“Long recognized as a hub for innovation and FinTech startups, Boston leads the nation in developing and supporting financial technology solutions that specifically address the pain points financial institutions grapple with today.” These words, penned by NEACH’s Vice President of Education, Mark Dixon, AAP, APRP, and NCP, in 2020, lie at the heart of Boston-based FinTech accelerator, MassChallenge. The accelerator, known for connecting startups, experts, corporations, and communities to grow and transform businesses and industries, is a staunch supporter of FinTech growth in New England and, by extension, financial institutions.
Recently, we sat down with MassChallenge’s Victoria Melbourne, U.S. Director of Operations for HealthTech and FinTech, to talk about what’s on trend in the New England FinTech space and what financial institutions are looking for.
"Right now, there's a lot," explained Melbourne. "Number one is generative AI, and not in the sense that we want to use this to sort through big data queries. It's really on the more day-to-day tasks like eliminating or streamlining some of the tedious tasks people are working on using technology."
For example, an Aug. 2023 article, “How banks can adopt generative AI,” that ran in the American Banker, cited these potential uses:
According to the KPMG data, 76% of financial services executives see fraud detection as a major application. More than two-thirds of respondents said compliance and risk will be a top use. For instance, banks could use generative AI to automate regulatory filings and analyze historical data to simulate risk scenarios. Generative AI will also likely be used to power more sophisticated consumer-facing chatbots, per 66% of respondents.
In addition to generative AI, Melbourne said they are seeing a heightened interest in solutions that align with broader industry trends—digital transformation, for example. Customer/member-centric and customer/member acquisition services are also topping the trend list for FinTechs and the financial institutions they serve. The regulatory compliance piece is also “huge,” said Melbourne.
“Going back to the customer-centric and customer services focus, one of the big pieces we’re hearing from our New England institutional partners is that they want to see startups in their portfolio that enhance the customer experience and improve customer engagement—the personalization of it,” said Melbourne. “Lastly, what comes to mind that’s a little bit new and of particular interest to our New England-specific partners, is sustainable finance.”
"Sustainable finance," says Harvard Extension School, includes "investment decisions that take into account the environmental, social, and governance (ESG) factors of an economic activity or project.” It includes using sustainable resources, consumer protection, diverse hiring practices, employee relations, and public and private compensation packages to offer a few examples.
Melbourne points out that, historically, MassChallenge has supported a wide variety of startups and the FinTech program, which fosters innovations tailored to the financial sector. This can include anything from software applications, platforms, and specific services that address particular needs within the industry, like digital banking or wealth management. Payment processing and financial data analytics are some of the biggest pieces of the puzzle that have come out of MassChallenge in the past.
“The ecosystem continues to evolve. The trends change from year to year, if not from quarter to quarter,” said Melbourne. “We continuously monitor the industry trends and emerging technologies . . . but that’s [done] in conjunction with our financial institution partners. The collaboration between FinTech startups and established financial institutions is crucial for driving innovation and addressing industry challenges.”
For more information on how FinTechs are enabling the next generation of payments, join us for the virtual Future of Payments Symposium on November 2 and 3. To learn more about MassChallenge and how you can participate in driving innovation in the Boston FinTech space, visit the MassChallenge website.
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AUTHOR: Joe Casali, AAP, NCP
Executive Vice President
As the EVP of Payments Innovation for NEACH, Joe focuses on exploring innovative solutions and technologies that will help position members for success, both now and in the future. Connect with Joe to read more of his blogs, articles, and posts.