Use of AI in Mortgage Business

Organizations are increasingly using efficient technologies to harness and harvest data to deliver new and more efficient service bundles to customers. Regulatory standards such as Dodd-Frank and PSD2 have forced organizations to manage and use data more efficiently. 

Large amounts of data are handled by all financial service sectors—payments, lending (unsecured and secured), insurance and wealth, and banking. Consumers of this data are both internal and external to financial institutions. Big Data demonstrated its capability to harvest large volumes of data, especially unstructured data (also known as dark data). Therefore, it is a widely preferred choice of technology at present.

Account aggregation or financial data aggregation solutions were initially used by wealth management and personal finance management advisors. However, they are now used across the global financial sector. Data aggregation is one such component offered exclusively by some FinTech players, as well as managed internally by larger industry players.

Mortgage lenders recognize the need to operate in this fast-changing landscape. Mortgage aggregators, i.e., enti …

Q3 2020 Global FinTech Funding Roundup

In Q3 2020, FinTechs worldwide raised $12.15 billion in investments from 716 deals with a 16% QoQ decrease in total funding raised compared to Q2 2020. FinTech startups were able to raise $10.47 billion in funding in Q2 2020 from 568 deals. In terms of the number of deals, there was a growth of 26% QoQ in Q3 2020 compared to Q2 2019. It’s interesting to note that the funding for FinTechs in Q1 2020 was majorly dominated by the top six segments in this quarter.

The Americas dominated the funding chart with $7.85 billion in funding raised from 340 deals, which happens to be 64.7% of the global FinTech funding in Q3 2020. Europe came in at a distant second with $2.90 billion in funding from 216 deals. In Asia, FinTech startups managed to raise $1.35 billion from 133 deals.

Five Biggest AML Fines on Banks

Banks are seeing a significant change in terms of new and strengthened regulatory compliance demands by regulators globally. Even though banking processes have changed and become much more efficient and transparent than before, the need to further lower compliance costs is still a key priority.

Sanctions monitoring, KYC remediation, anti-money laundering (AML) measures, and transaction monitoring are some of the costliest elements of compliance. Fines imposed by regulators for non-compliance are the other elements of compliance costs.

Compliance Cost for AML and KYC Fines Hit Banks Globally

The cost of compliance is expected to cross $181 billion in 2020. Since the Great Recession, financial services firms the world over have been hit by $36 billion in fines for non-compliance with anti-money laundering, know your cust …

‘Buy Now, Pay Later’ in India

India’s digital lending market is expected to reach $100 billion by 2023, posting a CAGR of 36%. The digital lending space in India has 330 startups. Digital payments saw a steep rise because of social and economic factors brought about by the COVID-19 pandemic—this is reflected in UPI hitting 1.34 billion transactions in June 2020.

Consumption has been the bulwark of growth in recent years. Over the past few years, households in India have dipped their savings and leveraged themselves to finance consumption. The year 2020 brought this changing habit to the mainstream, with the pandemic impacting financial stability and continuity.

The growing importance and penetration of non-banking financial companies (NBFCs) are helping fund retail credit demand. However, post the NBFC credit crunch, credit has become a tad inaccessible to riskier customer profiles, somewhat constraining households’ ability to spend.

This reduction in spending capacity pushes lending companies to innovate and introduce new products to retail consumers. ‘Buy Now, Pay Later’ (BNPL) is an ingenious product that aims to take formal microlending in an informal way to retail customers, especially to the segment that does not get easy credit from banks.

‘Buy Now, Pay Later’ 

BNPL is a zero-interest, short-term micro-credit for online purchases such as food, clothing, and travel. It is a digital credit payment offered by online providers, which allows a consumer to make a purchase and either delay the payment by 14–30 days or slice the payment into smaller chunks that can be repaid over several installments (may not be structured loans). 

MEDICI defines BNPL as a credit amount given to a user for a certain number of days, without processing fees or interest rates. This credit enables the user to pay upfront for their purchases, without any deduction from their bank account. It offers them the convenience to pay with all their purchases together. A BNPL solution provider either charges an interest rate or fixed rate if the user cannot pay the credit amount within a specified number of days or provides easy equated monthly installment (EMI) options.

