FinTechs must remain vigilant, dynamic and innovative to best serve financial institutions, Amount CEO Adam Hughes writes in a new PYMNTS e-book: “Beyond the Horizon: How to Identify Unexpected Threats That Could Impact Your Business.”
As we enter the second half of the year, leaders might want to prepare for the unexpected. Recent years have seen significant market fluctuations, pandemics and geopolitical instability, each posing unique challenges and opportunities. As CEO of Amount, a SaaS (Software as a Service) deposit origination, lending, and decisioning platform partnering with banks and credit unions, I understand the wild cards that could impact our industry . It is crucial for Amount and other FinTechs to remain vigilant, dynamic and innovative to best serve financial institutions.
Regulatory changes
Regulators diligently oversee bank/FinTech collaborations to ensure financial stability, consumer protection and fair market practices. New policies can emerge quickly, affecting operating models. Increased oversight can lead to more frequent audits and a need for improved reporting and transparency, potentially diverting resources away from innovation and growth initiatives. FinTech companies serving traditional banks and credit unions must effectively navigate these regulatory hurdles.
At Amount, we are committed to staying ahead of regulatory trends, continually updating our platform to ensure compliance and provide peace of mind to our customers, allowing them to scale with confidence and cost-effective manner. Drawing on our experience working with major banks and credit unions, we adhere to the highest standards to ensure compliance for customers of all sizes. We also work 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 bias, leading to unfair lending practices. Regulators require financial institutions and FinTech companies to demonstrate how their algorithms make decisions and ensure those decisions are not discriminatory. This requires significant investments in developing explainable AI models and conducting rigorous audits to identify and mitigate bias, which can be resource-intensive and slow the deployment of new AI-based products.
Additionally, robust data privacy and security measures are essential. AI and ML models rely on large amounts of data, but regulations such as GDPR and CCPA impose strict guidelines on the collection, storage and processing of personal data. Compliance with these regulations requires significant investments in data governance frameworks and security infrastructures, which increases operational costs.
At Amount, we enable our clients to access the power of AI by developing tools that proactively recommend policy optimizations. By leveraging the thousands of data points collected by our platform across each application, we identify poorly calibrated rules or new rules for underperforming or overperforming populations. This approach allows clients to use modern AI and ML techniques seamlessly and comply with existing frameworks for policy adjustments.
Although the future is inherently unpredictable, we are ready to meet the challenges and seize the opportunities. By remaining agile, innovative and customer-focused, we turn potential headwinds into tailwinds, driving growth and success for our business and our customers.
