Canada: Chatbots, Open Data And Sandboxes: Trending Topics From The 2016 Money20/20 Conference

With 10,000+ attendees, including more than three thousand companies from seventy-five countries, Money20/20 is the largest annual global event focusing on payments and financial services innovation. The 2016 conference in Las Vegas this October featured a packed agenda of talks by industry and thought leaders on a broad range of current and emerging Fintech issues, as well as an exhibition area featuring Fintech companies, investors, incubators, venture capitalists, consultants, regulators and lawyers. A team of McCarthy lawyers attended again this year and report back on some of the hottest topics of the 2016 conference: machine learning and artificial intelligence (AI), open data and regulatory sandboxes/innovation hubs.

  1. Machine Learning and AI. One of the next 'next things' creating a buzz at the conference was the integration of machine learning and artificial intelligence tools in the provision of financial services. "What will banking be in two, three or four years? It's going to be this," asserted Michelle Moore, head of digital banking for Bank of America, as she introduced BofA's new chatbot named Erica at Money20/20. Ms. Moore was not alone at Money20/20 in her obvious excitement about the promise of financial chatbots – tools that will permit the bank to interact with its customers through text messages or services such as Facebook Messenger and Amazon's Echo. MasterCard also announced MasterCard KAI, a bot for banks that will put the company's services on messaging platforms and enable consumers in the United States to inquire about their accounts, review banking history, monitor spending levels, learn about MasterCard cardholder benefits, receive contextual offers through integration with MasterCard Priceless experiences, and get help with financial literacy. Thinking Capital, the Montreal-based online lender to small businesses has also launched a financial chatbot named Lucy. Thinking Capital says Lucy was the first chatbot among Fintechs in North America.Chatbots are automated chat programs that use artificial intelligence to draw in data and translate it into understandable responses, akin to Siri, Apple's interactive voice tool. Although the technology is not restricted to financial services, it's clear that many financial industry stalwarts and startups alike are placing big bets on it. The customer-centric expression of this technological promise is that machine learning will, as described in the Money20/20 session Machine Learning & AI Powering Next Gen CX in Financial Services, "...raise the customer experience benchmark in financial services." But it's not all about the customer; another promising aspect of chatbots for financial institutions is reducing the cost of customer support.

    Notwithstanding the promising aspects of the technology, as financial chatbots scale in number and functionality, associated legal and regulatory issues will certainly likewise scale. For example, a text messaging platform may not be secure enough to handle the sensitive nature of consumers' financial information, giving rise to consumer privacy and protection issues. Consumer protection and competition concerns may also arise with chatbots that are affiliated with certain financial institutions, preventing them from giving unbiased advice about financial products and entities, and helping them to lock in customers using – and hoarding – accumulated data.

  2. Open Data. Another major theme emerging from Money20/20 2016 was the concept of 'open data' and 'open banking'. Open Banking is an emerging term in financial services / financial technology that refers to, among other things, the use of open application programming interfaces (or "APIs") that enable third party developers to build applications and services for the financial institution. It is predicated on the principle that personal information of customers (such as account and transaction information) should, with consumer consent, be made freely available to third parties, who can then use this data to create new tools to increase consumer financial data access as well as competition among participants in the financial ecosystem.The Director of the US Consumer Financial Protection Bureau ("CPFB") made headlines when he endorsed open data in the financial context. In his Money 20/20 remarks, The Director stated that the CFPB is "gravely concerned" that financial institutions are limiting or shutting off access to financial data, rather than "exploring ways to make sure that such access...is safe and secure." He concluded with the point: "Let me state the matter as clearly as I can here: We believe consumers should be able to access this information and give their permission for third-party companies to access this information as well." These comments reflect a similar push (mandated by legislation) in the EU (the adoption by the European Parliament of the revised Directive on Payment Services or "PSD2") and the UK (Open Banking Working Group) to require Open Banking. The financial services sector has been traditionally a data-intensive industry and the advent of 'big data' analytic techniques has created a new landscape for businesses based on data technologies: equity platforms based on crowdfunding, new platforms that match lenders with borrowers in innovative ways, data visualisations tools to follow companies, suppliers and clients, and a whole range of new payment systems based on mobile and cloud technologies. These transformative players include early innovators as well as established financial institutions which provide big data-related services that are shaking up the traditional financial markets.
  3. Regulatory Sandboxes, Innovation Hubs and the Fintech Charter. The issue of how regulators should respond to Fintech innovation, and to what extent they can encourage innovation, was the final hot topic of the conference. Regulatory approaches to Fintech were discussed in depth at a panel featuring the Director of the CPFB and by the Head of Project Innovate from the UK's Financial Conduct Authority (FCA).The Head of Project Innovate described the nature and status of the UK's Project Innovate, which features a regulatory sandbox (which seeks to create a regulatory "safe space" in which businesses that qualify can test innovative products and services without immediately incurring all the normal regulatory consequences of engaging in such activity), as well as an advice unit and an innovation hub. The FCA accepted 24 applications to the regulatory sandbox (out of a total of 69 applications) as part of the first cohort of applicants and this first cohort is expected to begin testing shortly. More detail on the first cohort is available here. In the US, the CFPB has launched Project Catalyst aiming to promoting consumer-friendly innovation. Project Catalyst involves the CFPB engaging with key stakeholders, coordinating with other government agencies and an "office hours" program of outreach to the Fintech community. In addition, the Office of the Comptroller of the Currency (OCC) has been considering the creation of a national limited purpose Fintech charter. While the approach has drawn praise from some within the Fintech community, some state regulators and consumer protection groups have been critical of the national Fintech charter concept, suggesting that a federal charter would likely preempt state laws on interest rates and impair the ability of states to protect less sophisticated retail consumers. The OCC has also recently issued a white paper outlining its recommendations for a responsible innovation framework.  However, the recent US election could impact these various initiatives, given statements made by President-Elect Donald Trump during the presidential campaign, in particular in respect of the role of the CFPB. In Canada, as in the US, legislative authority over financial services lies with both the federal and provincial governments.  The mix of federal and provincial jurisdiction over Fintech matters in Canada and in the US adds to the regulatory complexity of regulating and fostering Fintech in these jurisdictions. Notably, in Canada, the OSC recently announced that it will be taking steps to help Fintech entities navigate the regulatory framework, through its innovation hub called "OSC Launchpad", which was unveiled on October 24, 2016. Read more about the OSC Launchpad here.

To view original article, please click here

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.