Fintech Review 2025: AI Risk Becomes Banking
- Jörn Menninger
- 2 hours ago
- 55 min read
Finance is entering an irreversible phase: AI becomes a risk-managed infrastructure layer, real-time rails eliminate latency tolerance, and regulation shifts from consultation to enforcement. Winning institutions treat governance and resilience as product reality, not paperwork.
AI in credit becomes irreversible because processes, auditability, and real-time expectations rewire around it; removal breaks operations.
AI risk management becomes a bank-wide job because probabilistic systems fail differently than deterministic software.
Concentration risk makes AI systemic; shared model dependencies propagate failures.
DORA forces third-party and resilience discipline, but marginal regulation is drifting into bureaucracy.
Insurance automation fails when it increases contact; self-service that avoids contact wins trust.
Tokenization matters when it shifts control of settlement and access, not when it only improves UI.
Why AI in credit decisions becomes irreversible
Once AI sits inside credit decisions, it becomes a dependency of underwriting, monitoring, and audit. Removing it breaks speed, controls, and comparability.
AI alters the workflow: data collection, decision logic, and exception handling change shape around the model. Even “human override” becomes model-conditioned.
This is stated explicitly as irreversibility: AI enters core decisions and does not come out.
AI governance shifts from correctness to risk envelopes
Probabilistic models cannot be governed like deterministic software. Governance becomes bounded misbehavior with monitoring, escalation, and kill-switch design.
Agentic systems compound risk because outputs are nonlinear combinations of models and tools. Validation shifts from single-model accuracy to system-level failure modes.
Paolo Sironi frames the cultural shift: risk management must exist at all levels for AI to scale.
Regulation is now a business model filter, not an obligation
When regulation moves from consultation to enforcement, it selects business models by operational capability and cost base.
DORA’s core logic is rational: third-party and infrastructure risk must be controlled. The risk is diminishing returns: excessive detail becomes bureaucracy with limited added value.
Frank Schwab distinguishes meaningful governance demands from excessive regulation density.
Trust is the limiting factor for automated finance
Automation scales only if outcomes are trusted. In insurance, the highest-signal design is self-service that avoids customer contact.
“Better support bots” misdiagnose the problem. Customers want intuitive flows that prevent escalation. Automation that forces interaction feels like friction and reduces trust.
Meeri Savolainen states the discovery: users want not to open chat at all.
Tokenization matters when it shifts control of infrastructure
Tokenization changes markets when it reshapes settlement, access, and control layers. Efficiency gains are secondary.
Private credit tokenization can alter secondary liquidity assumptions and democratize access, but only if market structure and compliance enable real trading, not only representation.
Multiple guests point to tokenization’s acceleration and underpriced impact on private credit and market access.
Inline Micro-Definitions
AI irreversibility
Operational dependence that makes removing AI break process, auditability, or latency constraints.
Probabilistic governance
Controlling bounded failure behavior rather than expecting deterministic correctness.
AI concentration risk
Systemic dependency created when few model providers power many institutions.
Self-service insurance
Customer experience designed to resolve needs without contacting support.
Tokenization
Representing assets as digital units for transfer and settlement, with implications for access and control.
Operator Heuristics
Treat AI as risk infrastructure, not a feature.
Measure concentration risk before scaling deployments.
Govern failure envelopes, not model “correctness.”
Remove customer-contact steps before adding automation.
Fund compliance as strategy constraint, not overhead.
Underwrite recoveries, not only defaults.
WHAT WE’RE NOT COVERING
We exclude funding rounds, product launches, and vendor comparisons because they do not change governance requirements. We exclude generic “AI disruption” narratives because decisions in finance are constrained by enforcement, latency, and trust. Omission signals the only relevant layer: structural constraints.
Frequently Asked Questions
Q: Why can’t banks remove AI after deploying it in credit?
A: Because underwriting, monitoring, and audit workflows become dependent on AI outputs and latency. Removal breaks process and comparability once governance is built around model-driven decisions.
Q: What is AI concentration risk in banking?
A: It is systemic dependency created when many institutions rely on a small set of model providers or architectures. A shared failure or compromise propagates across firms and markets.
Q: What does DORA change operationally?
A: It forces disciplined operational resilience and third-party risk management. Institutions must control outsourced dependencies as if they were internal critical infrastructure.
Q: Why are chatbots a misread in insurance automation?
A: Because many customers want to avoid contact entirely. The highest-trust automation is self-service flows that prevent escalation into chat, email, or phone.
Q: Is tokenization mainly an efficiency upgrade?
A: No. It matters when it changes settlement, access, and control layers. Efficiency gains are secondary to who governs rails and liquidity mechanisms.
Q: Where does algorithmic underwriting work best?
A: In high-volume contexts with abundant data and required automation, such as consumer lending and some SME products. It struggles in bespoke lending with thin training data.
Q: What is the new competitive advantage for banks?
A: Resilience and governance under enforcement and real-time constraints. Speed is increasingly a baseline requirement, not differentiation.
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Jörn “Joe” Menninger is the founder and host of Startuprad.io -- one of Europe’s top startup podcasts that scored as a global Top 20 Podcast in Entrepreneurship. He’s been featured in Forbes, Tech.eu, Geektime, and more for his insights into startups, venture capital, and innovation. With over 15 years of experience in management consulting, digital strategy, and startup scouting, Joe works at the intersection of tech, entrepreneurship, and business transformation—helping founders, investors, and enterprises turn bold ideas into real-world impact.
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Automated Transcript
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:00:03]:
Welcome to StartUpLead IO, your podcast and YouTube blog covering the German startup scene with news, interviews and live events. If you're trying to understand where finance is actually heading, not what's trending on LinkedIn, not what's being pitched, but but what is structurally changing underneath, this is the episode for you. 2025 was a year of contradiction. AI moved from experimentation into underwriting, fraud detection and core operations, while regulators simultaneously tightened expectations around explainability, resilience and risk. Banks reported stability, yet quietly restructured cost basis and exited entire value chains. Fintechs spoke about growth again, but under very different unit economics. What made this year different was not speed, it was irreversibility. Once AI is in credit decisions, it doesn't come out.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:01:21]:
Once instant payments become mandatory, latency is no longer tolerated. Once regulation moves from consultation to enforcement, business models either adapt or disappear. In this Fintech and Finance Review 2025 we stop back from the noise and ask a more fundamental question. What still matters in finance? And what quietly stops mattering next. Hello and welcome. This is Joe from StartupReady IO and you're listening to and watching our Fintech and Finance Review 2025. This is a tradition we kept every year since 2014, not as a recap of products or funding rounds, but as an editorial checkpoint. A moment to pause and ask what was fundamentally shifted, what assumptions no longer hold and which debates will still matter 12 to 24 month from now.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:02:24]:
This year those questions feel heavier. Interest rates are no longer a temporary condition, AI is no longer side project and regulation from DORA to PSD 3 to M is no longer theoretical. To make sense of this, we've brought together a careful curated group of voices. Global banking research board level governments, founders operating in credit and insurance and a global perspective on blockchain and tokenization. Each guest answered three focused questions, one on structural change, one on execution and risk, and one forward looking outlook toward 2026 and beyond. What's striking is that these conclusions weren't planned. They surfaced independently across very different roles. Let's begin with the widest possible lens, the structure of banking itself.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:03:26]:
To understand where banking is structurally heading beyond products and platforms. We start with Paolo Cironi who looks at finance as a system, not as a set of technologies. I would like to welcome Paolo, the most frequent guest at StartupRight IO.
Paolo Sironi | Global Research Leader Banking and Financial Markets & Best Selling Author & Podcaster [00:03:43]:
Thanks for having me here every year and Happy Christmas to all of you.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:03:49]:
Exactly, Paolo. The financial industry is being redesigned re.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:03:56]:
Architect by Open Finance AI and higher interest rates.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:04:00]:
Which parts of the the banking's value.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:04:03]:
Chain will still matter in 10 years.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:04:06]:
And which ones will vanish?
