Kristen Talman / AltFi
Is all fintech just AI now? A look at FinovateFall 2023 in New York
A look at FinovateFall, where the dominant conversation was artificial intelligence for fintech firms. The challenge? Weeding through the marketing of AI
When fall begins to ascend upon the Big Apple, the happy hours return and conference goers are back to swig hotel coffee and hand out company pop sockets at booths (masks are no longer the hot giveaway).
After attending Finovate, I couldn’t help but notice that it seemed like every brand had magically rebranded to feature its artificial intelligence use prominently, in some cases even having AI in its name. SEI Ventures Sneha Shah, executive vice president and head of new business Ventures at SEI, and Russ Kliman, global leader of SEI Ventures said the hype is definitely alive and well.
“The hot topic [at Finovate], to no one’s surprise was certainly artificial intelligence and large language models, machine learning and data analytics, personalization,” Kliman told AltFi. Otherwise, the global leader said the other consistencies from across the years stayed the same — about eight firms in fraud detection and 16 or so in the banking, credit, debt management, and lending sectors.
In a world of every company claiming to use artificial intelligence, it becomes murky on who, when and what is going to change the fintech landscape. In fact, it's the billion dollar question that has investors everywhere sorting through the fog. Kliman said SEI Ventures approach has been to go back to the basics; ask what problem the technology is solving and how they’re using AI to do such, instead of starting off asking what AI capabilities they’re using, even if companies might want to lead with such given the prevalence.
He may be onto something. Checkout.com head of revenue Zack Levine told AltFi “within the world of fintech, there's a lot of features and things that help make life a little bit easier and less difficult but there aren't so many foundational core things like money movement and payments, acceptance and disbursement that that have a needle moving impact.”
As Bernard Mensah, president of international, Bank of America, wrote in the Financial Times this week, fortunes will be made but also inevitably lost as investors waft through the AI marketing and may end up investing in products that don’t quite move the needle.
But, Shah told AltFi that despite the more complex environment with tightening macro factors, VCs are still working to deploy capital — “we are seeing a lot of cash still sitting on the side of VCs and new funds being raised around an early stage,” Shah remarked, saying it has never been a better time to start a business, or early stage start up, as “innovations come in a period of crisis”. For companies that have raised and are struggling, conserving cash will be challenging but could pay off once we’re onto brighter, lower interest rate, days.
In terms of the hype around AI, Shah said she thinks of it as a “co-pilot” tool versus the main topic in an investor meeting.
“I do think we're just at the start of something that is going to be huge, and there’s actually some bigger questions around how organizations are even going to be structured in the next 10 to 15 years,” Shah told AltFi. “Because most organizations today are built on an apprentice to expert model, where you come in as a junior person and you work your way up. I think AI is going to serve as the apprentice or be the co-pilot.”
Albeit to acknowledge just the role of artificial intelligence at Finovate would be to fall for the flashing red marketing, panels on payments and fraud protection gathered attention as well.
Levine told AltFi that consumers are increasingly looking to build in a cushion between purchase time and payment leaving one’s bank account. Much like the rise of BYPL fintechs, consumers are looking to hold on to their cash just a bit longer, especially given the global market strains on individual wallets, the head of revenue said. Customers have increasingly been drawn to Checkout.com’s partnership with AliBaba which allows customers to pay after the product has landed on their doorstep.
Did payments, fraud protection, and banking-focused details fall by the wayside of companies’ artificial intelligence hype? Perhaps. But if the investor's note of caution is any insight, the marketing of AI will serve merely as a co-pilot to the problems the fintechs were originally created to solve.