Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Regtech, Compliance, Governance
DOGE Aims to Use AI to Cut 50% of Regulations
RegTech | July 28, 2025
AI Image
AI Deregulation in the United States and the Pressure on Canadian Fintech
According to a Guardian report, the United States Department of Government Efficiency known as DOGE has started using a new AI deregulation system to review the entire set of more than 200,000 federal rules and regulations, aiming to deregulate about 50% of the rules by President Trump's first year anniversary or by January 2026.
This massive move is already being trialled at agencies such as the Department of Housing and Urban Development and the Consumer Financial Protection Bureau, and internal reports show that thousands of regulatory sections have already been reviewed, and that 1,083 regulations have already fallen by the waist-side in less than two weeks.
A presentation obtained by Washington Post journalists claims that deregulation could reduce 93% of man hours, and lead to savings that run into the trillions of dollars. While those claims haven't yet been verified by independent auditors and there are already reports from agency employees that the tool has made mistakes by recommending the deletion of rules that are still legally required.
Impact on Canadian Fintech Competitiveness
Doge's deregulation effort is of significant importance to Canada where regulatory policy directly affects the cost and pace of doing business. If American regulators follow through on large scale deregulation, fintech companies in that market will face lower compliance costs and potentially operate faster giving them a competitive advantage.
See: Canada’s AI Competition Report Faces Big Tech Challenges
That could make it more attractive for capital and talent to focus on United States markets while Canadian fintech firms may need to operate in an environment of higher regulatory overhead, unless Canadian policy frameworks are modernized in a careful and deliberate way, too. NCFA's view is that this is both a warning and an opportunity.
Risks of AI Mistakes in Deregulation
Legal experts in the United States have pointed out that no regulation can be repealed without following the procedures required by the Administrative Procedure Act. These include public comment periods legal justification and review. Automated recommendations from an artificial intelligence system will still need to go through that process otherwise the decisions may be overturned by courts.
Congressional oversight bodies are also raising questions about whether this tool has been approved for use on government systems and whether its access to federal data could violate privacy or security rules.
See: Fintechs Face New Green Claim Rules Under Competition Act
While many in industry revel at the thought of deregulation and what it means to their business, there are real risks involved in rushing ahead with automating areas that directly affect public safety and investor protection, so human oversight is still strongly advised.
Implications for Canadian Policy and Investment
Artificial intelligence is not just being used to more efficiently process data but to influence the rules in which financial markets operate. It raises the stakes and can be a potential game changer for anyone or organization that depends on stable and predictable regulation.
"While fewer rules can sometimes mean faster innovation, such sudden and large scale deregulation can also remove guardrails that protect consumers and market integrity, and investors may think twice before putting money into markets that change their rules too quickly."
NCFA View
NCFA believes that Canada should watch this U.S. experiment closely and use it to build a more practical approach ow how AI regulatory technology (Regtech) could be used to help regulators review and streamline rules without allowing a system to autonomously decide which ones to remove.
See: Demystifying AI for Executives: Aligning Strategy with Reality in Fintech
Any such pilot should have human review at every stage in a transparent process that involves the public and clear reporting so that the decisions can be trusted. Canada can also focus on improving its regulatory environment by making the rulemaking process more efficient and modern without compromising on investor and consumer protections.
This will allow our fintech sector to remain competitive without taking the same risks that the United States is now taking. To be clear, time is of the essence.
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, artificial intelligence, 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 Review of Deferred Payment Credit Rules (BNPL)
BNPL | July 23, 2025
Image: Freepik
FCA Consultation on New Consumer Focused Rules to Regulate £13 billion BNPL sector by July 2026
On July 18, 2025, the Financial Conduct Authority (FCA) published their approach to regulating Deferred Payment Credit (DPC), otherwise known as 'Buy Now Pay Later' (BNPL), or interest free credit service if repaid in twelve or fewer instalments within 12 months.
From July 15, 2026, third party lenders that provide DPC to finance purchases must be authorised by the FCA. Merchants that offer their own DPC directly and broking activity remain outside scope.
