FinTechs must stay vigilant, dynamic and innovative to best serve financial institutions, Amount CEO Adam Hughes writes in a new PYMNTS eBook, “Beyond the Horizon: How to Identify Unexpected Threats That Could Impact Your Business.”
As we move into the second half of the year, executives may brace for the unexpected. Recent years have brought significant market swings, pandemics and geopolitical instability, each posing unique challenges and opportunities. As CEO of Amount, a software as a service (SaaS) deposit origination, lending and decisioning platform partnering with banks and credit unions, I understand the wild cards that could impact our industry. It’s crucial for Amount and other FinTechs to stay vigilant, dynamic and innovative to best serve financial institutions.
Regulatory Changes
Regulatory bodies diligently oversee bank/FinTech collaborations to ensure financial stability, consumer protection and fair market practices. New policies can emerge rapidly, affecting operating models. Increased scrutiny can lead to more frequent audits and a need for enhanced reporting and transparency, potentially diverting resources from innovation and growth initiatives. FinTech companies serving traditional banks and credit unions must navigate these regulatory hurdles effectively.
At Amount, we are committed to staying ahead of regulatory trends, continuously updating our platform to ensure compliance and provide peace of mind to our clients, allowing them to scale confidently and profitably. With experience working with large enterprise banks and credit unions, we adhere to the highest standards to ensure compliance for clients of all sizes. We also engage with regulators to help them better understand current industry dynamics and trends.
AI and Machine Learning
Artificial intelligence (AI) and machine learning (ML) models can inadvertently perpetuate biases, leading to unfair lending practices. Regulators require financial institutions and FinTech companies to demonstrate how their algorithms make decisions and ensure these decisions do not discriminate. This necessitates significant investments in developing explainable AI models and conducting rigorous audits to identify and mitigate biases, which can be resource-intensive and slow new AI-driven product deployment.
Additionally, robust data privacy and security measures are essential. AI and ML models rely on vast amounts of data, but regulations like GDPR and CCPA impose strict guidelines on personal data collection, storage and processing. Compliance with these regulations requires significant investments in data governance frameworks and security infrastructures, increasing operational costs.
At Amount, we provide clients access to AI’s power by developing tools that proactively recommend policy optimizations. Leveraging the thousands of data points collected by our platform on every application, we identify miscalibrated rules or new rules for under- or over-performing populations. This approach allows clients to use modern AI and ML techniques transparently and comply with existing frameworks for policy adjustments.
While the future is inherently unpredictable, we are prepared to navigate challenges and seize opportunities. By staying agile, innovative, and customer-focused, we turn potential headwinds into tailwinds, driving growth and success for our company and our clients.
