Hi, fintech fam! 💜

This week, I took some time to catch up on the latest in fintech (I’m still working through all those emails that have finally found me well).

As always, a lot is happening, and I'll dive into some of the biggest headlines in my Tuesday columns.

But for today, it's back to the grind. I'm focusing on three stories highlighting important trends in the fintech world—trends we need to stay on top of, especially given fintech's growing influence on our culture.

Oh, and great news! Barnes & Noble is having a preorder sale from July 10-17. You can snag a discount on my book, Fintech Feminists: Increasing Inclusion, Redefining Innovation, and Changing the Future for Women Around the World, by using the code PREORDER25.

Now, let's dive into the latest news!

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#TRENDING

What’s Up In Fintech

Every Thursday, I bring you the hottest news stories and trending insights in fintech. Stay ahead of the curve with a curated selection of the most important updates, making it easier than ever to keep your finger on the pulse of fintech.

#1 Bipartisan Senate Group Pushes to Ban Stock Trading in Congress 

The idea that members of Congress shouldn’t be allowed to trade stocks is back in the news, and it seems like Republicans, Independents, and Democrats can all agree on (at least) this.

Why is this issue gaining traction now? Part of it is due to the rise of fintech investing apps. These apps have made investing in the stock market easier for regular folks. They’ve also highlighted how some lawmakers might use their insider knowledge for personal financial gain.

Back in 2012, US Senator Jon Ossoff introduced the STOCK Act (Stop Trading on Congressional Knowledge). It was supposed to curb this kind of behavior.

But let’s be real, it didn’t pack much of a punch.

Under the rule, lawmakers must disclose their trades, but critics argue the rules are too weak and poorly enforced. If they’re late reporting a trade, they get slapped with a measly $200 fine.

Now, Senator Ossoff is back with a new bipartisan bill called the ETHICS Act (Ending Trading and Holdings in Congressional Stocks). If passed, this would stop lawmakers from buying individual stocks right away.

Starting in 2027, members of Congress, including the President and Vice President, would need to divest from any individual assets. Instead of blind trusts, they’d have to put their money into mutual funds. Interestingly, this bill doesn’t cover congressional staffers.

This bill is heading to the Homeland Security and Governmental Affairs Committee for a hearing later this month, and its future will be considered there.

Why It Matters

Well, the rise of fintech has shone a light on the privileged access to information that Wall Street and lawmakers enjoy.

Around 10 million Americans opened new brokerage accounts during the 2020 pandemic, and many turned to social media for investing tips, which turned into consumers sharing financial information — like how the rich stay rich through investing.

Some fintech startups even created products that mimic lawmakers’ investments, often outperforming the market.

Take former House Speaker Nancy Pelosi, for example. While she doesn’t trade stocks herself, her husband does. This inspired the creation of the “Pelosi Tracker” on the investing platform Autopilot.

Users could copy the top ten stock picks made by Pelosi’s husband. Your portfolio would buy when he buys and sell when he sells, based on the trades reported within 45 days as required by law. Last year, the Pelosi Tracker was up by 45%.

Autopilot users have invested around $55 million copying the stock portfolios of members of Congress.

Other fintech apps, like eToro, use copy trading for crypto, but it’s a different ball game when copying lawmakers’ trades.

Insider trading laws apply to lawmakers. However, the push for more transparency gained momentum after the 2009 financial crisis when some lawmakers made big profits trading financial stocks just before banks collapsed.

In the end, this legislation is a win for fintech. It should build trust and transparency for users and encourage wealth management-focused apps to get more creative in helping novice investors learn from the experts.

#2 Unlocking Financial Data: How Ntropy AI Is Changing the Game

Ntropy, a fintech startup founded by CEO Naré Vardanyan, announced Monday the launch of a new platform called Ntropy AI, and the startup is touting it as the “fastest and most cost-efficient way” to run large language models on enterprise tasks for financial institutions. 

Over the past decade, we’ve seen advancements in moving money quickly and cheaply. However, the data generated from these transactions is often messy and fragmented. 

The company noted in a blog post that this low-quality data makes financial processes like onboarding, underwriting, financial management, and reconciliation slow and expensive. 

Ntropy saw an opportunity to change this by building language models to parse and enrich financial data at lightning speed and with human-level accuracy at a fraction of the cost. 

“We can now bring any large language model (LLM) to you, regardless of size, reliably, 1000x faster, and cost-effectively. More importantly, we ensure the output is accurate, which is crucial in finance,” Vardanyan shared on LinkedIn.

Why It Matters

Ntropy was created with the belief that some of the world’s most vital information is hidden in financial transactions, Vardanyan told Unite.ai. Traditionally, this data has been siloed, messy, and complicated to work with. By developing a common language and system for understanding financial data, Ntropy is equalizing access to money for businesses and individuals worldwide. 

