The fintech dilemma

A Manhattan federal court last week convicted co-founders of fintech Frank for fraud. Charlie Javice will be sentenced in August. The case revolved around the 2021 acquisition by JPMorgan Chase of Javice's fintech for $175 million. The problem was that Frank didn't have the claimed 4.25 million Gen Z users: it had 300,000 customers, and Javice reached the larger number by paying a data scientist to create fake users. "It wasn't just a case of one person being really good at deception--it was a perfect storm of misaligned incentives, inadequate due diligence, and a rush to stay competitive in the fintech arms race," writes Forbes. "Chase didn't just buy a product--it bought a narrative. The pitch was irresistible: a growing user base of 4.25 million Gen Zers that the bank hoped to turn into long-term customers." But Forbes – whose 2019 "30 under 30" edition included Javice – added, perhaps in its own defence, that there's a "misguided notion that permeates the fintech community that fintechs are ethical, either because they claim to be, or because they do something (like carbon offsetting) that they equate with ethical behaviour". On top of that, there business was literally named Frank, (as in "honest"). But there's a sense too that Chase was thrilled by the promise of acquiring 4.25 million Gen Z users, who otherwise were running to sign up for "Chime, Current, or Cash App". As Brett Scott wrote in his study Hard Coding Ethics into Fintech, "I have speculated on some potentially negative ethical implications of fintech. Unless we actively embed awareness of these questions into our innovations, we may sleepwalk into an increasingly ethically-disabled financial system."