Coronavirus threatens fintech lenders

We are only just coming out of the last recession, and now we are hurtling into another one at breakneck speed. Countries are going into lockdown one after another, with those that can continue to function with employees working from home, having a distinct advantage over those sectors, such as tourism and hospitality that have been brought to their knees in some places already.

We all know that finance is going to be hugely affected yet again, and with so many people losing employment and therefore their salary, loans are going to be in the spotlight once again. Jeff Kauflin suggests that fintech lenders in the USA may be facing the biggest risks right now, starting with the basic reason — people won’t be able to repay their loans.

Upstart is a fintech-based lender that lends consumers up to $50,000 for purposes ranging from credit card debt consolidation to putting in a new kitchen. However, as the bond-rating agency Kroll reports, “It makes most of its loans to people with below-average credit scores.” Upstart argues that by using alternative data and machine learning to assess risk, it can identify creditworthy borrowers with lower traditional credit scores. It is true that the company has not reported significant defaults over the last year and is in profit, but what will happen to it during a sharp and sudden economic decline?

William Ryan, a managing director at investment bank Compass Point points to the fact that in a crisis, people place repaying personal loans very low on their list of priorities. He says, “People pay their cell phone bills, mortgages, auto loans and credit card bills before personal loans.”

And if the fintechs are not facing defaults, they face is a rapid rise in the cost to fund their loans. Most of them don’t hold banking charters and this means they can’t do what banks do — use customers’ checking accounts to fund loans cheaply. Typically, fintechs borrow from banks to fund their loans and this approach prevents them from holding loans on their own balance sheet, thus reducing their risk.

Another issue the fintechs face is the fact that interest rates for low-grade corporate debt have surged in recent weeks. Together, these factors are already making fintechs lower their growth expectations. Dan Rosen, a founder of fintech-focused venture capital firm Commerce Ventures said: “I was with a bunch of entrepreneurs last week. Most of them had already been having board calls and dramatically changing their plans for originating [new loans].”

The outcome for fintechs depends on the length of a lockdown. Chris Brendler, a senior director of research at CB Insights says that most will be able to survive a one to two-month lockdown, but that if it goes on for three to four months there will be a significant rise in unemployment, as well as

A List Of Fintech Firms Providing Free Technology During The Coronavirus Crisis

Coronavirus, or Covid-19, is preoccupying everyone at the moment, and in different ways. Businesses in almost every sector face a rough ride ahead, as they close offices in response to protecting employees health and responding to government instructions to stay at home and avoid contact with others.

Meanwhile, most of us still need money. We have to pay for food and online products, and for that we depend on bank services. And at this critical time, the more traditional banks have been receiving support from the fintechs, so that they can continue to support their customers.

According to Ron Shevlin writing for Forbes, the fintechs are “extending free, discounted, or accelerated deployment offers to financial institutions.”

So let’s see what some of them are doing.

Active.AI has a pre-built virtual assistant that can be quickly customized with answers specific to the institution. It is offering a 30-day free trial.

Agolo is providing customers with AI-generated summary feeds focusing on the impact of coronavirus on various sectors such asFinance, Energy, Media & Entertainment, Health Care, Info Technology, etc. It is offering these feeds for free on the web and via social media.

Agora Teen is an interesting fintech that specialises in offering white-label solutions for teenager bank accounts pre-opened by parents. It is offering free access to its products.

BillGO helps track, manage, and pay bills in one place and it is offering its Prism app free to help everyone stay on top of their money.

Brace is a borrower platform and it is helping borrowers to seamlessly apply for mortgage assistance in the event that the hardship is caused by COVID-19.

Digital Onboarding is a fintech offering its clients unlimited usage at no extra cost to help educate their customers/members on how to access money and utilise digital services without visiting a branch.

Similarly, Horizn works with financial institutions globally making sure both customers and employees understand and know how to bank digitally. It is providing a discounted short-term licence package of our cloud-based Customer Digital Platform and Digital Demos, and like other fintechs, it is accelerating deployment to get banks up and running within two weeks.

There are many other fintechs who are rallying around the financial sector and helping those institutions that need to react quickly to support customers. It’s a welcome move from fintechs and it can only help to boost confidence in digital banking once we come out the other side of this crisis.