See: UK Exempts In-home BNPL Sellers From Licensing
The FCA says its approach is proportionate and designed to reduce consumer harm without creating unnecessary burdens. It relies on the Consumer Duty to deliver good outcomes while adding specific rules where gaps exist. The aim is to build trust in DPC, support financial resilience, and promote sustainable economic growth.
Regulatory Concerns
DPC lending has expanded rapidly from £0.06 billion in 2017 to more than £13 billion in 2024. The FCA Financial Lives Survey reports that 20% of UK adults or about 10.9 million people used DPC in the twelve months to May 2024.
BNPL is growing fast and because it's been exempt from regulation, borrowers may not receive enough information before taking on debt and some lending may be unaffordable (akin to payday lenders?). The FCA notes that DPC users are more likely to be in financial difficulty than the average broader population.
Proposed Rules
- Information Disclosure - The FCA proposes that firms present key product information before an agreement is made and provide it again afterwards in a durable format that customers can store and read. Required elements include repayment amounts and dates the amount of credit late fee triggers consumer rights such as withdrawal or cancellation and whether a credit search will take place
- Creditworthiness and treatment of borrowers - Existing FCA Consumer Credit Sourcebook rules on creditworthiness (CONC 5.2A) would apply to DPC so lenders must assess whether customers can repay without harming their wider finances. The FCA links this to concerns about arrears late fees and borrower vulnerability and intends that firms provide support where customers are in or approaching financial difficulty in line with CONC 7
See: BNPL Plans Are Starting to Affect Credit in Canada
- Missed Payments and Defaults - Standardised requirements for borrower communications and fair treatment under CONC 7
- Consumer Duty - Firms must act in good faith, avoid expected harm, and support consumers to meet financial objectives throughout the journey
- Dispute Resolution - All DPC borrowers will have access to the Financial Ombudsman Service
- Data Reporting - Introduction of Product Sales Data (PSD) submissions to enable FCA supervision
Implementation Timeline
- Consultation deadline is September 26, 2025
- Policy Statement with final rules can be expected early 2026
- Regulation starts July 15, 2026
- Companies can continue operating while seeking full authorisation under a temporary permissions regime
Complete the online response form for CP25/23 or email: cp25-23@fca.org.uk
Why It Matters
The FCA's proposed rules look to reduce avoidable harm from missed payments and unclear terms while maintaining access to short term interest free credit, for those who can afford it. With 20% of the adult UK population using DPC/BNPL in the last 12 months, it's near time that the FCA's rules are in market for consultation. It is designed to boost trust and bring sustainable economic growth to the sector.
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, artificial intelligence, 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 Exploring Ethereum Standard for Tokenized Securities
Tokenization | July 21, 2025
Image: Freepik
SEC Meets Ethereum Groups on Tokenized Securities Standards
On July 16, 2025, the U.S. Securities and Exchange Commission (SEC) held a private meeting with Ethereum-linked groups including ERC-3643 Association and Chainlink Labs to explore standards for compliant tokenized securities. At the same time, SEC Chair Paul Atkins confirmed that the agency is reviewing an innovation exemption that could allow programmable compliance frameworks to operate with targeted regulatory relief. It's a new development that confirms growing regulatory support for tokenized finance, further raising the bar for Canadian policymakers to respond.
Key Developments
- SEC meets with Ethereum-based organizations
- Programmable compliance and tokenized securities standard
- GENIUS Act signed into U.S. law, and SEC exploring innovation exemption
- Implications for Canadian fintech regulation
1. SEC Engages Ethereum Ecosystem About Compliant Tokenization
In a major development during Crypto Week, the SEC held a private session with Ethereum-aligned groups, such as the ERC‑3643 Association, Chainlink Labs, the Enterprise Ethereum Alliance, Etherealize, and LF Decentralized Trust to explore the use of public blockchain infrastructure for regulated securities.
