Financial services companies are using technology to solve an array of problems, some of which aren’t being built in-house. That’s prompting them to seek partnerships with fintech startups as they embrace everything from artificial intelligence to cryptography.
Helping New York’s financial services companies meet that end has been the mission of the FinTech Innovation Lab New York for nearly a decade. An alliance between consulting firm Accenture and the Partnership Fund for New York City, the non-profit program is designed to help tech startups speed up product and business development by connecting them with financial services and venture capital executives.
The 12-week program is entering its ninth year Wednesday with the new crop of eleven startups representing a broad range of technology. It runs the gambit from artificial intelligence to insurtech. “It’s a pretty broad range in the type of companies and problem areas they are tackling,” said Maria Gotsch, co-founder of the Fintech Innovation Lab New York and President and CEO of the Partnership Fund for New York City. “A number of companies are using AI, gamification and machine learning.”
The FinTech Innovation Lab New York has long provided a window into the red-hot areas of fintech that financial services companies care about. After all, the participants in the program are selected by senior technology executives from among 43 financial institutions. Over the years the interest has increased on the part of the financial firms as they realize they can no longer do it all alone. “Interest from the banks have grown. They are really excited and see the real value in being able to tap into that (the startups) and get ahead of the curve,” said David Treat, a managing director in Accenture’s Financial Services practice, and co-head of the FinTech Innovation Lab New York.
In the beginning, the focus of the FinTech Innovation Lab New York was on payments, it then shifted to lending, distributed ledger, and more recently insurtech. The startups are trying to use technology to solve the key challenges for the industry including improving online engagement with customers, zeroing in on financial compliance and underwriting cyber risk. Moreover, some are trying to bridge the gap between legacy systems and cutting edge technology.
CloudFrame, is one example of the latter. Its technology transforms legacy mainframe applications into cloud-native Java providing a pathway to cloud migration without the added risks. Genus AI, another participant in the program, created an enterprise AI platform that extends financial services firm’s existing systems so they can better understand and engage with customers. Meanwhile, HyperScience uses proprietary machine learning technology to automate data entry and improve document processing for large enterprises by extracting handwritten, printed, and highly distorted text. Npm, the startup that manages the biggest software registry in the world, enables JavaScript developers to lower costs and reduce time to market when churning out new programs.
On the security front, Cyberwrite was chosen for the lab because it provides an easy to understand report benchmarking the risks and financial impact a cyber attack would have on small and medium-sized businesses. The data is in real time and on demand. It used for customer engagement, improved underwriting and to manage risk. Inpher is another play on security. It uses cryptographic technology to power analytics and AI applications without exposing any sensitive data across departments or organizations. Theta Lake aims to protect financial institutions from compliance risks, using AI and deep learning to detect compliance issues in what a company said, shared, or displayed. It also provides secure and compliant archiving for voice, video, and chat. Magma Trading is reducing the risk for Wall Street, developing a new stock market that enables broker-dealers to trade large blocks of equities without getting harmed by electronic sweeps.
In the consumer-facing area of fintech, startups in the FinTech Innovation Lab New York are trying to solve biases in underwriting, provide easier ways to pay for things and improve financial literacy. Take Extend, the startup that has created a digital credit card distribution for banks, fintechs, and businesses. It provides virtual credit card distribution without requiring any bank technology development. Meanwhile, FairFrame melds AI and social science research into an easy-to-use text analysis platform. Known as a spell checker for unconscious bias, it provides customers with real-time feedback. Goalsetter is trying to improve financial literacy via a goal based savings and gifting platform as well as gamification to teach children about financial literacy. All of it is backed by an FDIC insured bank account.
In addition to getting the companies in front of large financial institutions, participants in the program get hands-on experience in selling products to the industry. The sales cycle can be long with big enterprises and the process cumbersome. FinTech Innovation Lab New York demystifies it for the startups, teaching them how to present their business ideas in a way that meets regulatory and infrastructure requirements. “The mentors are focused on teaching these emerging tech companies how to sell to large institutions,” said Gotsch. “They make sure company doesn’t just have the tech but products banks want to buy.”