Paolo Sironi | Global Research Leader Banking and Financial Markets & Best Selling Author & Podcaster [00:04:09]:
Well, I guess that high interest rates that think that might vanish in 10 years from now.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:04:16]:
That was.
Paolo Sironi | Global Research Leader Banking and Financial Markets & Best Selling Author & Podcaster [00:04:20]:
But I guess there is a federally secular trend about interest rates and everything is conjuring also for this period to be unsustainable. But it's a very very interesting question if I can say 2025 I see this but was the first year when regulation went faster than the industry because the Genius act created a huge if you like discussion and set of opportunities started from the US about the tokenization of value and money. So I guess a lot of banks got surprised off guard on the fact that now that there is a framework the players outside financial services can act even more swiftly and broadly which is igniting a lot of if you like implementations or healthcare competition. And that I think was surprising for everybody. This typically the industry moves although the fintech are pushing the boundaries and then the regulators try to understand them and the job policymakers. But this time around I guess it's very different now. Still unclear to know whether the tokenized economy will be effectively unfolding the properties that many commentators are discussing. But definitely there is a strong acceleration.
Paolo Sironi | Global Research Leader Banking and Financial Markets & Best Selling Author & Podcaster [00:05:50]:
It's no surprise that my next research will be about banking in a tokenized economy.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:06:00]:
Of course there's no way around talking.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:06:03]:
Technology and resilience here, especially AI. I do believe that was a buzzword of last few years. Banking is quite data intense building is AI helping here in this data intense environment, highly regulated environment in banking, fintech.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:06:25]:
Capital markets and also maybe in insurance. Is this helping to build a safer system or is it quietly increasing fragility?
Paolo Sironi | Global Research Leader Banking and Financial Markets & Best Selling Author & Podcaster [00:06:36]:
Well Jon, just a few days ago Anthropic released a very interesting yet concerning report titled Disrupting the first reported AI orchestrated cyber espionage campaign. Essentially what happened is that an AI framework hacked the cloud code model using that model to basically understand the potential security vulnerabilities of a set of companies in financial services, in chemicals, in government, among others. I think the number was 34 firms and then use a code in an automated fashion to basically penetrate, get IDs, passwords and then steal data and piece of information. And of course anthropic managed to detect very fast the threat and they to use their own AI to basically diffuse the capability of another AI that was tricking their own AI. So we have this example of an AI framework that is a set of AI agents that socially engineer an AI model pretending to be somebody else, tricking that AI model to act in unwanted ways beyond their guards race helping them as an ally inside the organization to basically scout information that otherwise would have been difficult or would have taken days, weeks or months to be generated. Because the automation of AI is incredible. And the flexibility that apparently these AI agents orchestrated by these rock traders was truly remarkable. And therefore anthropicator.
Paolo Sironi | Global Research Leader Banking and Financial Markets & Best Selling Author & Podcaster [00:08:27]:
To deploy their own AI to understand the trickery of an external framework onto their own AI is like crazy if you think about it. So, which spans a couple of considerations. The first, since a couple of years I've been insisting in my research that every banker must be an AI risk manager. So whatever you do, you always need to understand all of the intricacies of this new framework, because there are many and they cannot be forgotten. And then the second is always difficult for security folks to basically do their job because you're really never 100 secure in a sense, right? So it's like a process where you have to continuously fight to be the best. It's like you need to be the fastest racers while all the others are accelerating, you know, getting new shoes, you know, to run those hundred meters faster than you. They get a new diet and whatever. So that's very, very complicated, but it is feasible.
Paolo Sironi | Global Research Leader Banking and Financial Markets & Best Selling Author & Podcaster [00:09:26]:
And all in all, it is also about the architecture, because it probably goes down into the dungeons of how you design your every cloud perspective to make sure that on top of security, you also have your secure, the design at the core of everything. And so next year, I believe that as the first AI agents will be deployed by quite a number of institutions for a broader utilization. It is also the year where we have to see how cybersecurity stepped up in order to protect that framework from its own deficiencies. And if I can conclude, the issue is also the fact that we are all running towards an upper concentrated AI world, right? So remember I wrote a paper for Davos two years ago and was discussing the problem of concentration. You have a few large companies that create models, and not only if one of those models misbehaves, that can have, you know, viral crippling effect across entire economies, but now we also have the possibility that some of them becomes too big to fail. Right? So there's a lot of unwanted consequences in the last two years of the AI race. They must be thought through. I, I do believe the future is for smaller models, so they will create more resiliency.
Paolo Sironi | Global Research Leader Banking and Financial Markets & Best Selling Author & Podcaster [00:11:02]:
But that future is yet to come. While we are all building on this existing concentration where one single point of vulnerability can generate the vulnerability for all. So that.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:11:16]:
If I take something from.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:11:18]:
You, just, just one sentence from Today's Fintech review it's every banker needs to.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:11:22]:
Be an risk manager.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:11:25]:
That, that's an amazing.
Paolo Sironi | Global Research Leader Banking and Financial Markets & Best Selling Author & Podcaster [00:11:27]:
So everything because the history of investing in technology and adjusting banking is investing in technology. That is more and I use the word deliberately unstable. That is a way of saying a flexible and powerful light. Because when technology is very deterministic it can do all a set of things right. And, and all those things. But AI is way more probabilistic. Generative AI is definitely probabilistic where you have to deal with instability of the algorithm as well as the one of the human interact with the algorithm in language mode and agentic AI is way more right. Because you have the orchestration of multiple agents and multiple models and the way they combine themselves one with the other is nonlinear.
Paolo Sironi | Global Research Leader Banking and Financial Markets & Best Selling Author & Podcaster [00:12:10]:
So you don't validate anymore the individual models, but a combination of the models and that compounds the complexity to understand the potential misbehavior. So if you don't have a stronger risk management understanding of how this algorithms work and where the potential threat can come from, things can be overlooked pretty fast. And in the age of AI, if you overlook something, the velocity by which can be exploited them is unprecedented. Right. So that's why I insist that the major cultural change that has to happen in an organization to allow AI to scale enterprise wide is there is management of AI at all levels of the organization to prevent than to manage. Because it's about being capable of managing probabilistic technologies like the 13th floor. The fact that the models are not perfect is not the point. The point is can you risk manage those models right.
Paolo Sironi | Global Research Leader Banking and Financial Markets & Best Selling Author & Podcaster [00:13:04]:
And if you can do that, you can be successful in capital markets. And the same is with technology. If you can risk manage technology, it's no problem. You can use technology.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:13:15]:
We're not only looking back at 2025 and the last few years, but we're also looking at 2026. And Bey, do you say in your personal opinion, what's the one fundamental change in global finance or fintech capital markets that almost nobody sees coming for 2026 and beyond?
Paolo Sironi | Global Research Leader Banking and Financial Markets & Best Selling Author & Podcaster [00:13:35]:
Well, it's different that somebody doesn't see something because everything is so highly discussed. Okay. And, and, and debated. So I don't know. I, I think that the banking industry is starting to reposition from the business side as well as the geographies are somehow reshuffled. So the American banks have been gaining strength. Although the Europeans got the benefit of the rise of interest rates from the last two years and the American banks, some of them had 10 years to invest into building the foundations, to engage clients on the continuum of client wealth, where for the first time we see that the channel is more important than the segment. So you may need or want to capture someone across everything that can happen on the channel because the channel becomes a platform.
Paolo Sironi | Global Research Leader Banking and Financial Markets & Best Selling Author & Podcaster [00:14:40]:
And many people may not have realized that, but this has been happening and going on. You can think about what companies like JP Morgan are doing or Morgan Stanley and I think the world is round. But we're here in Europe talking about that. We know the JPMC also tried to make a road in the German market. So will be interesting to see if the next year is the year where maybe through further developments of stablecoin, the capability of American banks to penetrate the European market gets intensified or not. So that is the thing that I guess people might have overlooked. So we're not just talking about technology for technology, tokenization for tokenization. The question is, is this giving more levi or power to some of the players that have invested them in the traditional market now refresh with technology to make those inroads and advances that they always dreamed of.
