The Age of Digital Transformation – How Should Banks Adapt?

Banking is going digital fast–and you need to figure out how to compete with digital-first fintech challengers. Here’s what you need to know to stay competitive.

In the following interview, Michael Haney, Head of Digital Core for Technisys, discusses the evolution of banking’s digital transformation and how banks can retain market share amid stiff competition from newer entrants.

How has the concept of digital transformation in banking changed over the years?

Initially banks thought it was enough to launch new digital self-service channels, such as an internet banking portal, or a mobile application. This helped to eliminate the need for branches or devices such as the ATM, while accelerating the move to banking anytime, anywhere.

The focus then moved to digitizing the physical world of paper and plastic. Everything from monthly statements to debit cards to cash itself became the target, as the cost to manage and process these items ate into the banks’ earnings.

Finally, incumbent banks shifted their attention to automation of business processes. The goal was to remove bank employees from the process to eliminate human error, reduce costs, and improve scalability.

Why has this proven to be insufficient to truly transform the industry?

The common theme in those examples is cost reduction, either by eliminating labor, real estate, or physical items, such as checks. The focus was on productivity of existing business models, so it was a very bank-centric approach to the adoption of digital technologies. Improvement to the bank’s operational efficiency was the challenge being addressed.

These days the industry is focused on changing its business models entirely, by putting the goals of the customer first. Banks and their fintech challengers are now using technology to create new digital-first products and services. They are embedding them at the point of need for the customer, no longer limiting their distribution to their own closed ecosystem of channels.

What are some examples of these new digital-first products and services?

Customers are seeking more than just the ability to transact. They are seeking help to manage their finances in ways that meet their goals, such as better abilities to manage cash flow. Early wage access and buy now, pay later solutions help customers access funds when they need them, and pay back these advances over time, all without the need to utilize credit. Personal financial management (PFM) solutions help customers understand how their money is being spent and address ways to prevent unwanted expenses or account balance shortfalls.

Customers are also searching for solutions that help them optimize their savings and align their savings to future goals. Data analytics from these same PFM solutions can help uncover opportunities to save, automate savings, and thereby reduce the overall effort required by the customer to save and invest.

What has prevented the incumbent banks from being the first to launch these capabilities?

Banks that invested solely in a front-end customer engagement platform eventually hit a wall. As they try to move beyond providing transaction services on their digital channels, they realize their middleware and back-end solutions can’t transform in the ways they need them to, or at least cannot do so without a lot of effort and cost. Their middleware needs to contain customer journeys that are not only agnostic to the bank’s own channels, but also allow the bank to embed these journeys into external brands, where the customer truly needs them.

The bank’s back-end platform needs to be configurable in ways that break down traditional system silos and allow for the combination of products and services that help solve unique customer pain points. The back-end systems also need the agility to change at the same speed as the newer front-end systems, which many of the older platforms are incapable of doing.

How can banks enable this change to keep up with the Fintech challengers?

“Banks will first go through an internal cultural transformation. This involves adopting a customer-centric approach using design thinking principles to ensure they are solving customer needs and not just their own needs.” – Mike Haney, HEAD OF DIGITAL CORE

The ability to adopt agile methodologies and the concept of continuous development and deployment requires not only retraining and reorganizing their staff but shifting budgets from a capital expenditure to an operating expenditure model.

Finally, they need to adopt tools and platforms that enable rapid-test and learn models, involve the customer in the design process, and most importantly allow the staff to focus on customer problems. Today, banks are still too focused on challenges that are not core to customer-centric banking, such as running a data center. This can be accomplished by moving to a cloud environment, adopting a low-code development platform, and using collaborative tools to bring together a mix of in-house disciplines, as well as the customers themselves.

What other advice would you give to banks to future-proof their businesses?

We cannot underestimate the impact that advanced data analytics will have to improve the customer experience and uncover opportunities for the banks. Banks have historically used data analytics largely for marketing purposes, and more recently to help fight financial crimes such as fraud or money laundering. Newer business intelligence tools are allowing banks to react to events in real time and shift from models that were only predictive to ones that are adaptive and self-learning.

Again, we will see a shift in the application of these technologies from simply helping the bank drive revenue or reduce risk, to being able to help their customers reach new levels of financial health and wellness. The abilities of these technologies to scale in a cost-effective manner will allow banks to apply these AI technologies to all customer segments, not just the affluent clients.

Click here for Haney’s Top 3 Tech Priorities for FIs Heading into 2023.

Click here to learn more about how banks can compete with fintechs.

