Joe Mutti, ForwardAI: “before you dive into your ocean of data, always establish a clear objective first”

There's a lot to handle when it comes to financial data management, especially if you're new to the game.

Luckily, there are various data management systems that can perform critical functions. Without them, companies will most likely face a host of problems like overspending while buying duplicate datasets, or time wasted trying to aggregate data.

Today’s interviewee, Joe Mutti, CTO at ForwardAI, offers practical advice on how digital tools can help make smarter, informed decisions to avoid mentioned problems, and what other cybersecurity practices, apart from using strong passwords or installing VPNs, should be followed to ensure maximum security.

How did the idea of ForwardAI come about? What has the journey been like?

During the pandemic, it became clear how complicated the small business loan application process was. For some SMBs, it took months to secure financing. These delays were confusing, and it seemed strange that lenders weren’t using technology to connect directly to the information they needed. Determined to make a difference, I co-founded ForwardAI with two of my mentors to help bridge the technology gap for financial institutions, lenders, and other fintech.

Throughout 2021, we surveyed business service providers across North America and discovered that many are not adapting to rising customer expectations by providing more crucial services for SMBs. 52% of service providers were providing neither funding advisories nor cash flow forecasting services for their clients when technology such as ForwardAI’s Predict can streamline these processes for service providers.

With the pandemic accelerating digital adoption, we came to understand that it is critical to add value to the services financial institutions or accountants provide to their SMB clients. We have seen immense success so far, having been reached out to by multiple interested blue-chip corporations. At the moment, we have signed agreements with nine (9) financial institutions and have 21 additional companies in sandbox development. Our clients are primarily lenders, working capital providers, or neobanks and are located across the globe from the USA, UK, Singapore, New Zealand, and Australia.

Can you introduce us to what you do? What technology do you use to make accounting easier?

Of course! ForwardAI is improving access to aggregated accounting, financial, and business data for banks, lenders, and fintech. With 19 and growing small business software integrations available, the intelligent PreciseMatch™ tech, deep client analysis, unparalleled forward-looking data insights, and a complete suite of calculated KPIs and ratios, ForwardAI customers can turn client intake and assessment into only three quick steps.

At ForwardAI, our available solutions include the Precise API, the Access partner portal, and the Predict as a Service client-facing cash flow forecasting and planning tool.

Modern clients expect more and more when accessing new and traditional financial services & products. By leveraging Open Finance technology, ForwardAI offers banks, lenders, and fintech the opportunity to streamline the underwriting process for small and mid-sized business (SMB) loans; expand any current business suite into a full-service business management platform with targeted financial offers; or even adopt a ready-to-use, white-label lender portal that requires no-coding. Possibilities are endless when using ForwardAI’s aggregated data integrations and ready-to-use data-derived insights.

In your opinion, which details are often overlooked by new business owners?

So many small business owners don’t pay enough attention to their income vs. expenses. Traditional cash flow forecasting was tedious, and many business owners don’t realize that cash flow projections take ages for a bookkeeper to create manually, if at all. This neglect can cause businesses to fall into cash flow gaps.

But with new online tools based on direct accounting data, it is now easy for owners or accountants to keep a keen eye on any upcoming cash flow gaps. Smart business owners will use a digital tool that gives them direct, real-time information about their finances so that they can make smarter, informed decisions. They can apply for working capital before the situation becomes dire instead of amid a crisis.

Understanding how much cash is available on hand when cash is expected to come in, and whether it can cover expenses or emergencies is essential for devising a realistic financial plan. Many tools in the market – like ForwardAI’s Predict – make cash flow forecasting and planning easy for anyone, even if it’s their first time.

How do you think the recent global events altered your field of work?

Most businesses struggled to stay afloat during the global pandemic, let alone earn profits. With more small businesses finally bouncing back from the pandemic, they’re in need of forward-looking solutions, and lenders that provide full-suite services and can make fast decisions - without solely looking at historical data that slows down the process to snail speed.