Paolo Sironi | Global Research Leader Banking and Financial Markets & Best Selling Author & Podcaster [00:15:50]:
And maybe we will see that in 2026 or 20.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:15:54]:
So I would point out at the JP Morgan retail bank going to launch 2026 in Germany as one of the indicators here. Paulo, with such a pleasure having you here as guests. Thank you very much.
Paolo Sironi | Global Research Leader Banking and Financial Markets & Best Selling Author & Podcaster [00:16:09]:
It is always my pleasure to be here and for all those that are attending and as many here on your podcast. I just realized that my business title is a German word which justifies the federal living in Germany. Because when people ask me, Paolo, what do you do? I always say that I am the global research leader in banking and financial markets at the BM Institute for Business Value, which in German is a simple word. Happy Christmas to all of you.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:16:38]:
Paolo describes finance as architecture value chains, dependencies and concentration risks. But systems don't run themselves. Someone decides which risks are acceptable, which investments get funded and which legacy assumptions are abandoned. Those decisions happen in boardrooms under regulatory pressure with incomplete information. That's where governance moves from theory to reality. If structure is theory, governance is reality. And Frank Schwab brings the board level perspective on what banks can still win and where they are structurally constrained.
Frank Schwab | Co-Founder Fintech Forum and multiple supervisory board member [00:17:21]:
Welcome. Thank you. It's an honor to be here here after year. So I really enjoy it.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:17:28]:
Me too. As you got in the recording studio, I said, so we beat again this year. Always shortly before Christmas. Very glad to have you here. Let us dive right in. Where can traditional banks still win against fintech and big tech? And where Are they structurally unfit to compete?
Frank Schwab | Co-Founder Fintech Forum and multiple supervisory board member [00:17:53]:
I believe, let's say the banks with the really big balance sheets, they still have significant advantage over all other players just due to the fact that they have so much assets and so many and deep customer relationships which hold for decades. So I don't think that these bank giants have to fear competition from FinTech or BigTech. On the other hand, that's quite different for small and very focused banks. So if you are a small bank or a mid sized bank, the competition you basically feel on a daily business and if you have a limited scope in terms of product, services and customer groups, then it's pretty important that the area which are you populating the area you sitting in the competitive, let's say landscape that you are actually best in class in order to survive.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:19:04]:
Actually, when you've been talking about this, I had in mind on the one end you have the very fine banks who are serving certain customer families already for decades. And on the other hand you have somebody in the B2C space that has the longest banking history with N26. So I think there's a lot of in betweens, right?
Frank Schwab | Co-Founder Fintech Forum and multiple supervisory board member [00:19:33]:
Yeah. And also from a business model complexity. So the business model of N26 is quite simple. Right. It's a retail customer only, it's a limited set of products. Let's say if, if you are a traditional bank, let's say small savings banks or small union banks, which basically have the same kind of, let's say, product portfolio and focus, they can't survive. And we have seen that over the last, let's say four decades the, the number of savings banks and union banks, not only in Germany, the same is true for let's say almost every any other mature country, they decline by 50%, 60% up to 80%. So what you see, what's left over is the one who did excel in merging, acquisition and building a significant customer base, a significant balance sheet.
Frank Schwab | Co-Founder Fintech Forum and multiple supervisory board member [00:21:01]:
If you look at Spain, there are only two CAR shares, so savings banks left, right. And therefore that's what we see. Simple business model, unbelievable competition, complex business model, complex business, complex customer structures and huge, let's say balance sheet that's much more difficult to attack and much more difficult to copy.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:21:39]:
You have a broad business base, you have a broad client base, you do have economies of scale and so on and so forth. I do understand that when you've been talking, just to tease you a tiny bit here, and I know forecasts are always difficult, especially concerning the future. Do you think that at one point in Germany we'll end up with two savings banks to Sparkassen and two union banks meaning Volksbank and Reif Eisenbach. Like two big, like four big players out of hundreds before.
Frank Schwab | Co-Founder Fintech Forum and multiple supervisory board member [00:22:12]:
Yeah, yeah, yeah. Probably not in my lifetime but. But I. That's bad that, that, that's. Look we have seen 4,000 savings bank going down to less than 400. I think we are now in the 360 or 70. So that's, that's where we currently are. There is no reason why should this should stop.
Frank Schwab | Co-Founder Fintech Forum and multiple supervisory board member [00:22:47]:
And you know there was was always a discussion about Landespunk. Why do we have more than one Landesbank? And it's a fair question. And anyhow, why do you have a central bank? Because the Landes bank somehow central banks for, for savings banks they also cover a different kind of business. But let's say the question is why.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:23:13]:
Right.
Frank Schwab | Co-Founder Fintech Forum and multiple supervisory board member [00:23:15]:
So will we end up like that 100 years from now? Probably. On the other hand other players, new players will have emerged and they will be established which we never heard of before. And now part of the landscape. And also let's say lately banking licenses are granted again and again and again and again for these new players. And so the landscape is changing and evolving. I, I believe there is still place for, for savings banks and union banks but not in the, in the form which they were successful in the past. So success in the past does not guarantee your success in the future. And, and that's pretty clear if you look at the, at the, at the structure of than the individual bank.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:24:20]:
Sounds like an investment brochure. Past performance is no indicator of future performance. I see. Let us shift a little bit perspective. From your board perspective, are we seeing smarter governance? Are we seeing just heavier bureaucracy under DORA and Basel iv?
Frank Schwab | Co-Founder Fintech Forum and multiple supervisory board member [00:24:40]:
So there are two hearts. So if I look for example at dora, what regulation ask for makes a lot of sense? So for example they ask for let's say assessing third party risk and critical infrastructure providers. Right. So that's actually, actually it's sad that it needs a regulator to ask the banks to fulfill that. If you run a business I would argue you should run it in the proper way. And in the proper way is that you fall in control what you have outsourced to a third party. But unfortunately that's not necessarily actually the case. So therefore there is a lot of regulation.
Frank Schwab | Co-Founder Fintech Forum and multiple supervisory board member [00:25:33]:
If you look at the core of it, that makes a lot of sense. And if banks don't do it by themselves, you actually need to do it and you need to regulate it. On the other hand I just published an article over the weekend having last week more than, more than 10 different board meetings and committee meetings. And my conclusion by now is there is too much too detailed regulation and currently it ends up and it feels like significant bureaucracy. So the challenge for the banking industry and especially for the regulator is.
Frank Schwab | Co-Founder Fintech Forum and multiple supervisory board member [00:26:27]:
How.
Frank Schwab | Co-Founder Fintech Forum and multiple supervisory board member [00:26:27]:
Much regulation do you actually expect and how much value does regulation create? Because as a society we cannot afford regulation which we, which, which doesn't pay out right? So, so if it ends up in bureaucracy with almost zero additional value, then additional regulation does not make any sense.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:27:03]:
I totally agree with that. Let us look a little bit into the future. We have the strategy with the board view and regulation and now let us shift in to looking into the future just a little bit. Not, not the hundred years we did before. What shift in banking or regulation do you think most executives will be blindsided by in 2026 and beyond?
Frank Schwab | Co-Founder Fintech Forum and multiple supervisory board member [00:27:33]:
I'm not, I'm not sure whether any executive will be blindsided because let's say according to, to my exposure, I'm not aware of any traditional bank manager who is not trying to comply to all the regulations and, and, and beef up and step up in skills and people and functions in order to make a the bank full compliant. That's quite different for fintech startups and new players into the industry and you actually can see that in the amount of fines which are especially now awarded to, to new players like N26 but lately also Revolut or Trade Republic. So you will see a lot of these new entrants into the banking sector who do not cope successfully with the, with regulations and compliance. So the blindsided is more to the new to the industry than to the established industry from all I can see.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:29:05]:
Totally agree. Do you think there is a regulation that all regulations are known? Just assume that. I think in normal banking that's pretty fair assumption because they do have a lot of people working on that with implications how deep you need to go, how, how much implication in your daily business it has. Do you think there's, there's something out there that banks don't really see right now from your experience or do you think they have a pretty good handle on all of.