Note: This article was originally published on which was acquired by SoFi Technologies in February 2022 and is the parent company of Galileo.

OpenAI Partners With Payment Firm Stripe to Monetize ChatGPT

OpenAI will use Stripe Inc. to take payments and subscriptions for its artificial intelligence tools ChatGPT and Dall-E, which it’s trying to monetize after capturing the public imagination.

The firm, which launched the latest version of its technology named GPT-4 this week, said Stripe will provide billing and checkout features for payments, as well as its automation and tax compliance technology.

The research lab first unveiled its $20 a month premium subscription offering in February after its chatbot was generated widespread public interest.

Stripe will take a small percentage of the transactions that go through its platforms, said David Singleton, chief technology officer at Stripe.

The partnership also means Stripe will integrate OpenAI’s new technology into its products and services, and is currently experimenting with 14 pieces of GPT infrastructure. It’s a fillip for Stripe, which cut its internal valuation by 11% to $63 billion in January amid a wider slump in the fintech industry.

Read More: OpenAI’s New GPT-4 Chatbot Is Here

–By Aisha S Gani (Bloomberg)

74% of digital consumer payments will be conducted by non-FI platforms by 2030

LONDON — Consumers continue to utilize embedded payment options regularly— from Amazon purchases to digital wallets and even the Starbucks app. “It’s predicted that 74% of digital consumer payments globally will be conducted by platforms (from) nonfinancial institutions by 2030,” Martin Hyde, EMEA partnerships lead at JPMorgan Chase payments, said Wednesday at the FinovateEurope event […]

GPT-4 Has Arrived. Here Are 6 Things You Should Know about the New Iteration.

If you need a break from bank failure news, here’s something refreshing. OpenAI’s GPT-4 was released yesterday. The new model is the successor to GPT-3.5-turbo and promises to produce “safer” and “more useful” responses. But what does that mean exactly? And how do the two models compare?

We’ve broken down six things to know about GPT-4.

Processes both image and text input

GPT-4 accepts images as inputs and can analyze the contents of an image alongside text. As an example, users can upload a picture of a group of ingredients and ask the model what recipe they can make using the ingredients in the picture. Additionally, visually impaired users can screenshot a cluttered website and ask GPT-4 to decipher and summarize the text. Unlike DALL-E 2, however GPT-4 cannot generate images.

For banks and fintechs, GPT-4’s image processing could prove useful for helping customers who get stuck during the onboarding process. The bot could help decipher screenshots of the user experience and provide a walk-through for confused customers.

Less likely to respond to inappropriate requests

According to OpenAI, GPT-4 is 82% less likely than GPT-3.5 to respond to disallowed content. It is also 40% more likely to produce factual responses than GPT-3.5.

For the financial services industry, it means using GPT-4 to power a chatbot is less risky than before. The new model is less susceptible to ethical and security risks.

Handles around 25,000 words per query

OpenAI doesn’t measure its inputs and outputs in word count or character count. Rather, it measures text based on units called tokens. While the word-to-token ratio is not straightforward, OpenAI estimates that GPT-4 can handle around 25,000 words per query, compared to GPT-3.5-turbo’s capacity of 3,000 words per query.

This increase enables users to carry on extended conversations, create long form content, search text, and analyze documents. For banks and fintechs, the increased character limit could prove useful when searching and analyzing documents for underwriting purposes. It could also be used to flag compliance errors and fraud.

Performs higher on academic tests

While ChatGPT scored in the 10th percentile on the Uniform BAR Exam, GPT-4 scored in the 90th percentile. Additionally, GPT-4 did well on other standardized tests, including the LSAT, GRE, and some of the AP tests.

While this specific capability won’t come in handy for banks, it signifies something important. It highlights the AI’s ability to retain and reproduce structured knowledge.

Already in-use

While GPT-4 was just released yesterday, it is already being employed by a handful of organizations. Microsoft, for example has been using GPT-4 to power its Bing chatbot since it launched in February. Be My Eyes, a technology platform that helps users who are blind or have low vision, is using the new model to analyze images.

The model is also being used in the financial services sector. Stripe is currently using GPT-4 to streamline its user experience and combat fraud. And J.P. Morgan is leveraging GPT-4 to organize its knowledge base. “You essentially have the knowledge of the most knowledgeable person in Wealth Management—instantly. We believe that is a transformative capability for our company,” said Morgan Stanley Wealth Management Head of Analytics, Data & Innovation Jeff McMillan.

