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article imageStartup banks using AI to disrupt finance sector

By Tim Sandle     Nov 21, 2017 in Business
The fintech arena is perhaps the fastest growing area of all digital disruption technologies. This is most notable with those firms offering artificial intelligence solutions that take on or support big banks.
Fintech startups are occupying different spaces within the banking and finance sectors. The website Bank Innovation has outlined several promising challengers. Three of interest include bonify, Better Mortgage, and Nutmeg.
Challenging big banks
German-based bonify of the kind of disruption going on throughout the financial service industry. This startup provides consumers free access to their credit score. In addition the user can upload other financial data. The app, making use of artificial intelligence, can then provide financial advice, circumventing the established financial advisor route.
In a similar fashion, Better Mortgage is set to challenge mortgage businesses, especially the high transaction fees associated with mortgage agreements. In the U.S. these can run to an average of $5,000. The New York-based company offers a completely digital, automated, artificial intelligence powered mortgage service in a bid to offer far lower charges for consumers seeking to set up a mortgage.
Finally, the company Nutmeg is taking on investment banks. This reflects changing consumer behavior when it comes to finances. The startup provides an online investment platform for investments and savings. Offering an easier and less costly alternative to many established banks.
Services for big banks
Not all startups are challenging banks; a number are offering services that banks lack. This is most notable in the area of anti-finance fraud through the offering of ‘regulatory technology’. These RegTech startups are helping bigger banks to keep ahead of complex compliance requirements or assisting with anti-money laundering activities or combating fraud with “know your customer” checks.
One example is London-based startup Kompli Global, which, according to Tech World, provides financial organizations with identity and background vetting for staff and customers. A second startup is credit risk management startup Credit Benchmark. This company specializes in pooling, aggregating and anonymizing credit risk data from leading global banks, enabling financial institutions to make capital allocation decisions.
Thirdly, HSBC Holdings has partnered with Silicon Valley-based artificial intelligence startup Ayasdi Inc. This is to automate some of its compliance processes in a bid to become more efficient.
Big banks respond
In related news, while smaller startup banks are disrupting the financial space, the response from larger players could be towards greater consolidation.
ComplianceX reports that Deutsche Bank’s chief executive has set out the case for more consolidation among European banks. The argument is that only “a handful of institutions” are powerful enough to compete on a global stage with larger U.S. and Chinese rivals. The financier argues there are too many banks in Europe and that bigger banks can leverage investment better and ride out periods of low returns.
More about startups, Artificial intelligence, Finance, fintech
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