A BNPL provider extends credits to a consumer with only e-KYC and some credit health checks in the background. The instant credit decision is supported by alternative credit scoring based on the consumer’s digital data, such as alternative data, mobile data, purchase data, and location data. RBI guidelines allow approved entities to disburse loans of up to INR 60,000 in a year to individuals registered through the Aadhaar OTP-based KYC process. Various FinTechs have leveraged these guidelines to extend innovative BNPL offerings to customers outside the structured credit basket. This segment of urban and s …

Neobanks Continue to Up the Game in the US Market

Neobanks are not only providing a digital version of traditional banking but also innovatively working on building customer-centric products as part of their collective mission to build trust in new-age FinTech banking services. This trust is demonstrated by an expanded customer base, continuous investments in fundraising rounds, and high market valuations.

Chime, a San Francisco-based unicorn, recently raised $485 million in its Series F funding. With this funding round, the current valuation of this neobank stands at $14.5 billion, surpassing Robinhood (a massive retail trading platform valued at approximately $11.2 billion with over 10 million customers). Chime also surpassed Brazil’s Nubank, which was valued at $10 billion in July 2019, with a customer base of 25 million.

Chime was founded in 2013 in San Francisco with a seed capital of $3.8 million. Over a span of seven years, it has raised eight rounds of funds with $1.2 billion in total funding. The post-money valuation of $14.5 billion of Chime is with a customer base of over 8 million users.

What Is Happening in the US Neobanking Space?

Neobanks are FinTech-founded digital …

The Best Monday Charts by MEDICI in 2020

We, at MEDICI, strive to bring you the latest trends in FinTech throughout the year. If you are familiar with our content, you must be aware that Mondays are ‘Monday Chart’ days at MEDICI, wherein we present fascinating insights through instructive and colorful charts, tables, and graphs.

The year 2020 was remarkable in many ways. As the year draws to a close, we thought of bringing you a round-up of some of our most popular Monday articles. How did we choose them? We selected the articles through a carefully evaluated ranking system based on the number of page views, social media impressions, and engagement, among other factors. Here are MEDICI’s top five Monday charts (by popularity) since the beginning of 2020:

We have been tracking financial API companies for the past six years. Even though 2013 and 2014 did not garner attention, we started seeing interest from 2015. In the last two to three years, with the rise of open banking, APIs (in general) and financial infrastructure APIs (in particula …

India InsurTech Report 2020 – By MEDICI

A tremendous InsurTech opportunity is waiting to be realized as India’s insurance sector is expected to reach a market size of $280 billion by 2020. With a conducive regulatory environment, the entry of new FinTech and InsurTech players that crystallize innovative business models, and incumbents embracing technology to develop a unique set of differentiated offerings, India’s InsurTech sector is on a course of transformation in both life and non-life insurance space. In this article, we look at some snippets from MEDICI’s new India InsurTech Report 2020.

India’s share in the global insurance market is estimated at 1.7%, and it is expected to grow to 2.3% by 2030 (Swiss Re). India’s total real premium growth rate, which was 9.3% vs. 1.5% of the world average in 2018, tells a promising story for the growing insurance industry in India.

However, India’s insurance penetration is around just 3.7%. Why? And, how is India fixing this low level of insurance penetration?

If we look at the insurance industry’s growth in the last two decades since the deregulation of insurance in 2000, it becomes clear that insurance sector growth had stagnated for half a decade. The insurance sector reported a consistent increase in insurance penetration from 2.71% in 2001 to 5.20% in 2009. What followed was a story of years of decline in the insurance sector.

The Indian insurance industry has witnessed marginal growth in insurance penetration over the last four years. In 2015, insurance penetration stood at 3.44%, which increased to 3.49% in 2016, 3.69% in 2017, and 3.7% in 2018. The level of insurance density was at its peak at $64.4 in 2010, up from $11.5 in 2001. Even though there was a slight decline subsequently, it gradually recovered to $74 in 2018.

In the fiscal year ending March 2020, India’s life insurance companies clocked 11.36% growth in their collective premium income at $684 billion. Gross direct premiums underwritten by non-life insurers grew 11.67% in this period. While these numbers indicate a positive trajectory for insurance growth, there are some underlying problems in the market—distribution being one of them. 