Here’s how it works: Ntropy converts raw transaction streams into contextualized, structured information by combining data from multiple sources, including natural language models, search engines, internal databases, external APIs, and existing transaction data. 

The rise of AI in fintech is exciting, but it comes with real-world consequences. It’s essential to adopt ethical AI training practices, ensure clean data, and promote transparency. 

Without this, AI could become another innovation that fails to meet most consumers' financial needs. 

Despite advancements in open banking and AI, the challenge of understanding data to create real value remains unsolved. This data influences decisions from credit scores to loan agreements and powers various financial products that impact lives. 

Vardanyan saw an opportunity to provide a developer-first, scalable platform to help businesses make sense of their transaction data, benefiting customers in the long run.

Ultimately, this is a major positive for fintech and financial institutions, as more businesses can harness AI to create economic opportunities instead of fearing the technology.

#3 Small Strides for Female Co-Founders in AI, Crunchbase Data Shows

U.S. startups with at least one female co-founder reached a new milestone in venture funding last year. Crunchbase said these companies received $34.7 billion, making up a quarter of all venture funding in 2023. This is a jump from 15% in 2022.

One big reason for this rise is the huge funding rounds secured by AI companies with female co-founders. 

More than half of U.S. investment in AI in 2023 went to companies with at least one female founder, totaling around $21 billion across 360+ rounds, per Crunchbase data.

However, this number is somewhat skewed by a few large fundings. For example, OpenAI raised $10 billion, and Anthropic secured over $6.5 billion across four rounds. Both companies have women among their founders.

A more accurate representation of the data, per Crunchbase, shows that the majority of AI startups in the US did not have a female founder, with just under 20% of funding rounds in AI going to companies with a female founder. 

Why It Matters

This data can represent encouraging news for female founders in fintech, especially with a focus on AI-driven platforms. It's encouraging to see two of the top-funded AI companies led by women.

However, to sustain and build on this progress, it's crucial to increase funding for more female leaders in the AI industry. We can’t just have two high-profile female founders and call the problem solved.

One way to increase the number of women leading in AI is to learn about AI from other women in the sector, such as Dr. Fei-Fei Li, Dr. Latanya Sweeney, Dr. Daphne Koller, and Daniela Amodei, co-founder of Anthropic.

Learning from each other creates a cycle of support, funding each other's businesses, and creating more opportunities to lead in this sector. This, in turn, helps us uncover new ways to build solutions that will increase inclusion, redefine innovation, and transform the financial system for women.

While only 2% of venture capital goes to firms founded solely by women overall, closer to 20% of venture capital goes to firms with at least one woman as a co-founder. 

While that is promising progress, and those female co-founders deserve to be celebrated, the data suggests VCs need to write checks to far more than just 50% of their portfolio with a female founder as a form of fairness in gender parity.

If we benchmark equity in terms of gender parity among mix gender founding teams, then 70% of the companies that VCs invest in should have at least one woman founder.

Why? A portfolio in which 50% of companies are women-founded doesn't mean 50% of founders are women, according to a 2023 report by Anthemis Group.

In the fintech world, Anthemis reported that global female-led fintech companies raised $1.2 billion across 151 rounds in 2023 and the first quarter of 2024.

In 2023 alone, these companies secured $1.19 billion, accounting for just 3.4% of the roughly $35 billion invested in fintech last year. 

While 3.4% is a step forward, it pales compared to the 26% of overall venture dollars going to companies with at least one female founder. Even this broader figure shows that the industry still has a long way to go in achieving accurate equity.

While funding for female startup founders is far from parity, women-co-founded startups see gains, especially in emerging tech sectors like AI.

Some of the most significant companies in generative AI are founded by women, who are leading one of our time's most transformative and talked-about technologies, as women always have.

_{MARK YOUR CALENDARS}

Join us every Thursday to keep up with the week's top events! These events are perfect for networking, learning, and connecting with others in the fintech community. Let's add these great events to our calendars - I hope to see you there! If you know of an event, tell me!

_{WEDNESDAY 7/17}

[NYC] Harvard Women in Entrepreneurship x Blue Collective Summer Mixer: ​Next week, I’ll join the Harvard Undergraduate Women in Entrepreneurship x Blue Collective Summer Mixer, an exclusive networking mixer designed to bridge the gap between aspiring female undergraduate student entrepreneurs and experienced female founders. I would love to see the Fintech Is Femme community there—join us for some summer hangs!

_{WEDNESDAY 7/24}

[VIRTUAL] FPA Live: Join me for an exciting FPA Live session on LinkedIn! I’m thrilled to team up with my friends at the Financial Planning Association to dive into what it means to be technology-focused yet people-centric in today’s evolving fintech landscape.

I’ll share the official link to join us virtually next week, but for now, follow the FPA page to stay updated when we go live on July 24 at 12:30 pm ET.

_FINTUNES

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That’s all for now! See you Tuesday!

Love,

Nicole 💜