Compounded with rising cases of fraud during the global pandemic and more financial institutions looking for solutions to better assess borrowers, interest in API has grown significantly. In fact, a recent survey showed that 44% of financial leaders believe API and microservices will have a strong impact on the financial services industry.

Through innovative technology, we are solving long-standing problems within the accounting and small business industries and helping lenders make better, faster, and more accurate decisions. At the same time, it is imperative that we put SMBs’ needs at the core of our business roadmap. We aim to continue developing a full suite of products and features that can help financial institutions add more value to the service they provide to their SMB clients.

What tips would you give to companies looking to get more value from their data?

Whether you’re a company with extensive analytics experience or a start-up new to establishing a workflow that makes sense, leveraging data correctly should bring your business good ROI.

Before you dive into your ocean of data, always establish a clear objective first and identify KPIs to measure. Is this project supposed to help you establish criteria that can be used to identify high-value customers? Or is it going to help you determine which business function is inefficient and should be improved? Having before and after metrics to compare will ensure you can see clear results.

Another tip is to learn to break data projects down into baby steps. It’s great that you have a goal in mind, but the journey to reach there is often a complex process and requires copious resources. Talk to your team to gauge a realistic timeline and what resources are needed, then determine if it is feasible and profitable for your business.

Which security practices do you think are essential for the financial sector to keep both their workforce and their customer data safe?

The System and Organization Controls (SOC) 2 audit report is often considered the standard when it comes to security practices, especially in the financial sector.

Organizational structures and data practices vary greatly between companies, and the reality is that it’s impossible to have a one-size-fits-all criterion for everyone. That’s why the SOC 2 audit report is essential for protecting data. It evaluates a framework self-imposed by firms that take data security seriously, based on what security practices make the most sense for each company.

A SOC 2 audit report is synonymous with a company’s commitment to protecting its systems and data from unauthorized access and minimizing incident impacts when needed. It is the primary indicator of good data security practices, which is why we had it completed for ForwardAI.

What predictions do you have for the future of the financial sector?

With more financial institutions looking to work with fintech built on newer tech stacks, I believe we will see more and more fintech build their products with the business segment in mind, either to attract SMBs away as a stand-alone product/service or built specifically for partnering with financial institutions.

The SMB segment is a largely underserved market, often left disappointed because they have long enjoyed a better customer experience as a consumer. SMB financial services leave much to be desired as many financial institutions are held back by complex processes, legal requirements, and legacy systems. Now that financial institutions realize collaboration with fintech could fill in the technology gap they are missing when serving the SMB market, the increased demand will direct more fintechs into building products specifically for SMB-related services.

Where do you hope to see AI used more widely in the next few years?

Many financial institutions are already using AI for credit risk, but there are a lot of use cases when most financial institutions are not leveraging AI to its full potential.

For example, AI can streamline credit scoring for new customers, automating the traditionally manual process while helping financial institutions make more accurate credit decisions. On the other hand, AI can actively monitor the credit risk of existing customers, effectively removing the need to dedicate human resources to stay on top of them.

With the move toward open banking and eventually open finance, AI’s capability to consume multiple data sources to assess credit risks will become increasingly important. Not only will better AI profit financial institutions with better credit assessment, but it will also improve the odds of SMBs getting funding when they don’t have a long credit history.

And finally, what does the future hold for ForwardAI?

As accounting and financial data become more valued by financial institutions, we plan to continue to expand our integrations with leading accounting, banking, payments, and commerce platform and software. We’re also looking to double our workforce in the coming year.

I believe ForwardAI’s technology will make a huge difference for financial institutions, lenders, other fintechs, as well as SMBs. Financial institutions need to underwrite quickly and profitably, SMBs need to access capital quickly, and our technology can bridge the gap between the two. We will continue to strive for excellence as we improve our products for those in need.