Frank Schwab | Co-Founder Fintech Forum and multiple supervisory board member [00:29:41]:
No, it's not about that. They don't see it that, that I cannot experience. But what happens from. So first of all, most bank managers will tell you the same thing. They spend the more senior you are. It feels like you spend 80% of your time and your money, your discretionary money on regulations. So these days, which is an unbelievable High percentage. Right.
Frank Schwab | Co-Founder Fintech Forum and multiple supervisory board member [00:30:17]:
So, so, so and many people and many figures will, will, will support that, that view. How deep and let's say being surprised, sometimes you are surprised how fast a regulation comes. That sounds strange in Europe, but for example, if you are a banking manager in Eastern Europe, then some of the parliaments they approve a law which has to come into, let's say place in, within nine to within six to nine months and that's in, in banking terms pretty fast if you need to comply within nine months to a new regulation and therefore that sometimes where you are caught by surprise. But that's more on a very local and also non European regulation, European regulations from ipa, ECB and others. You're not really surprised because the discussion often is for years. At some point in time you may be surprised by the details which are then decided in the last minute so that you do not have the proper time for specification. But on the other hand, I believe from all I can see that banks in general, banks and regulators, they work together in a way that, let's say in a proper way. Right, In a good way.
Frank Schwab | Co-Founder Fintech Forum and multiple supervisory board member [00:32:17]:
So most of the time this is not an issue and nobody is really catched by any surprises in a significant way. Yeah. We may discuss, let's say for example, all the ESG details, if they make sense for each and every institution or if we need to look at let's say proportion. So meaning, let's say what's relevant and important for a large wholesale bank may not necessarily be useful and does not make much sense for a small retail bank. Right. So, so, but, but still you have the same regulation and, and therefore let's say that that's something regulators identified as an issue. They also said they work on it and we will see what then brings us in the next years. But I do not see any significant regulation which will catch up by surprise.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:33:40]:
Frank, thank you very much. Was a pleasure again talking to you. Looking forward to have you on next year again in our fintech review. Thank you very much.
Frank Schwab | Co-Founder Fintech Forum and multiple supervisory board member [00:33:52]:
Thank you Jern. And happy New Year to all the people out there.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:33:57]:
Thank you.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:33:58]:
Governance may look rational from the inside, but it is judged from the outside. Media narratives, public trust and political framing increasingly shape how much strategic freedom banks and fintechs actually have. To understand that layer, we need to look at how the story of fintech itself has changed. Because finance doesn't evolve in a vacuum. We add the media and narrative lens. With Jacob Ward, who has spent years translating technology shifts into a global audience.
Jakob Ward [00:34:35]:
Thank you so much John, for having me. I really appreciate it.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:34:39]:
My pleasure. Let us dive right in. How has global coverage of European fintechs shifted since the funding boom? Are we still telling growth stories or is it currently a crisis narrative?
Jakob Ward [00:34:56]:
Well, I think that the, you know, anyone with any sort of professional connection to the investment community has been, you know, it's been all about the growth narrative. The, the, you know, the sheer, the incredible enthusiasm that people in the investment community have around that world is, is not to be underestimated. And so, you know, for me in the, it's the, you know, once you get into the inside pages of the Wall Street Journal or any of the other prominent outlets that cover that world, you know, there's, their stories are for the most part about growth, but I think when, as soon as you get to reporting outside of that direct business beat, then you're getting into a world in which people are highly concerned about, you know, the, the, let's say the, the overlap between the crypto world and the Trump administration and the ways in which that is a sort of unseemly connection and the ways in which, you know, a, a, you know, whenever someone suddenly, you know, when there's a regulatory problem or a new rise of scams or any of that kind of stuff. I think the mainstream coverage, the coverage that is not for the business audience but for everyone else has been very much about the dangers of a sort of destabilized world regime when it comes to the financial markets and fintech. So I think it's very much a two part, you know, it's a bifurcated media landscape when it comes to that topic.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:36:42]:
Yes. And I totally believe when you dive deeper into these specific publications, it really shifts into a very, very differentiated observations depending on the area where you're currently active in fintech. I think that the crypto guys don't have a lot of fun right now. But I also do think even people in wealth management are kind of getting worried with the valuation of the AI stocks right now.
Jakob Ward [00:37:18]:
I mean, I think that the, the, the, we have absolutely entered a world in which none of the old math serves a predicted about predictive purpose anymore because we're so beyond where, you know, your normal business school case study would, would tell you we should be. Right? I mean, the valuations that you're seeing of these companies is so out of control. The circular financing arrangements in which these companies are each other's, they're, they're, they're financing each other and they're each other's customers and they're each other's vendors, you know, all of that stuff I think is really serving to frighten, you know, the, the most conventional thinkers around this stuff because they just, there's no way to, to understand some of these arrangements and some of these valuations by any kind of traditional math. And I think you're in a world in which people are, you know, seeing so much of, at least in the United States, so much of the, the GDP and you know, the S&P 500 and the rest of it depending directly or indirectly on that industry. It's one of the only growth stories around. And as a result, you know, that also I think has people very nervous. And so to my mind there's a, there's, you know, anyone who, who's looking at the landscape and saying with conf. Anything with confidence about where it's going is going to get some eye rolling from the rest of the, of the community because there's just, it's, there's so little of our past experiences that we can draw on in understanding where this might be going.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:39:04]:
AI here. What blind spots does the mainstream media have when it comes to AI and financial inclusions?
Jakob Ward [00:39:14]:
Well, I think that, I mean, there's a really fundamental misunderstanding of what it is. Right? I mean, we, we from a, from a. As someone who's been studying this stuff, you know, for more than 10 years now, I wrote a book that came out in 2022 predicting the rise of commercial AI. It came out about a year before ChatGPT did and I was trying to explain to people in that book, and at that time, and I have been ever since, just how quick the human mind is to make big anthropomorphic assumptions about technology. We like to believe that it is a, you know, that it has a soul and has a personality and understands us and all of that stuff. I mean, the marketing language that we get from these companies about what these models do includes terms like reasoning and thinking and the rest of it. And in the mainstream media we have been so quick to just adopt that language when any real clear eyed assessment of what these systems are should be trying to remind people again and again. These are just big statistical vacuum cleaners that regurgitate the math.
Jakob Ward [00:40:24]:
They're not reasoning models, they're not thinking anything. You know, and so from that place alone where we've been in a, an enormous blind spot. Excuse me. And then I think beyond that there's a real, you know, one of the, one of the hardest things about the news business in my world is, you know, it is a, it is by its nature a backwards looking medium, it reports on what has already happened. And as a result it doesn't, you know, mainstream coverage doesn't like to predict what might happen next or, you know, or report on what might happen next. And so that's been a real challenge in my career as someone who thinks almost exclusively about what's going to happen next. And so, you know, other blind spots include things like, you know, we, we, we are. It is coming to light that there is enormous, you know, bias cooked into these systems.
Jakob Ward [00:41:31]:
That is clearly as the, as case law moves through the courts going to be unveiled. You know, the, the. I was just literally just speaking to a researcher who's, who's one of the top researchers on bias in the world. And she just, you know, showed, she showed in paper after paper since 2023 that these systems are sometimes two or three times as biased as humans on average. And you know, when that hits civil rights law or Federal Trade Commission law around biased lending or any of these other sort of laws that are intended to try and keep us pluralistic and neutral in this country, you know, I just think huge, there's huge blind spots in thinking about the implications there. So I think that, that the, from, from really just not even understanding the zeros and ones of how these systems work all the way through to not thinking, I think in the right time frame about the, its, their effects on, you know, on society in the coming couple of years. You know, we're so focused on job loss. We're so focused on, you know, the Terminator scenario.