See: Peirce: You Can Tokenize Securities but Not Skip the Rules
The meeting focused on how blockchain systems can follow existing rules for verifying identities, tracking ownership, and controlling who can buy or sell tokenized securities. The groups shared technical solutions that help meet these requirements while still using decentralized public blockchains.
Dennis O’Connell, president of the ERC‑3643 Association said the SEC showed a “noticeable shift in tone” and openness to openly source industry standards.
2. Programmable Compliance: ERC‑3643 and Chainlink ACE
Two frameworks were at the center of the meeting:
- ERC‑3643 — An Ethereum token standard designed to support compliant transfers of tokenized securities by embedding identity verification, issuer registry, and onchain control mechanisms
- Chainlink Automated Compliance Engine (ACE) — allows for smart contract-based enforcement of regulatory rules across jurisdictions. It integrates existing ID systems with onchain logic and supports public and permissioned chains
See: Robinhood Tokenizes Stocks and Launches Blockchain
Chainlink Labs in a statement:
“Only Chainlink provides the compliance, privacy, cross-chain, and data infrastructure needed to scale digital asset adoption in a single platform.”
In partnership with the Blockchain Association, Chainlink recently launched Tokenized in America, a national ranking of blockchain leadership across all 50 U.S. states.
3. Policy Momentum as GENIUS Act Becomes Law
The SEC meeting coincided with Crypto Week where rapid legislative developments were taking place in Washington. The GENIUS Act was signed into law, establishing a federal framework for stablecoin regulation, and recognizing the role of tokenized payment infrastructure. It was passed alongside the CLARITY Act, which defines treatment for digital assets, and the Anti-CBDC Surveillance State Act.
SEC Chair Paul Atkins spoke publicly about the Commission’s interest in creating an “innovation exemption” that would allow compliant tokenized securities to be piloted without full adherence to legacy rules, saying:
“If it can be tokenized, it will be tokenized.”
See: Is TikTok Going Blockchain? Impact on Creator Economy
Sergey Nazarov, Chainlink co-founder:
Excited to see our industry reaching new heights and getting global adoption from governments because of the fundamental value that our technology provides.
The GENIUS Act is a huge step forward for stablecoins, forming the basis of on-chain payments for retail users in both… https://t.co/QlgtUgOHlu
— Sergey Nazarov (@SergeyNazarov) July 18, 2025
4. What this means for Canada
Canada is already evaluating stablecoins under its existing regulatory framework. The CSA classifies fiat-backed coins like USDC as “Value‑Referenced Crypto Assets” and recently allowed more time for issuers to comply. At the same time, OSFI, Department of Finance and the Bank of Canada are developing new federal rules to license stablecoin issuers to include reserve requirements, redemption, audits, and consumer protection.
See: Fintech Grows 3x Faster, 97% of Market Still Untapped
However, Canada currently lacks equivalent legal tools for programmable compliance mechanisms like ERC‑3643 or Chainlink ACE. If the SEC approves a standards-based tokenization model, Canadian fintechs will face increasing cross-border friction unless policymakers adapt quickly. NCFA previously highlighted this policy gap in its advocacy post, such as Coinbase Pushes for Tokenized Equities Approval commentary. Canadian regulators cannot fall further behind.
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, artificial intelligence, 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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US House Pushes Crypto Reform Forward with Key Bills
Digital Asset Regulation | July 18, 2025
Image: Freepik/cookiestudio
Three US Crypto Bills Pass House Vote, One Heads to Trump's Desk
The US House of Representatives moved mountains yesterday and approve 3 major crypto bills during what lawmakers called 'Crypto Week', reflecting growing political support for crypto regulation. Some observers warn though that it could create another shadow banking system without sufficient oversight.
On Thursday, July 17, AP News reported the House passed the CLARITY Act in a 294–134 vote. The bill, which outlines crypto market structure reforms, will now move to the Senate for further debate. The GENIUS Act, focused on stablecoin rules, passed 308–122 and has already cleared the Senate. It now awaits President Donald Trump’s signature, with the White House expected to approve it. A third bill, the Anti-CBDC Surveillance State Act, passed by a narrower 219–210 margin and also heads to the Senate.