Siri is witty, but knows her limits!

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Back in 1956, a man called John McCarthy coined the term AI for artificial intelligence. However it is only in recent years that we have personally witnessed the benefits of AI, and its mass scale adoption by larger enterprises. One of the things that has encouraged the use of AI is the need to understand data patterns, because companies want to know much more about their target audience and Ai allows them to gain useful insights into consumer behaviour.

There is much to be gained by understanding AI, including the fact that it is segmented into ‘weak’ and ‘strong’ sectors.

WEAK AI
Weak AI is also known as Narrow AI. This covers systems set up to accomplish simple tasks or solve specific problems. Weak AI works according to the rules that are set and is bound by it. However, just because it is labelled ‘weak’ doesn’t mean it is inferior: it is extremely good at the tasks it is made for. Siri is an example of ‘Weak AI. Siri is able t hold conversations, sometimes even quite witty ones, but essentially it operates in a predefined manner. And you can experience its ‘narrowness’ when you try to make it perform a task it is not programmed to do.

Company chatbots are similar. They respond appropriately when customers ask questions, and they are accurate. The AI is even capable of managing situations that are extremely complex, but the intelligence level is restricted to providing solutions to problems that are already programmed into the system.
STRONG AI
As you can imagine, ‘Strong AI’ has much more potential, because it is set up to try to mimic the human brain.  It is so powerful that the actions performed by the system are exactly similar to the actions and decisions of a human being. It also has the understanding power and consciousness.

However, the difficulty lies in defining intelligence accurately. It is almost impossible or highly difficult to determine success or set boundaries to intelligence as far as strong AI is concerned. And that is why people still prefer the ‘weak’ version, because it does not fully encompass intelligence, instead it focuses on completing a particular task it is assigned to complete. As a result it has become tremendously popular in the finance industry.
Finance and AI
The finance industry has benefited more than many by the introduction of AI. It is used in risk assessment, fraud detection, giving financial advice, investment trading, and finance management.

Artificial Intelligence can be used in processes that involve auditing financial transactions, and it can analyse complicated tax changes.

In the future, we may find companies basing business decisions on AI, as well as forecasting consumer behaviour and adapting a business to those changes at a much faster pace.

Artificial Intelligence is going to help people and businesses make smarter decisions, but as always we need to remain mindlful of finding the right balance between humans and machines.

The everyday uses of AI

When it comes to Artificial Intelligence (AI), many of the people I talk to think that it is either something that is coming in the future, or interest in it is limited to geeks. Some see it as a negative tool that will destroy employment for people. And they are surprised when I tell them that they are probably using AI in their everyday lives already — they just aren’t aware that something like a Google search is AI based. And those adverts you keep seeing on social media because one day last week you searched for ‘holidays in the Maldives’ — that’s all down to AI.

Here are some of the everyday uses of AI that you may not be aware of. They have been compiled by 12 experts from Forbes Technology Council.

1. Customer Service

Data analytics and AI help brands anticipate what their customers want and deliver more intelligent customer experiences — better than the old call centre one anyway.

2. Personalised Shopping

When you shop online and you visit a site and look at a product, you may find you suddenly get recommendations for similar products — that’s AI.

3. Protecting Finances

For credit card companies and banks, AI is indispensible, especially in detecting fraudulent activity on your account. It saves all of us from the pain.

4. Drive Safer

You don’t need a self-driving car to use AI. For example, lane-departure warnings, adaptive cruise control and automated emergency braking are all AI functions.

5. Improving Agriculture

Agriculture is an important element of our lives, because we all want and need to eat. AI is improving this important sector with the following examples: satellites scanning farm fields to monitor crop and soil health; machine learning models that track and predict environmental impacts, like droughts; and big data to differentiate between plants and weeds for pesticide control.

6. Our Trust in Information

Trust in information is one of the most critical issues of our current times. We are bombarded with images and articles that we just don’t know if they are telling the truth or not. Experts say that AI will change how we learn and the level of trust we place in information. AI will help us identify the deep fakes and all those methods of sharing ‘fake’ information, and that is very important.

The ways in which we use AI are growing all the time — and if you think you’re not using it, you almost certainly already are.