Jakob Ward [00:42:42]:
I think we miss the chance to investigate some other really important things that are about to be affected by this stuff.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:42:51]:
When you talk about Terminator, what also comes to mind is Hell Space Odyssey and so on and so forth. So I'm, I'm really, I really think the narrative is somehow driven by what has been written in the past. Because if you do have a bad mean AI it makes a much better story, right?
Jakob Ward [00:43:17]:
Yes, I think that's absolutely true. And it's really interesting to look at the contrast between a place like the United States, which has a long history of science fiction around the Terminator and evil robots. We love to tell those stories. Whereas a country like Japan has a long history of, you know, characters like Astro Boy, who is a, you know, a friendly nuclear powered robot that saves the world over and over again. You know, there's a, there's a long cultural history of positive portrayals of technology in other countries. And so it, it's absolutely right. I think that Our zeitgeist has very much been about, you know, a fear of robots in the United States. And so yes, I think that's absolutely the case, but I also think that's as a result, so serving to distract us from some of the more near term abstract difficulties we're going to see with these systems.
Jakob Ward [00:44:06]:
You know, the deskilling of people and the wiping out of, of categories of jobs that turn out to really give young people a sense of purpose. And there's going to be all kinds of effects that we just aren't really prepared to talk about because it's not as easy to write a summary of that as it is to say it sounds like the Terminator, but it's real, blah, blah, blah, blah. You know, there's a real kind of, there's a tendency to rely on the science fiction tropes just because, you know, everyone's overworked and moving fast. And it's an easier thing to write than something bigger and more abstract around human psychology or human society.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:44:43]:
I was wondering, what storyline or paradigm shift do you think will define FinTech coverage 2026 and beyond?
Jakob Ward [00:44:54]:
Well, you know, my, my feeling about this, the technology space in general with AI, you know, I think one of the things that's, you know, there's a, there's, there's a more kind of dollars and cents one and a more social and sociological one. And so the dollars and cents one I think is going to be depreciation. I think it's going to be the physical infrastructure on which all of these AI companies are going to be built. You know, is all, they're all on these depreciation calendars of like 5 years or more where in fact this hardware is all going to have to be replaced in two or three years. You know, you've got these, the, the enormous physical cost of building the infrastructure that's going to make all this stuff possible, I think is something that, that is going to absolutely define the next couple of years. And, and we are just beginning to deal with the, with, with what that's actually going to mean on the sociological side. One thing that I just spend a huge amount of time thinking about myself is, is this broad umbrella topic that I call AI distortion. And it's the way in which our thinking is distorted in the presence of this technology.
Jakob Ward [00:46:11]:
Whether it's the, the, you know, investment decisions we make, whether it's the, you know, our personal interactions with this technology, whether it's the ways in which we come to believe that we, you know, in the United States we come to believe that we somehow shouldn't regulate it because that's going to slow down our fight against China or whatever else the excuse is. You know, there's a real distorted kind of thinking that I think we're going to see play out in story after story. Whether it's kids using these systems as a best friend rather than befriending real humans or you know, or a big bank coming to believe that the whole, you know, that their whole business line can be placed on the shoulders of AI I think there's a kind of distorted thinking that is going to present itself, make itself manifest over and over again in the coming year. And so that's my prediction is, is unpacking AI distortion will be certainly my job and the job of a lot of journalists coming up. Yeah.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:47:15]:
What has been popping up in the back of my mind when you talked about misconceptions about AI with the billion dollar revenue company with just one human employee.
Jakob Ward [00:47:27]:
Yeah, that's, that is such a big one. Right. So yeah, for anyone who doesn't know. Right. Sam Altman a year ago on Alexis Ohanian show talked about how he and his tech CEO friends have a bet going as to when we will see the first billion dollar one person company. And, and that right there just tells you everything you need to know about what we're going to see in terms of, you know, what, what a company like that would define as a success which is a billion dollar one person company versus what a politician in the United States or a labor leader in the United States or a, or a city mayor in the United States would consider a success. Those visions are so far apart and, and the, and that, that the, the until we can bring people's feelings about that stuff into better alignment. I think that yeah, there's incredibly amount of, incredible amount of distorted thinking around what success with AI is going to look like and we'll have to unpack a lot that.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:48:24]:
Jacob, was such a pleasure having you here. Hope to have you in spring for another interview talking a little bit more more about you and your book.
Jakob Ward [00:48:32]:
I hope so as well. Jordan, thank you so much for having me. And, and yeah, Merry Christmas and Happy New Year. I hope you have a great holiday and, and see you on the other side.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:48:41]:
Thank you very much. Same to you.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:48:46]:
At this point in conversation one theme becomes unavoidable. Most of the changes discussed here are, are no longer reversible. AI is no longer optional. Regulation is no longer hypothetical and trust and capital discipline are converging. What differs is not whether change is happening, but where the breaking points will be. And nowhere do these tensions become more visible than in credit. When structural change reaches capital allocation, it shows up first in credit. And that's exactly where Luca Fnani operates.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:49:28]:
Hey, Jan. Hey Wude. Yeah, you are joining us directly here from Frankfurt. So we could have also almost made it an in person meeting. We are, we're talking a little bit about you in the fintech landscape about lending and private credit in transition. I think I don't need like a big introduction for you because you are a regular guest. I think for three years now.
Luca Frignani | CEO and Co-Founder of Credit Platform Exaloan [00:49:55]:
I think it could be three years, yeah.
Frank Schwab | Co-Founder Fintech Forum and multiple supervisory board member [00:49:56]:
Is it really that long?
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:49:59]:
Yeah, it's already that long. That's one of the moments you realize you're getting old. Oh, it's already three years, huh?
Luca Frignani | CEO and Co-Founder of Credit Platform Exaloan [00:50:09]:
Yeah, let's not talk about the years.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:50:13]:
Yeah, it's not the years, it's the mileage. Let us dive right in. As private credit grows, are we repeating the old shadow banking risk under just simple new tech wrappers?
Luca Frignani | CEO and Co-Founder of Credit Platform Exaloan [00:50:29]:
Oh, that's a tough one to start, but also a very good one. And I would like to say, to your point, it may seem like it a bit, especially with what we've seen sometimes in the US with stuff that's happened with, you know, Tricolor holdings and First Brands and some of the jitters that we've seen in the market. I would nevertheless say we're not seeing a repeat, but what private credit is undergoing at the moment is more a transformation and transformation in the sense that refinancing processes and lending processes, they're being reshaped and digitized as we go along because we now have a lot of new technology. Especially also with the advent of AI, we have more efficient ways to check and sanity check specific things. So really technology brings in transparency and also real time monitoring capabilities to lenders, to institutional funders. And those are simply tools that when we think back to the, to the financial crises of old that simply weren't there. And so basically old legacy shadow banking just lacked these things. So I do firmly believe that we're not seeing a repeat, but more transformation that's going on in the market just because we have a lot more ability to also sanity check, triangulate certain data and verify some data.
Luca Frignani | CEO and Co-Founder of Credit Platform Exaloan [00:51:58]:
And so if that's done properly, then there is a lot of, there are a lot of people, a lot of projects that are working towards the goal, not to repeat, sort of old shadow banking risks.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:52:15]:
I was wondering what's the real advantage of algorithmic underwriting today, is it just speed you get there faster? Is it scale? Or can you really price to risk in a smarter way?