A detailed analysis is available in our new India InsurTech Report 2020. Access the full report here.

How Big Is the Indian InsurTech Landscape?

Rapid digital adoption in India (est. 829 million internet users by 2021) has created much-needed opportunities and infrastructure for insurance players to reach Indian customers. However, traditional insurers are still struggling with simplifying policy terms, settlement procedures, mutual trust deficits of buyers and sellers, and differentiating products that can help customers buy without much confusion. This is where InsurTech players have identified their opportunity.


The InsurTech landscape in India is in a nascent stage. Distribution challenges continue to be a major hurdle for insurers. The lack of customer trust remains a roadblock for the InsurTech segment (especially life insurance), and industry players find it a hard nut to crack. However, recent success stories from Indian InsurTech players paint a promising picture.


India has over 110 InsurTech players spread across different subsegments, such as aggregators, claims management, digital-first insurers, software white label and infrastructure APIs, and IoT. InsurTechs are solving the affordability challenge by innovating small-ticket and low-duration insurance products. ‘Bite-size’ insurance, also termed as ‘sachet’ insurance, is growing fast. It is frequently bought as a feature with many different products and services in the market, such as travel and e-commerce.

Note: Illustrative only

InsurTech Funding Trends

The past three quarters in 2020 indicate reduced funding in Indian InsurTech startups. We believe the funding situation will improve in the coming quarters, considering some very positive growth is being recorded by Indian InsurTech players in terms of the number of policies sold or distributed by InsurTech players since the dawn of the COVID-19 crisis.

Aggregators and online first insurance players (Acko and Digit) have been the most attractive sub-segment for InsurTech investors. Policybazaar, Acko, and Digit are also the top three highest funded InsurTech players in India.

The India InsurTech Report 2020 provides a detailed analysis and commentary on historical funding and segment- and stage-wise funding trends in Indian InsurTech.

What About InsurTech Partnerships?

Collaboration history between insurance carriers and InsurTech startups is very nascent. In the last two to three years, we have witnessed insurance companies setting up accelerator programs to tap into the InsurTech ecosystem and help them to accelerate or co-develop products under their guidance. Some interesting partnership examples include:

  • Apollo Munich Health Insurance’s Inspire Next was created in partnership with MEDICI, with a view to support and collaborate with entrepreneurs that are driving innovation in the FinTech/InsurTech ecosystem and leveraging their expertise for co-creating solutions that can benefit the company’s consumer base.
  • In the first, HDFC Ergo and Tropogo partnered to launch ‘Pay as you Fly’ insurance for drone-owners.
  • ICICI partnered with MobiKwik, a cyber insurance cover for MobiKwik’s mobile wallet users (microinsurance category with ~ INR 50k sum assured) that can give some safety net for new payment system users and help in promoting digital financial inclusion.

Check out the India InsurTech Report 2020 for a detailed list of key partnerships here.

The foundational digital blocks offered through the India Stack viz. Aadhaar, UPI, DigiLocker, and Account Aggregation have delivered tangible value to the growth of insurance products and services in the country. The insurance sector has been the pioneer within financial services in integrating with DigiLocker at scale. UPI has been instrumental in making the last mile of payments easier while purchasing policies as well as for recurring premium payments. Aadhaar-based e-KYC is now permitted for paperless issuance of policies, thereby reducing user onboarding costs and increasing inclusion.

What Else Is Inside the India InsurTech Report 2020?

Detailed Coverage on The Emerging Opportunities:

  • Bite-Size Insurance
  • Microinsurance
  • Insurance as a Feature
  • Group Health Insurance
  • Claims Management

Industry Expert Opinions and PoVs in the Report:

  • Industry Expert Opinion: Traditional Insurance Player
  • Expert Opinion: Increasing Attractiveness of Indian InsurTech Landscape
  • Industry Point of View: What Is Driving Growth for Aggregators 
  • Expert Opinion – Investor
  • Industry Point of View: Role of Regulation and Impact of COVID-19
  • Industry Point of View: Microinsurance

Grab your copy of the full report here.

