FinovateFall 2024 Day 1 Recap

Day 1 in the books and what a busy day it was. Here’s what I encountered:

Overall Vibe

As a first time attendee, my feeling was that the layout and general flow seemed a bit…chaotic? I get the sense that this is by design, as the goal is for socialization/connection to be primary and for folks to have no choice but to talk to others (or more accurately, to the presenting companies). I’ll be more specific..

• There is only one session going on for the first two days (and not multiple “stages” or “tracks” until Day 3) which is helpful if you just want to experience it all.
• The coffee and even the meals are right smack in the middle of the demo booths, forcing you to take a look at what the presenters have to offer. This is probably a good thing.
• Everything is pretty packed into two floors, and there’s little seating or tables other than the main hall and a few spots reserved for press and then the speakers area getting their own cordoned off section; I met with some folks and found it tough to do anything more than stand and chat rather than sit down and relax. For whatever reason, these couldn’t be in a private room. This unfortunately applies to lunch too; most people either ate with plates on their laps, on the floor, or grabbing any surface they could find.
• A lot of the demos were marred by wi-fi and connectivity issues (and it extended to attendees). The companies were only allowed 7 minutes, so I can only imagine how rattling it was for them to experience this. Probably something to work out with the Marquis in the future.

• Shout out to Ark Cafe in NYC and their fantastic baristas in preparing coffee on request for attendees. I joked with the baristas that Mosaicx was unfairly taking credit for their great brewing skills.

Demos

I had the pleasure of getting to observe demos from the following organizations which I felt added a Compliance, Risk, or regulatory lens to their presentations/products/talks (there were some others I wanted to check out and are noted in yesterday’s event preview, but couldn’t due to my agenda):

Synctera

• One of the OG BaaS platforms. Touted the fact that there was no integration with core banking required, with the product being targeted to sponsor banks
• Their motto - “Robust Compliance and Risk Management”
• In the demo they showed off their software’s ability to be able to build a legal/regulatory compliance profile of each theoretical fintech relationship owned by a sponsor bank
• The tool allows listing of customers that come in from a fintech, and expands into a case management tool as needed. There’s also a useful business-based stats portal for each fintech.

Corsound AI

• The goal of this company is to detect scammers/fraudsters/etc, and ensure legitimate customers are not blocked. Unfortunately their demo was one of the ones that I referred to which got impacted by the wifi issues but they managed to work through it.
• They claim that they are only technology that can generate a face from a voice, and call it “voice to face magic.” In the demo, they used an example of someone miming to the scanner/camera while someone else read the script out loud, to show that their tool would result in failed authentication. My lingering question is how do they collect face data and have it matched to voice data? Is this at onboarding? It turns out this is actually based on technology that was developed at MIT back in 2019.
• Their closing motto is “Protect me but don’t treat me as a criminal.”

Abrigo

• They stated that check fraud today is in the billions and is up over 300% year over year.
• They seek to focus on lending, compliance and fraud solutions and have launched a fraud detection product that claims to stop 85-90% of check fraud attempts.
• There is a dashboard that aims to streamline approval and declines through automation, leaving a “few” to decision, which can be bulk decisioned or handled one by one, albeit in an accelerated fashion, using what they called an “Event Drawer.”
• For the event drawer, there are flat rules, image analysis, and side by side check comparisons. In the event the decision is to decline, the analyst will direct the deposit ops team to return the check and stop the fraud.

ID-Pal

• I loved this presentation - the company focuses on documents/databases/biometrics, and work with community banks and credit unions.
• They started off the presentation by making a bold statement - “CEOs are replaceable.” They believe the single most important person in the company is the customer, and ID-Pal believes its job is to look after them. I can’t tell you how refreshing it was to hear this, after sometimes feeling like the fintech space and identity verification has become inundated with solutions and companies that are supposedly for consumers but don’t actually serve any of their needs.
• The solution operates using drivers license and passport scans, and used a hilarious dummy head as part of the demo example of what a failed verification would entail (that is our preview picture for today’s edition!). Their approach is to rely 100% on automation, while they point out that 70% of the industry is still using “flawed humans” to verify, which raises the excellent question as to who is doing the verification?
• While there wasn’t a great deal of a deep dive on the solution itself, the closing thought was powerful, with their reminder that the IDV industry has failed while tech has allowed folks to be “fraudsters from the comfort of their own homes.”
• Tentatively, we’re hoping to talk more with Colum Lyons , the CEO, in a future edition so stay tuned.

NYPAY After-Hours Event - Open Banking: Opportunities and Challenges for Fintech and Bank Adoption

This event was the highlight of my day. Featuring the legendary Jane Barratt of MX , Gary Stein formerly of the CFPB, and Cihat Fitzgerald formerly of Visa, this was an amazing lineup hosted by Judith Rinearson of K&L Gates . This event marked NYPAY ’s return to in-person events for the first time since the pandemic, and I came away hoping they will keep it going. The topic was open banking and Section 1033 in particular (as a reminder, we wrote a 5-part series on this Rule late last year):

• Part 1
• Part 2
• Part 3
• Part 4
• Part 5

For last night’s event, the following topics came up:

• A bit of history about the rule and associated regulations, as not everyone in the audience was necessarily an expert (super refreshing, by the way)
• It was agreed that the consumer experience is changing due to competition from services that provide more transparency
• There are regulatory concerns around money movement (which was highlighted since this is a payments event, and most folks tend to associate regulation first and foremost with banking rather than payments (outside of AML)).
• Some potential and current use cases of open banking were shared
• It was agreed that more information, which is what open banking seeks to democratize, can only help with risk management decisions, so institutions have a lot to gain in some ways.
• There was a lot of discussion around “pay by bank,” which if adopted en masse (and to be clear, presuming ACH is not involved here either) would be a sea change for how people do business today, allowing things like real-time payments. With open banking, such a move would become more possible. The question of course, is how banks will respond and try to combat this, since for them while they may not need to pay the networks they will in turn lose out on interchange. In essence, these big banks are the losers but their customers will be the winners.
• Questions came up about who would truly regulate open banking. While the CFPB provides a framework with 1033, they only focus on Reg E and Reg Z transactions (as we noted previously in our deep dive). The FTC could get involved, and partner banks via BaaS expectations, but beyond that…to be determined.
• A shout-out was given to the Financial Data Exchange or FDX, which is the closest thing the US has to an open banking “standards setting body,” similar to the Bank for International Settlements – BIS overseas which focuses on settlements.

Looking ahead

Today I attended the The Financial Club 's monthly get-together and am now back at Finovate, excited to hear some keynotes, check out some more demos and connect with some great folks this evening at our Fintech Compliance Circle event. More to come!