Your weekly resource for noteworthy news, fascinating features, and fintech titbits that caught our eye. Whether you live by your Twitter lists, save your Google Alerts or simply scroll through LinkedIn for insights and commentary – there is a wealth of content that weaves a global story around fintech.
Our job at Fintech Talents is to work within that global story – finding the news items, conventional wisdoms and hard data that aids us in bringing the industry the best content, community and experiences in the business. This week’s FTT Bookmark of timely resources and real time conversations that are shaping fintech is brought to you by VC Innovations Product & Content Manager, Laura Camplisson.
Buy now and pay another user’s balance later
News spread quickly towards the end of last week that buy-now-pay-later unicorn Klarna, had been forced to shut down its app. A technical error had apparently led to customers being logged into the wrong accounts.
Users were quick to report the issue on Twitter, posting screenshots to show they could see account details and balances of accounts not belonging to them. Ironically, Klarna asked for some Tweets to be removed, as they showed customer’s first names, considered Personally Identifiable Information.
Klarna CEO later reassured customers about the concerning breach, stressing no information classed as ‘sensitive’ by GDPR was revealed. Aside from this not being the point, as no information about other customers should have been revealed, some users don’t quite agree that this is true.
One Twitter user hit back by saying they were able to view partial card details, mandate reference IDs, bank names, personal phone numbers and were even able to remove/alter stored card details.
Here we go, a bit of a lip service from the CEO of @Klarna. Excuse me? I had full access to phone numbers, purchase histories, cor. addresses, partial card details of more than 20 random users, and you tell me this doesn’t count as a breach of GDPR. Wow https://t.co/h0q0WWMfF2
— esra efe laborde (@esraefe) May 27, 2021
It seems the incident was caused by internal human error, rather than an external breach of Klarna’s systems. I’m not sure whether this makes the situation better or worse, but I do know that trust is something Fintechs like Klarna have to work hard to build, so it is easy to see why customers were so panicked and angry about the incident.
Lemonade reassures customers it doesn’t use Phrenology
Another Fintech to come under fire this week was insurance unicorn Lemonade, forced to reassure customers about its use of AI. In a series of tweets, Lemonade made several claims about its AI’s superiority. It stated predictive insights were gathered from customer’s answers to just 13 questions, generating 1600 data points.
The Tweets have since been deleted and referred to by Lemonade as an “awful thread which caused more confusion than anything else.” I actually think alarm, or even horror more accurately describes the general reaction.
In recent years AI has come to be seen as a promising technology for use in insurance and lending markets. Intelligence data analysis could allow for quicker, more seamless and accurate offers to be provided to customers. So, what is it about Lemonade’s Tweets which caused such concern?
Well, objections seemed to centre around the statement that “non-verbal cues” are analysed with AI to look for signs of fraud. This led to fears that physical/personal features like gender, class, race or disability could be used to discriminate. Concern was increased further by Lemonade’s statement that using AI had helped to improve its loss ratio, which led users to wonder if the company profit from rejecting claims.
Lemonade later claimed these assumptions are not accurate, but I think the incident shows there remains a genuine mistrust of technologies like AI. No customer wants to feel that their claim might be unfairly rejected by a technology they don’t fully understand or have oversight on. Clearly there is still a demand for the human touch in critical financial interactions.
Americans trust banks over Big Tech with their data
Something which caught my eye this week, was the results of a survey from the Bank for International Settlements. Respondents were asked how much they trust various sectors to safeguard their personal data.
Banks scored a median score of five (on a scale of one to seven), while Government Agencies scored four and Big Tech two. There are of course variations across demographics such as age and race but overall, the results suggest a clear trend.
I found this very relevant to an ongoing discussion in the identity sector, around which entities will act as the guardians of our digital IDs. Most people agree government aren’t making enough progress in this area, with schemes failing to get off the ground and citizens not fully trusting government data collection.
Many suggest that higher than average consumer trust might put banks in a position to take the lead, perhaps with a similar system to the Nordics Bank ID emerging elsewhere. Others predict that if banks don’t act, Big Tech will fill the identity gap.
However, perhaps results like those from the BIS survey suggest that individuals are less willing to trust Big Tech with their data than it may seem. Perhaps consumer demand will support banks in taking a leading role in the future digital identity ecosystem.
One in four Gen Z invest in meme crypto
Just when you thought this week’s FTT Bookmark had avoided any mention of Elon Musk, we turn to the results of a survey from Block-Builders.net.
Apparently almost a quarter of Generation Z are now actively investing in meme coins like Dogecoin or Shiba Inu. When asked how they heard about Dogecoin 34% of investors said from social media, while 18% said from statements made by Elon Musk.
Musk has not kept his support for the crypto a secret, recently Tweeting that he is working with Doge developers to improve transaction efficiency. He also asked Twitter if Tesla should accept Dogecoin, resulting in a resounding yes.
Do you want Tesla to accept Doge?
— Elon Musk (@elonmusk) May 11, 2021
Clearly Gen Z are listening, and are acting. Dogecoin may have started as an internet joke, but I think it would be a mistake to ignore its very real impact and future potential.
And finally this week’s wildcard story … a COVID vaccine from Dracula
In difficult times, I think you have to be able to see the funny side. This week I read probably the first coronavirus related story to make me smile.
Bran Castle, famously known as the inspiration behind Dracula has responded to a decline in visitor numbers over the pandemic by offering the COVID vaccine, alongside free entry to the castle’s medieval torture tools exhibition.
Medical workers even wear scrubs with bloody, vampire fangs on them. Adaptive marketing at its finest and the definition of making the best of a bad situation.
Next week it’s my colleague Liz Lumley’s turn to guide us through her week of Fintech news.