Social Engineering Attacks: Things One Should Know to Avoid Payment Scams

In simple terms, social engineering refers to psychologically manipulating people to make them perform an action or divulge information—this is an activity that happens all the time without us even realizing that it is happening. All forms of persuasion or leveraging influence to make someone behave in a certain way or make decisions that benefit us are a kind of social engineering. However, in our context, we shall concentrate on deliberate efforts by individuals to manipulate with the aim of defrauding, especially from a financial standpoint.

Since human beings are the weakest link in cybersecurity, 98% of all cyberattacks result from the social engineering of individuals within an organization, including senior management and IT professionals. Most of these attacks …

4 Big Trends Signaling Radical Change in the Banking Industry

We’re in the midst of a sea change in banking, but this transformation has been years in the making. Due to the COVID-19 pandemic, we’re witnessing unprecedented levels of digital transformation in banking. However, these trends have been in motion for years.

The Dying Branch Office

Well before the outbreak of COVID-19, bank branches were being closed in large numbers. 

In the US, the number of full-service bank branches fell from almost 95,000 to just over 83,000 between 2010 and 2019—that’s 12% of all bank branches across the country, and those findings were pre-pandemic. According to McKinsey & Company, more than half of the top 100 US banks reduced their footprint by more than 50% over the past five years.

Digital Onboarding or Bust

Nearly one-third (31%) of new account openings are executed through a bank website or mobile app, up from 22% in 2019—that’s a 50% increase in just one year (source: J.D. Power). Meanwhile, the number of new account openings at branches comprises just 55% of new account openings, a drop of 10 percentage points year over year. 

And remember, these studies were done pre-COVID, so the move to online channels has only accelerated over the last few months.

More Business Online, More Threat Vectors

As banks have increasingly gone digital, there has been a parallel proliferation of cyberattacks that attempt to damage, disrupt, or gain unauthorized access to banks and other financial institutions’ computer systems. So while banks are looking for ways to streamline the onboarding process, they must also build in the necessary safeguards to protect their ecosystems, reputation, and customers.

New account fraud isn’t new, but it’s fast becoming one of the biggest problems in the digital banking era, costing the financial services industry billions each year. According to RSA Security, about 48% of all fraud value stems from accounts that are less than a day old. Moreover, 57% of businesses report higher fraud losses associated with the account opening and account takeover than other fraud types.

Precipitating KYC and AML Fines

Another accelerating trend is the number and magnitude of compliance fines doled out by regional monetary authorities. According to Fenergo, global financial institution penalties totaled $5.6 billion for non-compliance with Anti-Money Laundering (AML), Know Your Customer (KYC), and sanctions regulations by then end of July 2020.

In 2019, 58 AML penalties were handed down globally, totaling $8.14 billion—this is double the amount, and nearly double the value, of penalties handed out in 2018, when 29 fines amounting to $4.27 billion were imposed. AML fines in the first half of 2020 have already surpassed all of 2019 as firms are repeatedly sanctioned for the same failings (Duff & Phelps), so this trend is also gaining momentum.

Most AML compliance programs are highly manual and time-consuming, making matters worse. They usually involve bank personnel who perform public domain searches and historical alerts in transaction histories for negative information related to customers and their counterparties.

A Five-Step Plan for Digital Transformation

To get ahead of this sea change, banks need to re-examine their eKYC and onboarding processes. 

  1. Measure your abandonment loss: You should know how many customers are being lost in your current onboarding funnel. 
  2. Reduce the number of steps: If the onboarding process is clunky, onerous, or too time-consuming, you can expect high levels of abandonment. Consider performing usability studies to observe where customers are getting frustrated or bailing out of the process. 
  3. Rely on a reliable trust anchor: It’s no longer sufficient to check a credit bureau or third-party database to see if that identity exists in the real world; banks need to verify that the online customer exists and is physically present. While it may be easy to buy a fake ID document online, it’s infinitely more difficult to circumvent eKYC systems that rely on a driver’s license and a corroborating selfie.
  4. Automate the AML process: Given the escalating fines, it no longer makes sense to rely exclusively on back-office staff to manually check new customers against PEPs and sanctions or adverse media lists. Today, the technology exists to automate these checks, reduce the number of false positives, and integrate the process with online identity verification.
  5. Safeguarding existing accounts: Given the shocking rise of account takeovers, banks need to wean themselves off archaic forms of authentication. A username and password may be acceptable for users checking their account balance, but is wholly inappropriate for high-risk transactions (e.g., wire transfers, password resets). Biometric forms of authentication can help ensure the person making the request is the actual account holder.

