The AI In Fintech Market Map

OK – so how cool is this? James being included in the just released Top 100 AI fintech firms, as per the boys and gals at CB Insights. Thanks guys, so top 10 is my next target now. 

Funding to AI startups reached record highs in 2016 and applications for artificial intelligence technologies exist across nearly the entire spectrum of business. Highlighted here are the top 100 AI startups selected by CB Insights operating across numerous industry verticals.

Using the CB Insights database, we expanded upon our AI 100 analysis to identify companies that use AI in financial services and mapped them according to the areas where they’re operating. In broad terms, our analysis includes companies whose core offering includes the application of AI to serve the financial services industry, including commercial banking and credit offerings, insurance, asset management, accounting & personal finance, as well as regulatory & compliance services. In addition, many of these companies have additional use cases beyond financial services.

Source: The AI In Fintech Market Map

Machine Learning: The New Proving Ground for Competitive Advantage – MIT Technology Review

Leaving you in the dust, my friend. It’s my way, or the highway.

A recent survey conducted by MIT Technology Review Custom and Google Cloud reveals that while the majority of businesses are struggling to apply machine learning, others are hard at work developing strategies for the technology — and are already realizing genuine ROI.
The business world’s focus on machine learning (ML) may seem like an overnight development, but the buzz around this technology has been steadily growing since the early days of big data.

ML is beginning to deliver on the potential created by big data and analytics by turning raw data into useful, predictive tools for business. Innovation-minded business leaders are embracing ML as “the next big thing” and have already crafted ML strategies and initiatives that promise real benefits and return on investment (ROI).

The survey sought to reveal where organizations stand in terms of adopting ML strategies. Respondents included current ML strategists, representatives from companies planning to execute ML initiatives in the next months or years, and those with no ML plans for the foreseeable future.

Source: Machine Learning: The New Proving Ground for Competitive Advantage – MIT Technology Review

Is it OK for lending algorithms to favor Ivy League schools?

This article goes deeper into the subject matter, and addresses a number of issues that are important indeed. In the long run though, it’s clear that this has only one way to go, and it’s a positive story. The human factor being what it is, there is always going to be a bias. Put more machines in charge, let them learn, and we’re off to a better credit world, no doubt. 

The main mantra used to be “software is eating the world”. Mine these days and going forward is “AI and Machine Learning is eating all the rest”. TGIF – but have a good read nevertheless.

“I think a baseline question is, how much disparate impact already exists in the system?” said Paul Gu, co-founder of the online consumer lender Upstart, which includes the potential borrower’s college in its underwriting criteria. “I think we would be kidding ourselves if we thought that the traditional way of underwriting was a completely unbiased way of underwriting. If you look at credit scores by any demographic, they’re extremely uneven. If you look at credit access in America, it’s extremely uneven.”

Source: Is it OK for lending algorithms to favor Ivy League schools?

Innovation in Credit Granting With Big Data – Ash Gupta

You want to hear from the big kahuna – you got it!

All you wanted to know about Big Data, AI and Machine Learning, applied also to the un- and underbanked part of the population, call it broadening of access to credit.

“Ash Gupta is an industry leader in machine learning and big data analytics. He promotes AXP wide innovation to drive revenue growth along with best-in-class Credit and Fraud results. His responsibilities extend across all AXP businesses and geographies. He is an executive officer and reports to the company’s Chairman & CEO. Mr. Gupta’s prior roles include company’s Chief Risk officer and CEO of US banking, along with broad leadership positions in Finance and Strategic Planning. Mr. Gupta earned an MBA from Columbia University and a bachelor’s in Engineering from Indian Institute of Technology (IIT), Delhi. Currently, he serves on the boards of Encore Capital Group (NASDAQ: ECPG), Big Brothers Big Sisters of New York, and South Asian Youth Action (Advisory Board).”


How fintechs are using AI to transform payday lending

Big Data, AI and Machine Learning getting some needed attention here, no less by the people at American Banker. Something’s afoot? Yes indeed, and we ain’t seen nothing yet. The upward march will be long and “volatile”, but has only one way to go. It’s one of the great ways we’ll be able to help a large part of the un- and underserved population at many different a level. Stay tuned for more, but enjoy the observations below.

“Flannery said machine learning engines are less discriminatory than people.”

“Humans tend to do things like redlining, which is completely ignoring an entire class,” he said. “Machine learning algorithms do [lending] in a multidimensional, ‘rational’ way.”

Source: How fintechs are using AI to transform payday lending

Why branch bankers shouldn’t fear bots

I don’t disagree with this observation, but wanted to add a couple of thoughts here. For one, I strongly believe that over time, we’ll see a re-evaluation of the importance of people vs. machines, as we’ll try to deal with some major headwinds and other unpleasant side effects of current developments re. automation. 

More importantly, what I miss in this particular piece, is the fact that AI & Machine Learning is not only there to replace repetitive and low value add activities. It is also there to grow the business, in this case (FI’s) by pointing to opportunities to better serve the un- and underbanked population, who currently are falling through the (credit box) cracks. 

Much of the talk about artificial intelligence in banking has been about how technology can replace some functions currently performed by humans. But AI could help human bankers do their jobs more effectively by giving them quicker access to relevant information than ever before.

Source: Why branch bankers shouldn’t fear bots

CB Insights on Twitter: “Artificial intelligence has jumped the shark”

No further comment needed #CrowdProcess #James #Marketplacelendingrevolution

Management online lending risk with AI & CrowdProcess / James

Most timely update from the team at Lending Times on CrowdProcess, its flagship product “James” and its plans for US domination … guess who’s gonna lead that charge? 

James’ features include:

  • Scorecard: Traditional scorecards have been augmented with a random decision factor, gradient boosting, and neural networks.
  • Validate: It provides precautionary alerts according to the model`s metrics and access to data necessary for validation. James has an edge over other solutions in the market, which may not enable regulators to validate.
  • Deployment: James has superiority with regards to the timeline of deployment. The model can be run automatically or in conjunction with other models. So a 6-month integration time is essentially reduced to zero and the company can compare multiple models in parallel.
  • Monitoring: James monitors its own performance in real-time. The system not gives out early warnings and helps ensure data sets are used appropriately. When a material change occurs, the software is tweaked accordingly.

Source: Management online lending risk with AI | Lending Times

Take the Pokemon Go approach to bank sales

Somewhat hopeful that Gaming & Gamification within the financial services sector is finally being talked about, i.e. discussed. Meet your (future) customer where he is and spends most of his time today, and that is on his smartphone. Increasingly so. Once you realise that, you can then start looking a game mechanics, gamification, game play and other critical elements needed to develop a “buyers journey” commensurate to the times. The famous PBL approach (points, badges, leaderboards) becomes second nature, and you just may be able to take the inevitable lead in the space, and never have to look back. #marketplacelendingrevolution

It is a fallacy that customers respond only to monetary rewards. Banks should use psychological rewards to drive digital product sales just as popular mobile apps do.

Source: Take the Pokemon Go approach to bank sales

Fintech 2017 – Breaking Banks

Good to see CrowdProcess/James being featured here as well – with the following details:

“There have been big advancements in AI over just a short number years owing to better algorithms, much larger datasets for training them, cheaper and faster cloud-based infrastructure and new computing techniques like parallel computing. On the back of this, we are seeing many more AI-related fintechs entering the jams, especially compared to two years ago.

An interesting example from the UK is Crowdprocess whose product James leverages machine learning algorithms to create high-performing predictive models and scorecards for credit risk management.”

Source: Fintech 2017 – Breaking Banks