Fintech 2024: Navigating the Winter, AI, and Regulatory Guardrails

I along with many others recently attended the Intersekt Fintech 2024 event. It was a dynamic gathering of innovators, regulators, and industry leaders. All focused on the future of financial technology.?

The central conversation of the event revolved around the so-called ‘Fintech Winter.’ Is it finally coming to an end? Despite the overwhelming sense of optimism, it was tempered by caution. Many attendees were hopeful that the thaw might be near. But agree there is no escaping the underlying challenges still faced by the sector. Particularly in navigating regulatory compliance and finding value in AI amidst the noise. It was a repeated theme across most presentations and panel discussions I attended.

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Regulatory Compliance: The RegTech Sweet Spot

One of the major takeaways from the event was how regulatory compliance continues to be a sweet spot for RegTech. The view is that it is no longer about ticking boxes. Rather ensuring businesses can meet evolving standards (of which there are many) whilst embracing innovation. With AI's rapid adoption, there were many conversations focused on how companies can balance regulatory obligations while harnessing technology’s full potential.

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A significant concern raised was around regulatory frameworks (or lack thereof) for AI. The conversation highlighted the risks of deploying AI. Without understanding the insights and analytics it provides. In Australia, rather than a hard legislative approach. The principles-based framework has been the initial strategy and a welcomed one. Eight government principles on AI, as a solid starting point for businesses to guide responsible AI development. Still, there was broad consensus that getting it wrong could damage trust, which remains the key asset in financial services.

AMO can empower your teams with our AI-powered GRC solution. Helping you to intelligently mitigate risk and streamline compliance. To learn more... Get in touch.

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AI: Navigating the Noise-to-Signal Challenge

There is no denying the excitement around AI in fintech, but the challenge is cutting through the noise to find real value. Companies like Airwallex are taking the plunge. Integrating AI into every product. Highlighting the industry’s determination to leverage AI across their offerings. But the conversations at Fintech 2024 also highlighted the need for caution. Not every business is ready to dive in headfirst. With many wary of using real customer data until they better understand AI's implications. Instead, there is a push towards using key use cases to minimise risk while maximising learning.

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Interestingly, there was a broader historical reflection on AI’s roots, with some attendees discussing its first being coined in 1956 at a conference. The goal was to explore the possibility that human intelligence could be simulated by machines. ?This not only provided context. But a reminder that while AI has been evolving for decades, we are still at the early stages of harnessing its full potential in financial services.

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Fintech Trends: B2C, AI, and Data Creativity

?For broader fintech trends, three clear themes emerged:

• A stronger focus on B2C (Business to Consumer). There’s growing interest in consumer fintech solutions. Likely driven by the demand for more personalised and intuitive financial products.
• AI’s transformative potential. Whether it is managing accounts, providing real-time insights on upcoming bills, or automating repetitive tasks. AI is set to revolutionize customer interactions in the financial space.
• Data creativity. Businesses are becoming more innovative in how they use data, not just for compliance but to unlock new products and services. Improve decision-making and enhance customer engagement.

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Digital Highway: Responsible Consumer-Centric Fintech

?A standout theme of the event was the idea of a ‘Digital Highway’ for fintech. With the rapid acceleration of digital transformation, it is not just about creating the infrastructure. But ensuring that consumers are at the heart of it. WeMoney, for instance, stood out, not only for their distinctive jackets! But for their emphasis on putting consumers in the loop. Their focus on building strategies that prioritise responsible outcomes. Reflects a growing trend towards ensuring fintech solutions not only serve customers but do so in a moral, responsible manner.

In 2023, the Australian Government released its Strategic Plan for Australia’s Payment System. This sets out its policy objectives and priorities for the payments system. The Strategic Plan developed through a consultation process. In collaboration with regulators, industry, consumer and business representatives. It provides its version of a Payments roadmap.

Lately, I have been spending a lot of time preparing companies for their Australian Financial Services Licence (AFSL). Not a simple endeavour! A transformative one that touches every aspect of an organisation. The most challenging aspects include: Legal, approach and structure, sequencing and inter-dependencies. For more advice on how to approach your AFSL project, reach out to me.

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The Risk of AI and Fintech Innovation

?As fintech continues to experiment with AI, the importance of starting small with low risk use cases is key. Several speakers highlighted the need for businesses to be proactive in cutting regulatory red tape. Allowing for a lighter touch that does not stifle innovation. But with this experimentation comes significant responsibility. Discussion around AI being used in a way that lowers costs, but the real question remains—will those cost savings be passed on to consumers?

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Startups and Corporates: Navigating Partnerships

The excitement surrounding new, existing, and upcoming startups was electric. For startups, one of the most compelling insights was how they engage with corporates. With corporates spoilt for choice between different startups. It is vital for new entrants to demonstrate why they are the right partner. We should not only focus on the technology. But convincing corporates that you can scale responsibly while delivering real value.

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One major risk for fintech startups is security—ensuring a robust safety net for operations is critical. As a founder, you must think about risk centrally, embedding a risk profile in parallel with the customer journey. It's here where I find ‘value streams’ so beneficial. By aligning risk, finance, marketing, etc… alongside delivery from the outset. Businesses can ensure a more seamless operation. By bringing delivery and operations together in a meaningful way. This is easier to do with startups who are often starting from a clean slate (aka a greenfield environment).

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The Takeaways

Fintech 2024 highlighted both the promise and perils of a rapidly evolving industry. AI is undoubtedly the big trend. The challenges of deploying it responsibly, navigating regulatory frameworks, and ensuring consumer trust cannot be ignored. The event also provided a stark reminder that in this race to innovate. Starting small and strategically could be the key to long-term success.

?The takeaway? Start experimenting, build guardrails as you go, and remember—trust is your most valuable asset. Lose it, and you might lose the right to exist as a business.

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