Luca Frignani | CEO and Co-Founder of Credit Platform Exaloan [00:52:31]:
I think we need to differentiate a bit and I think those three elements that you are mentioning are really key ones. I think it's, it's a mix of all of these. But I also think we're not really there yet, that we're in a fully algorithmic underwriting sort of environment. I think when you are looking at granular lending, let's say buy now, pay later, SME lending, consumer finance, essentially processes that really have to be automated, then we're pretty much, pretty much close to algorithmic or at least automated underwriting where definitely speed and scale are sort of commodities and that's really an advantage. But it's also from a borrower's perspective, more or less expected. And I think then you know, with other pockets in the market, it just doesn't really make any sense especially like to, let's say, you know, more, more private, private debt areas like you know, leveraged loans or, or even you know, traditional mid market lending. It's just too bespoke. So there's generally not a lot of data that's available on the basis of which a machine learning or AI model could, could sort of be trained.
Luca Frignani | CEO and Co-Founder of Credit Platform Exaloan [00:53:55]:
So the benefits to algorithmic sort of underwriting would be marginal, if any. So I think this is where we need to really differentiate. But overall it's speed and scale obviously of you know, doing a lot of lending transactions. That's sort of the benefits. And the real differentiator is of course smarter risk pricing as well. So ideally you would want to see that your ability to price risk either in predicting defaults or you know, price risk on a risk adjusted basis and basically lower sort of your cost of funding. Those will be the real benefits to lenders.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:54:41]:
I was wondering what credit market development isn't being priced in yet for 2026 and beyond, is it? Something like it.
Luca Frignani | CEO and Co-Founder of Credit Platform Exaloan [00:54:53]:
So now, now, yes, bad word. And now we're, we're talking about, we're looking into the, into the crystal ball that both of us don't have. No, I think it's, I, I think one of the main themes that probably isn't really priced in yet is one of the tokenization of private credit. I do think that there is a lot of, there is a big case at the moment going on for sort of democratizing access to private market on private equity and private credit. And a lot of the focus this year has been sort of in fund structures like ELTIFs and so on. But I do think that tokenization of private credit just brings in another dimension. So that has the potential to, in my opinion, really reshape also secondary market trading. Then obviously the benefits of AI driven sort of, you know, underwriting and portfolio optimization.
Luca Frignani | CEO and Co-Founder of Credit Platform Exaloan [00:55:53]:
I think we're only at the beginning of this whole, of this whole trend. So I think that is also not, not fully priced in yet, which would be sort of of the good scenarios, especially focusing on Europe. I do think there is a certain element of regulatory tightening, especially with the implementation of DORA and then the EU AI act, which is sort of looming on the horizon, which is basically just some parts of the regulation on it, security, operational resilience and so on that will force also lenders to probably also invest a bit more heavily in being compliant in order to be able to carry on. And I do think that there is still a certain underestimation, at least, you know, among some, some parts of the market in terms of what this means related to cost of operating as well as to, you know, organizational requirements in order to be able to fulfill those, those regulatory requirements or be compliant with the regulatory tightening. And I think another element which is interesting is going to be kind of a reality check because a lot of, a lot of lenders have, especially in the fintech space, sort of started in 2016, 2017. So we haven't really been through a full credit cycle yet. And I mean in some, and some economies, especially Germany, we've seen a rise in insolvencies. So it's also going to be really interesting whether the credit collection processes actually hold up what they expected and whether, you know, some money from loans that were restructured or defaulted can actually be retrieved.
Luca Frignani | CEO and Co-Founder of Credit Platform Exaloan [00:57:42]:
And so I think that's going to be also pretty interesting to see how that part of the, of the lending equation really holds up because it's, you know, in good times that's also pretty, pretty, pretty equally or pretty easily overlooked. So I think those would be the four elements that are not yet fully sort of priced in, in 2026. I think.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:58:06]:
I would be interested because if you're referring to a downturn of complete credit cycle, you have expansion, you have the downturn, you repair and then you recover. You implying a little bit that we are in the downturn. Some started in 1819. So that means the expansion phase has been rough estimate, seven, seven and a half, eight years, something like that. How when do you see the downturn ending?
Luca Frignani | CEO and Co-Founder of Credit Platform Exaloan [00:58:35]:
I'm not saying, look, I'm not saying.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [00:58:38]:
You know, this is, we're in a.
Luca Frignani | CEO and Co-Founder of Credit Platform Exaloan [00:58:39]:
Downturn or, you know, things are tough. I'm just seeing, you know, there are, there are structural changes and I think with economies in different places across the globe are in, are in different or in different spots. So there's just going to be some macroeconomic divergence. We have central banks that are in potentially different cycles of, you know, of, of the rate setting stage. We've seen the, the Fed for instance, you know, on a path towards, you know, a bit more easy or loose monetary policy. Whereas, you know, on the ECB we've probably reached sort of the end of the rate cutting cycle. And so there is just a lot of macroeconomic divergence and uncertainty. And that just means that obviously in some parts of the credit markets we'll definitely see some of the effects.
Luca Frignani | CEO and Co-Founder of Credit Platform Exaloan [00:59:36]:
And I mean in Germany for instance, and then also Austria, we've just seen, you know, a certain uptick in insolvencies just across the board, nothing specific to fintech lending. And so that's why I'm saying, you know, it's in a way it's a good thing because it's also a reality check and kind of we're going to see how some players have been holding up and you know, which underwriting processes have worked and haven't and also whether the recovery and sort of recovery expectations on defaulted loans are actually going to be going to be what we all assume them to be. But yeah, so far I don't see any significant risk of further downturn. It's just part of the continuation of this trend.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:00:30]:
Yeah. What did Jumper said? There's always a cold shower involved from time to time. Also, I was trying to get a lawyer to talk with us here. Unfortunately I could get not get one because I would be very interested in how the authorities approached the first full year of DORA and how hard they actually audit the respective startups because that's either going to be just fine or it could be a very rough spot for many startups. But unfortunately we don't know it yet. But let's talk about it next year in the next fintech review. How would you like that?
Luca Frignani | CEO and Co-Founder of Credit Platform Exaloan [01:01:08]:
I'd love to be back, of course. And I think I'm also very curious how that panned out.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:01:15]:
Awesome. Luca, was such a pleasure having you here. Merry Christmas. Happening here.
Luca Frignani | CEO and Co-Founder of Credit Platform Exaloan [01:01:20]:
Thanks to you too. Cheers. Always nice to be here.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:01:22]:
Credit exposes institutional risk, but consumer finance and insurance exposes something else entirely. True trust at scale Automation only works if customers believe outcomes are fair. Especially when something goes wrong. If efficiency is fintech's promise trust is its limiting factor, especially in insurance. Which makes Mary Savolainen perspectives especially essential here.
Meeri Savolainen | CEO and Co-Founder of Insurtech INZMO [01:01:51]:
Hey Aaron, great to be back. I'm Mary, I'm CEO, founder of Inspector. Insmo is one of the fastest growing embedded insurtech startups on the European insurance market. And we are here to generate amazing insurance experiences for the consumers, for the partners and really provide excellent insurance services hidden into other products and services.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:02:19]:
Let's dive directly into the topics we'll be covering. Insurtech and customer trust. In digital finance. We talk about digital insurance rebuild speed.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:02:33]:
How do you rebuild trust in the age of instant claims and algorithmic decisions? Because I'm very, very sure a lot of insurance customers will have over the next years the same experience as people. You remember those phone lines, those call centers, those automated calls, cause that never understood what you want to have. I'm sure they'll have the same experience with AI agents. What do you do here?
Meeri Savolainen | CEO and Co-Founder of Insurtech INZMO [01:03:02]:
So we are always very curious about how we can enhance the customer experience. Because this is based on the customer experience. We are also tailoring our products and services and it's very interesting that we have investigated the AI services to topic a lot and we have tried to implement also AI into our chatbots and consumer experiences. And it's, it's pretty interesting discovery that we just made I think last year where we understood that the insurance customer wants your experience to be so intuitive that they don't have to open the chatbot, that they don't have to write you an email or pick up the phone. So we see that the younger demographics and the millennials want to be able to manage everything by themselves without ever contacting the insurance carrier or the provider. So this is also one of the reasons why we haven't maybe put more investments into the chat developments because we just saw that the customer needs are lying somewhere else and they just want to have a perfect self service. And I think this, this is sort of the, the whole dynamics of the customer requirement in the insurance space is that people want to do things themselves. They don't want to be bothered by phone calls, emails, chats and whatsoever.
