By Natalie DeCoste

The Federal Reserve Bank’s Fintech Partnership Symposium is underway, a two-day event where industry experts explore technologies available in the marketplace that facilitate digitization of credit decision processes and risk management, expanded credit access, and increased portfolio diversification.

One event looked at fintechs available for deposit funding, artificial intelligence and machine learning, cybersecurity, and anti-money laundering. The event explored what options for consumers six different fintech companies offer.

David Snitkof from Ocrolus spoke first. Oculus, founded in 2014, claims to help financial service companies make high-quality decisions with trusted data and unparalleled efficiency.

“What I do every day is work with lenders, who are customers, to help them make better decisions to help them manage their credit risk, to help them prevent fraud, but to help them operate more efficiently by being able to process documents, make sense of the data integrate digital and document-based data streams and ultimately get capital to their borrowers and increase the availability of financial services cost-effectively,” explained Snitkof.

Specifically, the company helps banks and lenders who are trying to keep up in the rapidly digitizing market. By utilizing digital infrastructures, Oculus helps lenders make more secure financial decisions.

“We have very robust fraud detection where we’re able to detect tampered with documents and other suspicious activity. And then, really importantly, we’re able to take all this cleansed and standardized data and help lenders do cash flow underwriting risk decisions, fraud prevention, income assessment, proof of address, proof of income, cross-source validation so they can make really good financial decisions with confidence,” said Snitkof.

Next to speak was Peter Hazelhurst, the current CEO and founder of Synctera.

“It’s pretty clear that now more than ever, there’s this challenge that’s coming into the market of what’s the future for a community bank, and how fintechs work with them to be successful. And if we can figure it out and collaborate and partner together, we’re actually going to be able to generate a lot of activity for consumers and create a lot of value for everybody,” said Hazelhurst at the start of his presentation.

Hazelhurst addressed the risks that community banks take to associate with fintechs. Once they can get over the regulatory and compliance risks, these banks still have concerns about operating with fintechs efficiently, Hazelhurst explained.

“So this is Synctera in a nutshell. What we do is we seek to build that marketplace that allows fintechs to focus on what they do really well, which is building a market consumer experience and satisfying their customer markets and users, and we help the community banks build operate and monitor the fintechs for growth and compliance, and it’s very symbiotic,” said Hazelhurst.

Hazelhurst said that one of the problems that Synctera has identified is that there are not enough community banks in the marketplace for consumers.

“The goal here is getting consumer customers access to the next new bank for dentists or doctors or lawyers or the environment and so on while partnering up with the community banks to managing their risk. And if we can do that and we can be really efficient, we can bring more and more fintechs to market, and that will be great for the innovation that’s bound to happen in the marketplace,” said Hazelhurst.

Synctera helps the community banks and fintech companies come together and build the online fintech bank itself to achieve this goal. Specifically, Hazelhurst noted that Synctera helps both parties with KYC, banking balances, and reconciliation across payment processing services and offers APIs to the fintechs.

Up next was Kareem Saleh from FairPlay, a company that focuses on algorithmic discrimination.

“Amazon, Goldman, Uber, Facebook they’ve all been subject to allegations that their decision-making systems discriminate against people of color, women, and other historically disadvantaged groups. I hate to be the bearer of bad news, but lenders are especially susceptible to charges of algorithmic discrimination that’s because the training data that we all use to build our marketing underwriting and collections models underrepresents historically disadvantaged groups,” explained Saleh.

Saleh said that during the K-shaped recovery following the pandemic, the Biden administration has kept economic inequality at the top of the national agenda. All of this means fair lending compliance must evolve, and there are serious regulatory risks that come with this evolution. Often companies will seek to pass off illegitimate fair lending compliance to avoid legal hassles.

“FairPlay’s tools start with a fair lending analysis that is rigorous, fast, and free. Our system can assess your marketing underwriting and collections models for pricing, and on an approval rate disparities, within minutes, we applied fairness metrics and thresholds that regulators commonly use in exams, and you get to review this fair lending analysis… we apply some of the latest AI techniques to identify if fairer models exist and if being fair has a cost. And we document that analysis so that you can provide your internal audit teams, your examiners, your regulators, etc., with hard evidence of your commitment to fairness,” explained Saleh about FairPlay’s process.

Next was Shana Hennigan from Deposit Solutions.

“We offer a fintech platform that digitally connects consumers who are looking for savings products with banks that are looking for retail deposits for consumers. We offer greater choice and convenience as savers can access a variety of banks and deposit products through the convenience of a single account, and for banks, we digitally connect you to consumers across the US through customized marketing campaigns,” said Hennigan about Deposit Solutions.

Hennigan highlighted for the audience how the COVID-19 pandemic accelerated the trend towards digitization in the banking industry. Specifically, he noted the importance for banks to have an online channel to reach consumers and to raise deposits and on the consumer side how digital usage by consumers increased during the pandemic, and it is not a trend that is going away. According to Hennigan, nearly nine out of 10 consumers indicate they plan to maintain their digital usage in banking even when the pandemic is over.

Next was Laura Kornhauser the CEO of Stratyfy.

“We offer modern credit and risk decisioning engine that helps banks make precise audible risk-based decisions, decisions like who to lend to and who to investigate for potential fraud,” explained Kornhauser.

Like FairPlay, Stratify helps businesses to detect biases in their lending practices.

“I am sure I don’t have to tell anybody on this call the massive importance of not only the cost to our economy in those trillions of dollars of biased lending practices but also the significant financial and reputational… how do we do this at Stratyfy is we do it by offering a tool that bridges the gap between traditional methods for building credit risk models and making credit risk decisions,” said Kornhauser.

Finally, Linda Jeng, the global head of policy at Transparent Financial Systems, spoke. Transparent seeks to make payments more efficient, cheaper, and faster for American businesses, specifically within transactional communities, any group of participants with shared objectives. These groups can range from commodity traders to farmers to community banks. Part of what the company does involves the rapidly expanding cryptocurrency market.

“Transparent kept what is working in our payment system and has dropped the rest. We have taken lessons from the blockchain crypto world and applied them to traditional finance to create a blockchain-enabled digital representation of the U.S. dollar. We applied legal and regulatory requirements, we partnered with regulated and responsible banks and financial institutions to build networks within which digit dollars can be exchanged, created, and redeemed, and what did we drop we’ve cut out unnecessary and slow payment intermediaries in order to make payments faster cheaper and more efficient,” explained Jeng.