Still messes up

One very human-like aspect of OpenAI’s GPT-4 is that it makes mistakes. In fact, OpenAI’s technical report about GPT-4 says that the model is sometimes “confidently wrong in its predictions.”

The New York Times provides a good example of this in its recent piece, 10 Ways GPT-4 Is Impressive but Still Flawed. The article describes a user who asked GPT-4 to help him learn the basics of the Spanish language. In its response, GPT-4 offered a handful of inaccuracies, including telling the user that “gracias” was pronounced like “grassy ass.”

Photo by BoliviaInteligente on Unsplash

2023, the Year of Commercial Lending Transformation

There are many reasons to modernize your commercial lending technology. Make 2023 a year of transformation for these core reasons:

  • Enabling a digital omnichannel experience
  • One loan system for multiple lines of business
  • Real-time access to data
  • System agility to grow

These all support the main priority—improving the customer experience. Consumer businesses know the importance of their customers’ experience, adopting technology that provides the experience customers demand—simple, all inclusive, and fast. Now commercial lending needs to do the same!

The right technology investment can improve your customers’ experience while modernizing your business for growth and success. Here’s how.

Attract and keep customers

Everything begins and ends with your customers. The most important factors in acquiring and retaining customers is how flexible, easy, and timely doing business with you is. Putting their experience at the center of your solution is critical. Digital solutions, fast response times, and personalized AI advice are the bare minimum your customers’ expectations.

Enable end-to-end integration for your omnichannel strategy

A customer-centric, omnichannel network that delivers integrated products and services is essential for enabling “ease of doing business.” This industry changes quickly and approaching your business as an interconnected entity allows you to support any line of business/product and pivot your focus to react to inevitable market swings.

Get Real-time, accurate data

Pre-pandemic, there was much discussion that by the time digital system upgrades were completed, any “nice to haves” would become “must haves.” And that’s exactly what happened. The need for a system with consistent, real-time, and trustworthy data will provide meaningful and sustained value for your clients and you.

Increase efficiency and revenue

Disparate and non-integrated legacy systems, siloed business lines and inefficient processes, manual, error-prone data entry, slow response times, lengthy decisioning and funding processes—all chronic obstacles that impact efficiency and profitability. Multiple outdated systems result in slow closing times, unclaimed fees, and missed renewals. Improve it all with one integrated system.

Adapt and grow

You need an agile, real-time core loan accounting system that reacts to client growth and market changes. Meeting market and customer demands means making faster loan decisions, offering “hot topic” products like ESG financing, staying ahead of market and regulatory developments, and keep pace with you as you grow.

Find the right technology and transformation partner

The issue is no longer whether to update your systems, but how quickly you can deliver a game-changing customer experience with real-time efficiency and revenue gains. Modernizing your commercial lending demands a technology partner with a targeted approach, a robust foundation, and built-in flexibility.

Start modernizing now!

Successful financial institutions are replacing their patchwork, outdated systems with a modern end-to-end, seamless omnichannel experience that will meet customers’ expectations. A system that enables real-time responsiveness, data trust, easy navigation, transparency, and agility is essential to create the sought-after customer experience. With AFS and AFSVision you get the innovative technology you need to enable modernization and deliver the customer experience your customers expect from you.

FinovateEurope 2023 Best of Show Winners Announced

Winds of more than 60 mph tossing 787s around like paper planes. A wave of multi-industry strikes sending parents, patients, and passengers scrambling to reroute plans and rearrange schedules. There is no doubt that the attendees of FinovateEurope 2023 have had more than their fair share of challenges to make it to the Intercontinental O2 this year.

But make it they have – and we are all the better for it. Now, with the votes tallied from those undaunted delegates, we are happy to reveal the names of the companies that have earned Finovate’s most coveted prize: Best of Show.

10x Banking for its technology that enables banks to move from monolithic to next-generation core banking solutions with its cloud native SaaS core banking platform Supercore.

FinTech Insights by Scientia for its competitive analysis tool for banks and fintechs that offers all the data companies need to outsmart the competition.

NayaOne for its technology that enables institutions to 10x their digital transformation with single-key access to 200+ fintechs to discover, evaluate, and scale new solutions to production.

TAZI AI for its technology that empowers experts and data scientists to create, update, and deploy ML models with a no-code platform, making smart decisions in dynamic environments.

Your Juno for its solution that engages more than 50,000 users around financial education.

We congratulate this year’s winners – as well as all of our demoing companies – for taking to the Finovate stage to show us their latest fintech innovations. And, of course, a hearty thanks to our sponsors, our partners, and – perhaps most of all – our attendees whose attention, participation, and appreciation make our annual European fintech conference such a joy to host. We look forward to seeing everyone again next year!