ICBA Reaction
The Independent Community Bankers of America (ICBA) released a statement opposing key provisions in both the GENIUS and CLARITY bills. ICBA President Rebeca Romero Rainey wrote:
"[The bills risk] establishing a parallel banking system that lacks the regulatory framework necessary to protect consumers and preserve financial stability, [if crypto firms are allowed to bypass traditional oversight]. [The proposed reforms could] allow crypto companies to offer products that resemble deposits or banking services without adhering to the same prudential standards."
The ICBA urged Congress to prohibit nonbanks from accessing Federal Reserve master accounts and to bar stablecoin issuers from offering yield-like products via affiliates or subsidiaries.
See: U.S. Crypto Week Will Impact Global Crypto Policy
Crypto markets responded with optimism with prices pushing all time highs, but not all stakeholders are convinced. Sen. Elizabeth Warren warned that the CLARITY Act could allow firms like Tesla or Meta to tokenize assets and sidestep SEC oversight.
Why It Matters
If President Trump signs the GENIUS Act, it will become the first U.S. federal law specifically regulating stablecoins, setting up a nationwide reserve, audit, and disclosure standards for issuers. The Senate’s upcoming hearings on the CLARITY and Anti‑CBDC bills will determine whether U.S. crypto markets receive cohesive federal oversight or remain subject to a fragmented mix of state rules and judicial rulings. With pressure mounting from banking groups, consumer advocates, and industry, the final outcome will determine if Washington will become a true global magnet for blockchain innovation, or a shadow financial system without full protections.
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, artificial intelligence, 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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Citi and BofA Plan Stablecoins as Regulation Advances
Stablecoins | July 18, 2025
Image: Freepik/gstudioimagen
Citigroup and Bank of America Enter Stablecoin Race as TradFi Accelerates Towards Digital Dollars
The dominoes are definitely starting to fall. Citigroup and Bank of America have confirmed they are developing or preparing to launch their own stablecoins. In back-to-back Q2 earnings calls this week, executives from both banks outlined their intentions to support stablecoin issuance for use cases like digital payments and tokenized deposits.
As reported by Reuters, Citigroup CEO Jane Fraser said on July 15 that the bank is “looking at the issuance of a Citi stablecoin” and that stablecoins would fit within the bank’s current initiatives in tokenized deposits, custody, and digital cash on/off-ramp services.
See: Ripple Seeks US Bank Charter for Stablecoin Expansion
Then just a day later, Bank of America CEO Brian Moynihan confirmed that Bank of America is actively preparing to issue a stablecoin of its own. He told analysts the bank “expects to launch” a stablecoin and is in conversations with regulators about what a compliant U.S. dollar-backed version would require. Moynihan also pointed to the advancement of the GENIUS Act in Congress as a key milestone for legal clarity.
JPMorgan Already Live in the Market
Note, JPMorgan Chase already has functional stablecoin infrastructure. JPM Coin, a wholesale payments vehicle used by institutional clients, currently moves over $1 billion in transactions daily. The bank is now expanding into tokenized deposit products for digital settlement use.
Tokenized deposits are regular bank deposits that have been turned into digital tokens. They still belong to the customer and are backed by the bank, but because they run on blockchain technology, they can move money faster and incorporate programmable rules.
See: BIS Stablecoin Warning Meets US Policy Momentum
Worth noting that while Morgan Stanley has not announced its own stablecoin it confirmed during its latest earnings call that it is “actively discussing” potential use cases. CFO Sharon Yeshaya said the firm is monitoring the regulatory landscape and evaluating client needs.
Consortium Stablecoin Being Explored
In a Reuters article May 23, 2025, mentioned that JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and other large commercial banks (including U.S. Bank via consortium channels) are “exploring whether to team up to issue a joint stablecoin,”, but there have been no commitments or formal statements issued yet.
Implications for Traditional Finance
Traditional banks are positioning themselves to be regulated providers of digital dollars that can be used in fast, transparent, and low-cost transactions across modern financial systems.