Meeri Savolainen | CEO and Co-Founder of Insurtech INZMO [01:04:37]:
So this means that we have to put more emphasis on the overall experience of what, how the customer can self serve them the best.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:04:47]:
I think that's profound insight because many.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:04:50]:
People are here talking about we do AI, we do chatbot, we do agents.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:04:55]:
For our customer service. But what you figured out is hey.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:04:59]:
Most people don't need it, you have to do it as intuitive as possible. And people just don't need it. I think that's pretty interesting and hopefully a lot of people are listening out there to what you have to share with us us here.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:05:16]:
I was, I was also wondering, you talking about embedded insurance, can this ever.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:05:22]:
Become a sustainable core business or will it remain a cross sell feature?
Meeri Savolainen | CEO and Co-Founder of Insurtech INZMO [01:05:30]:
I think it, it can be a pretty sustainable core business. And well, for Insmo, it is the core business. And what we see out in the market is that there is in Europe there is 100, 100 billion uninsured gap because 70% of the people do not want to buy insurance because it's so cumbersome. The policies are long, the claims are so draining for people and we always have this nagging feeling that whether I ever get paid, if I actually need this. So there's a massive underinsured cap. And then on the second angle, there are retailers, banks, manufacturers who are leaving billions on the table when not embedding insurance into their products and services. Because this is where the customer expect to be served with coverage at the point of sale, when I'm buying my next ticket, when I'm paying for something else. So we do see that, that this is the new way of customers shopping for insurance because naturally, especially when we talk about the younger demographics, these people do not want to go shopping for insurance because it's nothing sexy.
Meeri Savolainen | CEO and Co-Founder of Insurtech INZMO [01:06:48]:
Nobody wakes up 3am in the morning looking for another insurance product. So it means that the needs of the customer are very different and they expect the insurance coverage to be there when I'm buying something else that is important or relevant to me. So we do see that the embedded insurance market is booming and growing globally and more and more retailers and manufacturers are looking for opportunities to integrate these offerings to their other products and services and not only to increase their customer satisfaction, but actually to increase their margins per customer quite significantly. So yeah, I do really think that for a lot of insurance companies it could be actually a core business in the future. And this embedded insurance strategy.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:07:40]:
And as we just learned, if you don't do it, you may leave billions on the table aggregated. Interesting insight. Let's talk a little bit about 2026, which at the time of publication is just two weeks away. Which behavioral or technical change in consumer insurance will surprise everyone in this year.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:08:12]:
So don't worry about it.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:08:15]:
I know forecasts are always difficult, especially concerning the future.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:08:19]:
I know that.
Meeri Savolainen | CEO and Co-Founder of Insurtech INZMO [01:08:24]:
So in insurance, I think we will definitely see the AI adoption quite a lot and especially when it comes to insurance underwriting and pricing. Right. And customer consulting. I do think that there will be definitely several players out there who would like to implement AI into their customer service either it's like robo chats, AI chats on their website, and so on, so forth. And I do believe that in very easy and very like, not very complex cases, these could be helpful and advancing to some extent the customer experience and customer communication. But what we have seen is that often when the customer reaches out to an insurance company, these cases seem to be more complex and in this case the customers expect to be served by a human or in a more helpful way. So in that sense, I think we will be seeing that insurance processes claim sending support will get much faster than it was like in the previous years and all thanks to implementation, implementing LLMs and AI into the processes. And we do believe that the customers will win from much faster resolution times than ever before and it will end up customers being more happy getting paid faster and not in weeks or months.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:10:12]:
I'm just trying to wrap my head around this review. Remembering the time when you had to write something via snail mail with a typewriter to make an insurance claim. Yeah, insurance has come a long way. Mary, thank you very much. Was a pleasure having you as. Yes. You want to say everybody goodbye and Merry Christmas.
Meeri Savolainen | CEO and Co-Founder of Insurtech INZMO [01:10:35]:
Yes. Wishing everybody a joyful holiday season and, and getting ready for the amazing new year with new opportunities ahead.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:10:48]:
Great. Thank you very much.
Meeri Savolainen | CEO and Co-Founder of Insurtech INZMO [01:10:51]:
Thank you, Jern.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:10:52]:
When trust becomes institutionalized, it turns into infrastructure. And infrastructure raises new who owns it, who governs it, and who settles risk when something goes wrong. To close this review, we zoom out beyond Europe to look at tokenization and digital ownership from a global angle. We welcome Michelle Singh from Silicon Valley.
Michelle Tsing [01:11:18]:
Hi. Thank you, Joe.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:11:21]:
I remember a lot from you. And people who are listening to our Internet radio station may recognize your voice. You're hosting the Stanford University campus radio show called Laptop Radio, right?
Michelle Tsing [01:11:33]:
Yes. Yes. I'm Klaus from Laptop Radio. I've been talking about crypto for a long, long time.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:11:40]:
Before that, you had the payment history, you worked as first Asian American at PayPal.
Michelle Tsing [01:11:46]:
Yes, I was an attorney at PayPal for six years from 06 to 12. And I basically handled payment transactions and supported Bill Me later and Zong as well as the core PayPal transactions.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:12:06]:
And I also remember you are a mentor of the Berkeley Blockchain Accelerator. Is that still true?
Michelle Tsing [01:12:13]:
Correct. I have. I've been a mentor and advisor to a number of different companies, but I've also support. I've supported the Berkeley Blockchain Accelerator from the beginning. Also, I'm a mentor at Techstars Web3 Launch Pool Outliers Fund in London and a few other accelerators in the Bay Area and also globally.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:12:41]:
You other accelerators. Okay, I see. Let us dive right in. I was wondering how do you see blockchains trajectory shifting as tokenization becomes more regulated from Silicon Valley to Europe?
Michelle Tsing [01:12:57]:
Yeah, I'm actually really excited about tokenization. So in, in about 2021 I remember speaking with a payments accelerator, a pretty big one, and I remember telling him that as DAOs become normal there will be more tokenization. And I'm talking about tokenization of stocks and normal companies. So I'm referring to the board as a dao and having digital stock. So I think we're moving toward that direction. Direction.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:13:44]:
Interesting perspective, tokenization. And where do you see this going long term? Sorry for the interruption.
Michelle Tsing [01:13:53]:
We're still at the beginning of the tokenization movement. You know, I think the current stocks could be tokenized but we're going to move beyond that to real estate art and other real war assets. And in about five to 10 years I can see boardrooms being tokenized and voting on chain. So you know, in, in company, in, in normal companies there are, you know, I used to manage, to use to help manage the board. So there's a lot of issues with fraud, you know. So you know, everyone knows about surveying Oxley but I still like when voting and everything is going to be on chain, it's just really easier to manage. So the private shares could be on chain and they could be distributed and people with, with the, with a digitalized asset or the tokens could vote. And I'm really, really excited about that.
Michelle Tsing [01:14:54]:
Right. I also wanted to point out that I feel like there will be more liquidity in the security token sector. One of the biggest issue with builders in the last couple years is that even if people want to create security tokens, there is no platform or there's no liquidity. But I feel like that because of tokenization going a little bit more mainstream now, there will be more liquidity as well.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:15:25]:
I actually do feel yes there will be shares tokenized, but as also as a former capital markets management consultant, I also do feel in the fixed income space, like all the different issues, all the different interest rates, all the different maturities of fixed income, of bonds, asset backed securities and stuff like this, I also do feel there, there's a big opportunity for tokenization there as well.
