The second day of the Fintech Talents event witnessed panel discussions that delved into the latest trends and innovations in the financial technology sector. Among the various topics discussed, artificial intelligence (AI) emerged as the focal point of conversations, signaling its pivotal role in shaping the future of financial services.
AI dominates discussions
The Fintech Talents event showcased the industry’s growing enthusiasm and optimism regarding the potential of artificial intelligence (AI). Expert panels convened to discuss how AI could revolutionize specific areas within financial services, including embedded finance, customer experience, financial crime, credit risk, and regulation. The discussions also covered the current state of affairs in open banking, payments, and digital identity.
Variable Recurring Payments (VRPs): A game changer
One of the focal points of the event was the discussion around variable recurring payments (VRPs) and their potential to transform the payments landscape. VRPs, introduced around two years ago, leverage open banking technology to facilitate automatic money transfers in two ways: sweeping and non-sweeping. Sweeping involves transferring money between accounts owned by the same individual, while non-sweeping involves transactions between different senders and recipients.
During the event, a panel of executives from prominent financial institutions, including Wise, Plaid, NatWest, and Secure Trust Bank, gathered to discuss the merits of VRPs, particularly emphasizing their non-sweeping use cases.
Putting customers in control
Raffaele Brusco, senior API commercialization manager at NatWest, highlighted how VRPs empower customers by putting them in control. Customers can set up limits and receive payment notifications, ensuring enhanced security and flexibility while enabling a seamless “one-click payment experience.”
Reducing friction in banking services
Andrew Norman, lead engineer of UK and Europe product at Wise, discussed how VRPs can “unbundle” and streamline banking services, reducing friction for users. Compared to direct debit, which shares similarities with VRPs, Chris Higham, head of payment and cards at Secure Trust Bank, emphasized the ease of VRP transactions and the challenges associated with direct debits, such as data collection processes that often involve paper or electronic documentation.
Targeting frequent payments
In the context of today’s budget-conscious consumers, VRPs offer an attractive option for those who need to make frequent payments. This middle ground between traditional payment methods provides a solution for customers who want to manage their budgets effectively.
Business use cases on the horizon
All panelists noted that they were either actively exploring business use cases for VRPs or planning to do so in the near future. While some challenges, such as setting up VRP consents, exist, businesses are keen to leverage this technology to enhance their payment processes. NatWest, for example, is piloting VRPs with internal charities, recognizing the low likelihood of refund requests in this context. They are also investing in improving the user experience and exploring e-commerce applications.
AI in regulation: Balancing automation and compliance
In a separate panel discussion, industry experts explored the role of AI in regulation and how regulatory efforts are evolving in response to AI advancements. The consensus among panelists was that while compliance can be costly and time-consuming, it remains a crucial aspect of the financial sector.
AI as a compliance enabler
Peter Morgan, CEO and founder of Deep Learning Partnership, highlighted how AI tools, when applied effectively, can help control compliance costs and automate regulatory processes. However, this automation raises concerns about “technological unemployment” as it reduces the need for human intervention. While AI offers substantial benefits, it also brings forth new challenges.
Government involvement in AI regulation
Panelists acknowledged the proactive stance taken by governments in regulating AI. The UK’s AI Safety Institute, as well as the involvement of the US, was cited as an example of governments recognizing the significance of AI regulation. Global cooperation is sought, but data privacy considerations necessitate the establishment of AI Safety Institutes in every country.
The future of finance and regulation
The Fintech Talents event’s discussions on VRPs and AI regulation highlight the financial industry’s ever-evolving landscape. VRPs have the potential to revolutionize payments and enhance user experiences, especially for those managing their budgets. Meanwhile, AI’s role in regulation underscores the importance of balancing automation with compliance in the financial sector. As financial technology continues to advance, the industry seeks to harness innovation while ensuring regulatory frameworks keep pace with technological progress.