Stablecoins issued by large banks could compete or potentially replace legacy payment systems for cross-border transfers, securities settlement, reserve management, and cash liquidity optimization. Eventually they may support consumer payments, although bank executives have stressed that the focus is on B2B use cases first.
Bank of England Governor Andrew Bailey recently warned that privately issued stablecoins could destabilize global financial systems if left unregulated, reinforcing the urgency for banks to operate within robust legal and supervisory frameworks.
See: Amazon and Walmart Exploring Merchant-Led Stablecoins
Traditional finance (TradFi) is gearing up to compete directly with crypto native infrastructure in the issuance and management of digital cash.
Outlook
The rapid entry of big banks like Citi and Bank of America into stablecoins confirm what fintech leaders have predicted for years. Programmable money will enter the banking mainstream, depending on regulatory approval and market demand.
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, artificial intelligence, 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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U.S. Crypto Week Will Impact Global Crypto Policy
Crypto Policy | July 15, 2025
Image: Freepik
Congress Debates Key Crypto Bills as Bitcoin Records Another All-Time-High
This week, the U.S. House of Representatives is organizing a series of votes on three major cryptocurrency bills. American lawmakers are calling this “Crypto Week” because the outcome of debated decisions will likely impact digital assets and the future of crypto for years to come.
See: Ripple Seeks US Bank Charter for Stablecoin Expansion
Included this week is how crypto and stablecoins are regulated,= and whether the U.S. government can issue its own central bank digital currency (CBDC). The outcome of course may influence how other countries including Canada approach regulation and innovation in the crypto-driven fintech sector.
Bitcoin Reaches Another High
Despite some chop in markets at these prices, Bitcoin rose to over US$123,000 on Monday, recording another new all time high as investors were drawn to the crypto policy news and congressional process taking place in the U.S., after years of regulation by enforcement. Investors see these bills as a clear sign that the U.S. will finally bring clarity to crypto regulation. There's also been steady growing demand and support from institutions, including companies like BlackRock, MicroStrategy and the list goes on.
Lawmakers Debating 3 Different Proposals
1. The Digital Asset Market Clarity Act (CLARITY Act)
This bill aims to define the roles of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). It would also allow some crypto projects to operate without registering as securities, if they meet certain technical standards.
2. The GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins)
This bill sets clear rules for companies that want to issue stablecoins. It requires 1:1 reserves in U.S. dollars or similarly defined safe assets, and also expands financial reporting and compliance rules for issuers.
3. The Anti-CBDC Surveillance State Act
This bill would block the U.S. Federal Reserve from launching a digital dollar. It says only Congress can approve a U.S. CBDC and aims to stop the central bank from using it to monitor or influence spending.
Votes are scheduled throughout the week, with final decisions on the CLARITY and Anti-CBDC bills expected by Thursday, and the GENIUS Act vote likely on Friday.
Why This Matters to Canadian Fintech
The U.S. is Canada’s closest financial partner. If Congress passes new laws that support crypto innovation while protecting consumers, it could set a standard for others to follow. A stablecoin framework in the U.S. could push Canadian regulators to accelerate efforts of their own.
See: SEC Policy Reversals and Crypto Case Dismissals
Cross border and global fintech companies will benefit from clearer rules in the U.S., opening doors for new investment and partnerships. And as more large players move into crypto under a stable legal framework, Canada’s own financial institutions will face increasing pressure to compete.
Outlook
The momentum is real. If these bills pass, the U.S. will take a significant leap towards a national digital policy. Canadian fintech leaders, investors and regulators must pay attention.
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, artificial intelligence, 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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Study Finds ChatGPT Weakens Memory and Focus
Research | July 14, 2025
Image: Freepik/stockking
New Study Finds ChatGPT Use Weakens Brain Engagement in Writing Tasks
A new study from MIT and partner universities, "Your Brain on ChatGPT" shows that using ChatGPT during essay writing reduces brain activity, memory recall, and feelings of ownership over the work. The study included EEG scans, human interviews, and AI scoring, and concluded that essays completed with the help of ChatGPT often looked polished, they led to lower mental effort and weakened learning.
