Feds have smart questions for smart banks

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Hello and welcome to Protocol | Fintech! This Friday: Washington's AI inquiry, Coinbase's key hire and the growing role of real-time payments.
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AI is changing financial services. Now, regulators want to know how deep the changes go, and if they're actually good for consumers and the financial system.
Five agencies, led by the Federal Reserve Board, the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency, are asking for insights into how banks and technology companies use AI.
How "safe and sound" is AI? Financial services companies, trade associations and consumer groups have until June 1 to submit comments in the "request for information" process.
Fraud-fighting will get a close look. AI is clearly making a difference here. It's helping banks verify identities faster and more efficiently, and crack down on financial crime.
The potential for bias deserves scrutiny. AI is also used to figure out who should get a loan, how much they should get and on what terms.
AI has some explaining to do. The CFPB has stressed the concept of "explainability" in AI, the ability to break down the quality of data used and the algorithms that emerge from it. Yes, AI is growing and blazing new trails. But it's still often portrayed as a "black box" technology that's hard to understand, even by the banks and fintechs that have embraced it. The federal scrutiny could force that to change.
— Ben Pimentel
Technology has been the leading sector in trust since Edelman began its Trust Barometer 21 years ago. Since that time, trust in business has risen while trust in technology has declined – and this year, the decline has been dramatic. Join Edelman for a discussion with tech industry leaders on what's next for Tech & Trust in 2021. This event is moderated by Protocol.
Payveris is a digital money-transfer company.
What do you think is the most exciting fintech trend right now?
Real-time payments, taking that money in real time out of your checking account and moving it to [pay your bill] at Pacific Gas and Electric [for example.] It's posted real time and you get real-time confirmation. That's a big trend that's going on and in the works as we speak.
What fintech trend do you find most troubling?
It's fraud. It's cyber attacks. Luckily, I have a top-notch CTO who stays awake at night worrying about that so I can sleep. But it is absolutely what's going on and out there. We're moving money and the fintech space is a good place for bad people to start hacking away at. That's why it's so important and coming on us to safeguard as much as possible.
What's been your biggest professional blunder and what did you learn from it?
Earlier in my career in fintech, we didn't partner as well with our distribution partners as others did. That was more of a corporate blunder than a personal blunder. One of the strategic priorities for Payveris that I do hammer my folks on is our most important partners are digital banking providers. We make it as easy as possible for them to work with us.
That's the number of in-store mobile payment users projected in 2021, per eMarketer. Apple Pay leads, with Starbucks, Google Pay and Samsung Pay following.
Thanks for reading — see you Tuesday.
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