Today’s banking customer is looking for Uber-like simplicity and convenience in all their banking needs. They don’t want to wait an hour to create a new account. They want it completed in minutes—anytime, anywhere.

Whether you’re trying to create an Amazon-like onboarding experience or just looking to streamline the in-branch experience, banks need to make the right investments to fuel digital transformation, fraud detection, KYC/AML compliance, and customer satisfaction.

September 2020 FinTech VC Funding Stats – Digital/Neobanks, Lending & InsurTech Top the Charts

We cover more than 60+ sub-segments in FinTech – but we do not stop there; we also cover topics beyond FinTech, such as InsurTech, RegTech, PropTech, WealthTech, BankTech, AgriTech, and the enabling technologies enabling innovation such as AI, Blockchain, etc.

FinTech Vs. Deepfake Fraud

Continuous advancements in technology, especially in artificial intelligence (AI), have led to the emergence of novel forms of deception. Algorithms can be used to create highly deceptive synthetic media, colloquially referred to as deepfakes. Deepfakes include videos, audios, and seemingly authentic photos. In addition to their most common use in politics to primarily spread misinformation, deepfakes are now growing roots in the financial sector.

Threat of Deepfakes

Deepfakes remain a low threat to the financial sector, mainly because synthetic media production is complex and requires superior technical skills. However, they can neither be ignored nor wished away because a majority of financial frauds happen due to compromised identities—deepfakes can and will become a …

How FinTech Is Helping Women Entrepreneurs Survive and Thrive During COVID-19

Before the pandemic, things seemed to be looking better for women in the business sector. From only 402,000 in 1972, the number of women-owned businesses in the United States jumped to 12.3 million by 2018. This means that from 4.6% of all businesses, women now own roughly 40% of all businesses in the US, translating to a tenfold increase within five decades.

However, when the pandemic broke out in early 2020, it affected not just the healthcare sector, but the business and finance sector as well, leaving millions unemployed and thousands of businesses either bankrupt or buried in losses. Unsurprisingly, this includes a disproportionate amount of women-owned businesses.

Women in Business and Finance Sectors

Lost revenues were not unexpected, but many companies can still bank on business trends for 2020 to help them keep their businesses running during the pandemic. Some trends, like e-commerce and online gig work, not only remain to be true but have become even more emphasized due to the pandemic.

Sadly, most women-owned businesses do not get to enjoy the same benefits, mainly due to persisting gender inequality and underrepresentation in the business sector. In fact, while women-owned businesses are steadily growing in number, the revenue share of these businesses is still very minimal. Only $1.8 trillion, or 4.3% of the private sector’s total revenues, are earned by women-owned businesses.

This is especially true in the FinTech sector, where the gap between women and men remains wide. As of 2020, women amounted to only 37% of the FinTech workforce, out of which only 19% hold C-suite positions. Indeed, higher unemployment rates and a greater pay gap are caused by the lack of diversity in the FinTech sector.

Challenges Faced by Women Entrepreneurs Due to COVID-19

In all industries, history has proven time and time again that women tend to bear the brunt of economic impacts during crises, like the COVID-19 pandemic.

1. Increased Unpaid Care Work

Since other members of the household are confined to the house due to the pandemic, the care demands of the household have also increased. With support services like domestic help and daycare facilities affected by the pandemic, women, being the bearer of the majority of responsibilities at home traditionally, have increased in domestic workload.

Due to this, they’re forced to lessen the time they can spend on their own businesses. Studies show that women have been spending an additional two hours a day on unpaid work at home than men during the pandemic.

2. Disproportionate Gender Distribution In Impacted Sectors

In the US, half of the women-owned businesses are mostly in “other services” sectors such as salons, pet care, healthcare, and social assistance, as well as professional, scientific, or technical services. Women are also more likely to launch businesses within the healthcare or education sector, more so than men.