Michelle Tsing [01:15:53]:
Yeah. So I know I have a contact who have worked on a bond for a city a couple years ago as well. So I Expect to see those more normalized. Now that tokenization is a buzzword in the blockchain world.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:16:16]:
I don't think anybody out there who has not been in tokenization or capital markets realizes how much many different bonds, fixed income bonds are actually out there. A city can issue for certain projects, for the overall project, different maturity, different interest rates. So any, any given city can have like 50 to 100 bond issues outstanding. And when you multiply this by the number of cities out there, you see how much of administrative stuff there is. And I do believe tokenization can make a real dent there and in the administrative duties we already talked about globally here. I was wondering if global crypto regulation is slowly aging or are we heading towards a permanent east west policy split here.
Michelle Tsing [01:17:09]:
Yeah, I think that having worked with different governments, you know, I used to work with, you know, one of the government in, in Canada, you know, and, and being in the U.S. you know, I think a lot of the governments might not follow the US or the SEC in, in blockchain regulation. And I didn't think that it was a necessarily bad thing because, you know, like each government has their working group to do research and what they find and there, you know, might be different, different and their needs, my different for that might be different for that country. But I think, you know, I think because there's different regulation and the people are smarter about blockchain now, like they understand DEFY and NFTs, you know, and, and more of the normal crypto stuff, you know, that they could review each other's regulation and kind of take what works. Right. Because I feel like even with the privacy regulations in Europe, you know, like from California, for example, you know, I, I saw that, you know, the California is establishing a, a privacy, you know, off office, you know, if you will.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:18:28]:
Right.
Michelle Tsing [01:18:29]:
So, and I feel like a lot of their regulations echo the regulations in Europe. So I believe that we will see a lot of that. But I also expect to have differences between the different countries as well.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:18:46]:
We're talking about 2025 here. But I'm also curious about your outlook. What blockchain or fintech transformation almost nobody sees coming for 2026 and beyond.
Michelle Tsing [01:18:59]:
Yeah, I think there will be a lot more, more AI agents that could accept payments. You know, I've, I've built agents here and, and integrated Web three payments and it's really, really easy I think, you know, for agents and payments in web 2. It takes a village to allow for that. But I feel like blockchain enables coins and tokens in USDT a lot easier. We also have stable coins. You know, I think people understand, you know that stable coins are more or less volatile, right. Because they're packed to something, you know, so the world basically recognizes it now, which is, which is awesome. So I'm expecting to see more innovation in stable coins.
Michelle Tsing [01:19:53]:
More the one of the issue in a stablecoin that people haven't spoken about and I used to work at it algo based stablecoin company is you know, if, if you base, if you create a stablecoin in more of the traditional sense, you don't really know whether it's peck or not, right. Because you know it could be hidden somewhere. There's no transparency. However, if it's an algo based stablecoin you don't know whether it would rebase. You know traditionally some of the more elbow based bitcoin has dropped to zero. Right. So I think it's an opportunity to like not just look up a stablecoin but look at the nuances and you know, more of the issues impacting stablecoins more deeply. And that goes the same with AI agents, right? So we're looking at identity for, for AI agents.
Michelle Tsing [01:20:50]:
We're looking at how they're making payments like registry and then also we call it Kya, you know, your agent, you know, and also how they would take payments. So I think those are going to be more, you know, like I, I just went to a, a AI conference yesterday where some of those issues were addressed. But I'm also involved in decentralized AI. So in, in Web2 worlds only a few companies basically own our data and they create the data mine, right? So our data is used, you know, to create LLMs and reasoning. So but how do we create a decentralized AI system where the world and 8 billion people can participate. So I, and the good news is that people are, you know, are starting to think about that. So I'm really bullish on more of like a decentralization of AI and then also you know, more transparent stablecoin and tokenization that move beyond, beyond stock into real world asset. And then also I think the other thing I want to mention is that more developers coming into Web3 because it's still a very niche market, a lot of people trade but it doesn't mean that a lot of people build.
Michelle Tsing [01:22:30]:
So I'm expecting to see see a lot more people coming to Web3 because we have a lot of open source tools and I think just more from the principle of creating a decentralized ecosystem where there's more of a shared ownership.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:22:51]:
You've been talking about decentralized AI split between more players. We've been seeing a handful of players dominating global LLMs. Do you think that'll change over time?
Michelle Tsing [01:23:05]:
Yeah, I think so. I mean, it's really hard, right in the Web2 space there is almost a monopoly. There's like four or five players that dominate that space and they have a lot of money, they have a lot of data. And Google is kind of leading slowly. And I'm not surprised, I'm not surprised because when I was learning about AI, that's like 2012, Google has been making AI. At that time I used to go to their conferences. So I'm actually not surprised that Google is catching up. They were really being really careful because of the security aspect of AI.
Michelle Tsing [01:23:54]:
So I expect to see, I think over time, if, you know, if there are certain things that are going to go on, there might be more class action and more regulation as a result of that. But I think it's a little bit kind of scary just because when you really think about the last generation where Facebook, Apple and a few other companies, you know, basically own tech per se, right now we're having more consolidated companies owning our information. You know, you can see that all the podcasts are mine now, you know, because they, they're going to use it to train data and to train reasoning. Right. So it's becoming more dangerous, you know, I, I believe, and more segmented. So I think, and that that's why decentralized AI is going to come in. Because like, I think if we stop using centralized AI and then kind of start using open source LLMs or using more decentralized systems of LLMs, I think it's a little bit better because things are a little bit more spread out and, you know, there will be more ownership as well.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:25:18]:
Interesting perspective. Let's catch up next year and see if this came true already. Michelle was a pleasure having you as guest. Thank you very much. Happy holidays.
Michelle Tsing [01:25:28]:
Thank you. Happy holidays.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:25:30]:
If there's a clear takeaway from this year's fintech and finance review, it is this. The next phase of financial innovation will not be defined by speed. It will be defined by resilience under stress, governance under scrutiny, trust under automation, and capital discipline under higher rates. AI will not remove judgment, but it will expose weak processes. Tokenization will not remove risk, but it is. It will change who controls infrastructure. Embedded finance will not work everywhere, but where it does, it will quietly reshape margins and power structures. As we look toward 2026.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:26:18]:
One distinction becomes decisive. Tools are easy to copy systems. The institutions that win will be those that understand structure, not just software and resist the temptation to confuse tooling with strategy. Those who mistake implementation for understanding will struggle even if they adopt the latest technology first. To all our guests, thank you for clarity, your honesty, and your willingness to look beyond the hype. And to our listeners, thank you for making this annual review one of our most listened to episodes year after year. This was the Fintech and Finance Review 2025. I'm Joe from Zotopret IO.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:27:09]:
Have a thoughtful end of the year and we'll see you on the other side.
Paolo Sironi | Global Research Leader Banking and Financial Markets & Best Selling Author & Podcaster [01:27:13]:
Hello, my name is Paolo Cerroni. I want to wish you all a Merry Christmas. Buon Natale e Buona Channel Nuovo. I'm here on Startup Radio. Attend all of the episodes during the vacation. Enjoy.
Frank Schwab | Co-Founder Fintech Forum and multiple supervisory board member [01:27:25]:
Hello everybody. I wish all of you a Merry Christmas and a Happy New Year.
Jakob Ward [01:27:31]:
I'm Jacob Ward speaking to you from the Bay Area in California. Happy Holidays and may we all understand better what AI is and what it is not in 2026. Take care.
Luca Frignani | CEO and Co-Founder of Credit Platform Exaloan [01:27:42]:
Hey guys, this is Luca from Xalone. I wish you all a very Merry Christmas and a Happy New Year.
Meeri Savolainen | CEO and Co-Founder of Insurtech INZMO [01:27:49]:
Hi, I'm Mary, CEO of insmo. I wish everybody a prosperous New Year and Happy Holidays.
Michelle Tsing [01:27:55]:
Hey, it's Michelle. You're listening to Straight up radio. It's 2026. I wish everyone a Merry Christmas and Happy Holidays.
Jörn "Joe" Menninnger | Founder, Editor in Chief | Startuprad.io [01:28:11]:
That's all folks. Find more news, streams, events and interviews@www.startuprad.IO. remember, sharing is caring.