 416.596.1711 or dev.mishra@mnp.ca
This article appears 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
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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For more information on how you can leverage AI in your organization, contact Dev Mishra MBA, MBAN, BEng, at 416.596.1711 or dev.mishra@mnp.ca