See: Canada’s Productivity Depends on Intangible Tech Adoption
The findings are red flags for any parent with kids in school using ChatGPT frequently for tasks AND also professionals in other sectors including fintech that rely on chatGPT for everyday tasks.
Top 5 Verified Takeaways
1. ChatGPT lowers brain activity during writing
Brain scans showed that students using ChatGPT had the lowest levels of brain connectivity, especially in the alpha and beta frequency bands. These waves are linked to attention and executive thinking. Students who wrote without tools had the strongest brain engagement (See: Figure 1, pg 1).
2. Most ChatGPT users couldn’t remember what they wrote
This takeaway is particularly shocking. After writing, 83% of ChatGPT users couldn’t quote anything from their essays, and none could quote accurately. Only 11% of the students using search engines or writing without tools had the same issue (See: pg 31).
3. Students feel less ownership of the essays written by ChatGPT
Only 50% of the ChatGPT group said the work felt like theirs. Of course almost all students in the 'brain only' group said they fully owned their writing (See: pg 32).
See: ChatGPT Creator Tells Us What Is Coming Next
4. ChatGPT essays looked similar and lacked originality
The AI essays often use the same phrases, structure, and focus on the same topics. The Natural Language Processing analysis shows that the variety of words used and topics explored were much lower than in essays written without AI support (See: Summary of Results, pg 3).
5. AI assisted essays scored well but but reasoning was shallow
Although essays written with the help of ChatGPT received high marks from both human and AI judges, they lacked strategic integration and complex thinking. The authors called this a “surface benefit with hidden costs” (See: pg 3).
Implications for Fintechs
The learnings from this study directly impact financial technology companies. Many roles in fintech now rely on daily interaction and use of generative AI tools like ChatGPT, Gemini, Claude, Grok, or Amazon's Nova. While these tools boost speed and productivity, they will likely lead to reduced learning, memory loss, and lower capacity to make effective decisions over time. Below are five examples of how this could play out in a fintech business setting.
Customer Support Teams
Human call centre support agents that rely too much on AI to provide customers with quick and accurate responses, could find that they lose their ability to explain policies clearly, troubleshoot issues, or respond creatively.
See: Goldman Sachs Deploys Agentic AI Engineer Devin
If supporting complex financial products, this type of low recall and engagement ability is a risk.
Market and Data Analysts
Analysts using LLMs to write summaries or market updates may understand less of the data they’re reporting. Over time, this reduces their ability to identify trends, make forecasts, or provide insightful context beyond what AI benchmarking provides.
Product Managers Writing Business and Design Plans
PMs who use ChatGPT to write roadmaps, product and UI/UX specs could find themselves suddenly missing the deep thinking needed to balance tech feasibility, user needs, and regulation. AI can help write the document but a less than focused PM may not fully get the reasoning behind it.
Compliance and Legal Teams
Compliance staff using AI to draft internal policies could easily miss critical legal nuances. A polished draft that's considered 'confidently complete' by ChatGPT could contain subtle errors or regulatory gaps, causing major issues or backlash.
Weakens Experience and Skill Development
Entry-level staff using ChatGPT to write emails, explain APIs, or summarize client meetings might look super productive but are learning less. If that's the case, then their reliance on ChatGPT will weaken their longer term skill growth and reduces the quality of future fintech leadership.
High-quality output without high-quality thinking may look efficient but can quietly lower capability.
Conclusion
This study shows that while ChatGPT improves the speed and polish of writing, it comes at a cost. Users are less mentally engaged, remember less of what they create/co-create, and feel less connected to their work.
See: NFX: Start Thinking ‘Service-as-a-Software’
In fintech, similar over reliance on chatGPT for writing could lead to weaker analysis, skill development, and reduced capacity to do regular job-orientated tasks. Fintechs should keep their brains are sharp as possible, or develop AI systems/tools that augment human thinking, not replace it.
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, artificial intelligence, 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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