Are You Riding the AI Hype-Train or the Snark-Bus?
The allure of AI is undeniable, but its true potential lies not in following trends, but in finding genuine value.
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Hi there,
The mornings have turned brisk here in NYC, which in addition to spiced lattes, should mean a busy season ahead as FinTech investors look to deploy capital before the holiday doldrums.
Last week, our team joined our friends at Primary Ventures for their annual Summit. The topics, sessions, and conversations that came out of the day are ones I’m sure will continue to be discussed and debated well into 2024. Chatter about mark-downs, embedded finance, and of course, OpenAI, consumed the room.
While artificial intelligence and even language models are not something that is new, the popularity (and FOMO) of AI in FinTech continues to grow – with projections pointing towards reaching $31.71 billion by 2027.
Is this just hype? Consultants selling 1m decks? Or will AI eat the world? Will I be watching an AI-powered Empire conference in 2024 from a beach somewhere? ...Sounds blissful!
Bubble, or Benefit?
On one hand, hype can create bubbles and lead to the premature demise of promising technologies - from web3 to BaaS. Hype can lead eager founders to lose the plot and blur the line between eternal optimism and outright fraud. Hype can lead investors from family offices and hedge funds into overpriced rounds in an asset class they know nothing about.
On the other hand, hype builds empires. Hype created Silicon Valley. Hype created New York City. Hype has created undergraduate FinTech and Web3 curriculum. And hype means that EVERY Fortune 500 board has a committee in place to evaluate OpenAI.
But does hype around OpenAI equate to a step function in value creation within financial services? 🤔
Whether you’re on the AI hype-train or the snark-bus, you should also be asking yourself, “Who stands to win, incumbents or FinTechs?”
AI Strikes… Again
This is the second AI hype cycle following conversational AI circa 2014. We saw more committees built than solutions deployed in financial services. More deck slides than lines of code. And what’s worse, after standing up committees to develop a thesis, many incumbents stop evaluating emerging startups full stop.
“We’re not looking at new vendors in this space.”
So as a FinTech, you have 18 months to become a category killer before the window closes and all future innovation happens inside the incumbent.
Before we can pick winners, it’s critical to identify the precise problems or inefficiencies that represent the largest opportunity. We are not short on technologies in search of problems; instead, we should be looking for the largest problems and specific use cases to solve.
How Large is FinTech’s Opportunity?
Here are a few examples where benefits outweigh the consequences. Where the “FOMO” may hold some clout:
Swift Fraud Detection - AI's rapid data analysis can swiftly identify unusual patterns or activities within financial transactions, significantly expediting fraud detection compared to conventional methods.
Tailored Financial Guidance - Leveraging AI's analysis of spending patterns and financial objectives, it offers personalized advice and product recommendations, enabling users to ascertain their net worth with just a few taps.
Automated Customer Support - FinTech companies employ AI-powered chatbots for customer service, providing round-the-clock assistance. These chatbots can address inquiries, resolve issues, and facilitate transactions anytime, day or night.
Operational Efficiency - AI automation tackles repetitive tasks such as data entry, resulting in quicker processes and reduced human errors. This, in turn, allows individuals to focus on more strategic and creative aspects of their work.
AI will continue to be a popular topic as the circuit of conferences continues. Multiple FinTech companies will talk about multiple use cases for AI when it comes to their product or their company.
But beyond it being cool, popular, and FOMO-inducing, why should FinTech care about AI? Should we care at all?
The allure of AI is undeniable, but its true potential lies not in following trends, but in finding genuine value.
And before we wrap this up, kudos to Empire contributors like Stephany Kirkpatrick, Ron J. Williams, and Sasha Orloff for their pieces on the positive potential of AI when it comes to financial inclusivity, task management, and capabilities for the modern consumer.
Cheers,
Jon
🏙 Empire Startups x NYC Tech Week
We’re bringing the FinTech to NY Tech Week! Check out our 2 events, below:
It’s time for the investors to be in the hot seat. Join Empire Startups for a private, investor breakfast and “reverse pitch” event. This event is co-hosted with the Google for Startups Cloud Program.
The last few years have seen rapid growth in FinTech, and with that growth has come a new set of challenges. How can financial institutions and FinTechs work together to create solutions that will benefit everyone? What is the future of FinTech? This event is co-hosted with Thomson Reuters Ventures.
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🗞🎧 The latest news in FinTech.
Reads
🌎 Wise and Swift join forces on faster cross-border payments | FinTech Magazine
Wise and Swift are joining forces to empower banks and FIs to deliver more cross-border payment optionality as part of a broader long-term partnership.
🤝 Chase Payment Solutions Partners With Gusto to Add Payroll | PYMNTS
Chase aims to become a one-stop-shop for small and medium-sized businesses (SMBs) seeking financial solutions.
🤖 Morgan Stanley kicks off generative AI era on Wall Street with assistant for financial advisors | CNBC
Called the AI @ Morgan Stanley Assistant, the tool gives financial advisors speedy access to a database of about 100,000 research reports and documents.
🏛 Rival banks unite to take on Big Tech | Financial Times
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📈 SimpleClosure raises $1.5M in less than 24 hours to help companies shut down faster and cheaper | TechCrunch
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🗣 Anthony Cimino, Head of Policy at Carta | Fintech Family Hour
Anyone else noticed that big scary shadow looming at the end of your bed?
Turns out that has been the silly SEC this whole time! Thankfully, folks like our guest today are doing the Lord’s work in trying to influence them and shape policy to help our Fintech world.
Anthony Cimino joins us to discuss his work as head of policy at Carta, new rules that are being implemented by the SEC, the uncertainty for future regulations, and how the everyday fintech-head can get engaged with those influencing policy.
🤳 Engaging Gen Z – Crafting a New Era of Digital Banking | Banking Transformed
With their unique preferences, behaviors, and technological fluency, Gen Z and younger consumers are reshaping the landscape of banking products, channels, and engagement strategies.
With this in mind, how do banks connect with and build loyalty among the emerging Gen Z demographic. What technologies, products and messaging matters?
💪 Overcoming Your Financial Baggage, with Alejandra Rojas | Humans of Fintech
In this episode, Nicole chats with Alejandra Rojas, founder of The Money Mindset Hub, about why it’s so critical for women to acknowledge and address all of the emotional baggage and trauma money brings with it.
Alejandra explains why approaching money from a clearer mindset enables women to seize opportunities in an otherwise male-dominated space and to level up in new ways where finances won’t automatically trigger an emotional response. By creating a safe space where people can feel safe to discuss their issues with finances, Alejandra believes women can unlock their true entrepreneurial prowess.
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