Fintech Innovation Fights Virus Threats

Wayne Miller Commentary


Fintech Innovation Fights Virus Threats

“There’s a way to do it better — find it!”
— Thomas Edison

At the Venture Center, I spend my days with innovators looking for ways to do “it” better. Four months into the COVID-19 crisis, we’ve employed new technologies for nearly every aspect of our lives, including how we bank.

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As financial institutions innovate, Arkansas’ financial technology community plays a significant role. Arkansas-based fintechs like Teslar Software, F.I. Works, Bond.AI and Cobbler Technology’s Leap XL expand fintech capabilities globally. These companies are part of The Venture Center’s fintech accelerator family, where we regularly see innovation in digital services, lending and cybersecurity. From better ways to check out at the store to using new data points for loan applications, fintech founders and financial institution leaders are working together.

Digital Services

The digital revolution continues to change consumer behavior. Fintech giant FIS recently noted that mobile banking traffic rose 85% in April, and there was a whopping 200% increase in mobile banking registrations. While we don’t know how long we’ll battle COVID-19, we know that financial institutions will continue to innovate.

The demand for mobile check deposits, person-to-person payments and the ability to open and manage accounts increased significantly due to COVID-19. Contactless payments are relatively new in the U.S., but the demand is growing. Just a few years ago, the ability to transact a payment with your mobile device at the grocery store felt like science fiction. Today, we can pay for everything from a taxi ride to a doctor’s visit with our mobile phone.

Lending

Innovation in lending is another area gaining speed. Over the past four months, we have seen banks in Arkansas alone process almost $3.3 billion in small-business loans through the Paycheck Protection Program. The volume of PPP loan applications meant that many financial institutions needed technologies to speed the process. Using artificial intelligence to gather and sort information, identify consumers’ credit-worthiness and streamline the underwriting process, technologies enabled small-business owners to stay afloat.

Automated lending is primed to become the norm for speed and efficiency’s sake, but lending technology will also increase relevant to assessing consumer risk after the pandemic is over.

For example, AI technologies can pull data from customer profiles beyond determining someone’s ability to repay a loan. A person who lost his home or business during COVID will need consideration through a different lens, and lending fintechs like Plaid and Codat streamline data to create a 360-degree view of the customer.

Cybersecurity

With more digital capabilities comes more risk, and cybersecurity firms are working on it. An FBI warning stated: “Studies of U.S. financial data indicate a 50 percent surge in mobile banking since the beginning of 2020. ... The FBI expects cyber actors to attempt to exploit new mobile banking customers using a variety of techniques, including app-based banking trojans and fake banking apps.”

The pandemic has hit small businesses, banks and individuals hard, and the last thing any of these needs is a cyber breach. A robust cybersecurity strategy will prevent account takeovers and other fraud threats. Cybersecurity firms are using AI and machine learning to thwart the increasing risks, and partnerships with financial institutions grow daily.

Through tumultuous times, it’s reassuring that financial institutions and fintechs are innovating to keep fraud at bay, ensure loans are processed efficiently, and provide more digital services for consumers. Entrepreneurship and innovation remain the strength of our nation, and as we continue building a new normal, financial institutions and fintechs will do the same so that when COVID is history, together we’ll have found a way to do “it” better.


Wayne Miller is the executive director of The Venture Center in Little Rock.