However, businesses in these sectors, especially in small and growing businesses (SGBs), have been severely affected by the pandemic, mainly because of the new physical distancing measures. The new regulations prompted the temporary closing of stores, and according to a recent survey, women-led businesses are twice as likely to consider permanently closing their shops.

3. Lacking External Investment

Even before the pandemic, there were already existing gender biases among investors. About 54% of female entrepreneurs in the US have experienced gender bias from investors while raising capital for their businesses, such as getting asked unnecessary questions about family circumstances and their credibility as business leaders.

Despite the persistent gender funding gap, however, more and more women are starting businesses. In fact, according to SCORE’s recent report on female entrepreneurs, The Megaphone of Main Street: Women’s Entrepreneurship, women-owned companies now make up 39% of the 28 million small businesses operating in the United States.

4. Assumption Of Equality And Equity

After years of campaigning against the social constructs imposed on women, female entrepreneurs’ challenges in their respective industries have become so subtle that gender inequality and inequity have gone unnoticed by many, even by other women.

Unlike their male counterparts, women entrepreneurs have plenty of social expectations to defy in the workplace. Respect and reputation are harder to earn for women, and the confidence gap between the two sexes is becoming even wider.

COVID-19 Support for Women Business Owners

It’s been 25 years since the Beijing Declaration and Platform for Action, once the most progressive advancement of women’s rights, was adopted to improve the situation of women in the workplace. While it did help women entrepreneurs to thrive better than ever, the playing field remains unequal, and men still have the upper hand.

As mentioned above, one major challenge encountered by women entrepreneurs, especially during COVID-19, is gaining enough capital for their businesses. Already burdened by investor bias, women have been hit by the pandemic with a significantly larger decrease in revenue than their male counterparts.

But luckily for women-owned businesses—many of which require low levels of capital and are more reliant on self-financing—there is a solution that could help alleviate their problems. And this solution comes in the form of FinTech innovations.

FinTech lenders have recently started a new model of lending for Small and Medium Enterprises (SMEs). Using advanced analytics platforms and artificial intelligence to assess the data available, FinTech lenders can quickly determine which businesses are worthy of receiving loans, regardless of whether a man or a woman owns it. The system merely has to look at how risky or creditworthy the venture is, and it can grant approved loans in as little as 24 hours.

This new model is not only easier and faster for lenders, but also more accessible to women entrepreneurs who want to take their business to the next level.

In addition to this, FinTech lenders are also creating new payment structures to allow SMEs and micro-entrepreneurs to make and receive payments easily. Subsequently, this makes online transactions easier to track. This is certainly helpful for women entrepreneurs since analyzing the consumer pattern for sales can help them develop an effective strategy for making their business even more successful and profitable.

For businesses, an online presence is now a must and not just an advantageous feature. Going digital allows businesses, in general, to remain connected to their customers through hygienic contactless transactions, despite strict social distancing guidelines and other pandemic-related regulations.

Getting Back Up

Businesses around the globe suffered greatly due to the pandemic, in more ways than one. But if women are enabled and given equal opportunities in entrepreneurship, the global GDP could rise by $5 trillion. This is enough to regain the world’s economic footing and at the same time, show that women entrepreneurs, crisis or not, can make it as well.

Buy Now, Pay Later – A New Trend in the Lending Ecosystem

With the digital medium being the preferred choice for shopping and the increase in spending, items that give immediate gratification have made ‘buy now, pay later,’ or BNPL, a success. By partnering with financial institutions worldwide, sellers have also been making the process of buying as seamless as possible over the decades—from the invention of credit cards to converting purchases into EMIs instantly without any processing fee and now to BNPL. But how is BNPL different from the rest?

We at MEDICI define BNPL as the credit amount given to the user for certain amounts of days without any processing fee and interest rate. These credits enable the user to pay for their purchases upfront without any deduction in the bank account and gives them the convenience to pay with all their purchases together. The BNPL solution provider either charges an interest rate if the user cannot pay the credit amount within a specified number of days or provides easy EMI options.

In India, like the rest of the world, BNPL is a very new concept. BNPL has evolved from the EM …