Notes on methodology:
1. Only audience members NOT associated with demoing companies were eligible to vote. Finovate employees did not vote.
2. Attendees were encouraged to note their favorites during each day. At the end of the last demo, they chose their three favorites.
3. The exact written instructions given to attendees: “Please rate (the companies) on the basis of demo quality and potential impact of the innovation demoed.”
4. The five companies appearing on the highest percentage of submitted ballots were named “Best of Show.”
5. Go here for a list of previous Best of Show winners through 2014. Best of Show winners from our 2015 through 2022 conferences are below:
FinovateEurope 2015
FinovateSpring 2015
FinovateFall 2015
FinovateEurope 2016
FinovateSpring 2016
FinovateFall 2016
FinovateAsia 2016
FinovateEurope 2017
FinovateSpring 2017
FinovateFall 2017
FinovateAsia 2017
FinovateMiddleEast 2018
FinovateEurope 2018
FinovateSpring 2018
FinovateFall 2018
FinovateAsia 2018
FinovateAfrica 2018
FinovateEurope 2019
FinovateSpring 2019
FinovateFall 2019
FinovateAsia 2019
FinovateMiddleEast 2019
FinovateEurope 2020
FinovateFall 2020
FinovateWest 2020
FinovateEurope 2021
FinovateSpring 2021
FinovateFall 2021
FinovateEurope 2022
FinovateSpring 2022
FinovateFall 2022

Applications open for 2023 Demo Challenge

Auto Finance News, a sister publication of Bank Automation News, is pleased to announce that applications are now open for the 2023 Demo Challenge, which will take place at the Auto Finance Summit East on May 10-12 in Nashville, Tenn.

The sixth annual Demo Challenge offers startups in financial services and automotive to showcase their technology before of a large audience of auto lending and leasing executives at the conference.

Fintechs less than 7 years old with an eye toward consumer finance are invited to complete a short survey to be considered by the editorial team. Companies are required to present a live demo at the event.

Apply for the Demo Challenge here.

Previous winners of the Demo Challenge include lender EV Life, auto refinance provider Caribou, collections software Remitter, and blockchain company Bloom.

Visit to register.

Sezzle Revisits Plan to Publicly List in the U.S.
  • Sezzle announced plans to publicly list on the Nasdaq by the end of September.
  • The company will continue to sell common stock on the Australian Stock Exchange.
  • The news comes two years after Sezzle’s original announcement of plans to publicly list in the U.S.

Buy now, pay later (BNPL) technology provider Sezzle announced on Monday it plans to list publicly in the U.S. on the Nasdaq, while continuing to sell common stock on the Australian Stock Exchange (ASX).

The Minneapolis, Minnesota-based company originally listed on the ASX in 2019 using Chess Depositary Interests (CDIs), which are traded on the ASX to allow non-Australian companies to list their shares on the exchange. Prior to listing on the Nasdaq, Sezzle plans to remove the Foreign Ownership Restricted on United States Person Prohibited tag from the CDIs to allow participation from U.S. investors.

“A listing on the Nasdaq is a natural evolution for Sezzle given the company is already filing the necessary reports with the SEC,” said Sezzle Chairman and CEO Charlie Youakim. “Although we are not seeking to raise capital as part of the Nasdaq listing, we are excited to expand the universe of potential investors to the United States.”

Sezzle plans to list in the U.S. no later than the end of September 2023.

Avid fintech nerds may have a sense of déjà vu reading Sezzle’s headline today. In fact, it echoes a news post we published in 2021: Sezzle Plans to File for U.S. IPO. According to that release, “Plans for the public listing are still in early stages. Details, such as the timing, price, and use, have not been revealed.” Sezzle’s release today revisits the plan for a U.S. IPO, but with more concrete details.

Sezzle was founded in 2016 and the company’s growth ballooned alongside the increasing interest in BNPL in 2020. In turning its focus from growth to profitability, Sezzle has made significant cost-saving efforts, including exiting a handful of foreign markets and cutting 20% of its North American workforce. Last February, we reported that fellow BNPL player Zip planned to acquire Sezzle. The deal was terminated in July in light of macroeconomic and market conditions.

Photo by cottonbro studio

Acquisition of Delaware’s Digital-First Fair Square Filling Consumer Credit Card Gap for Industry Leader Ally Financial

This is a sponsored blog post by Delaware Prosperity Partnership

Delaware’s status as a hub for financial services dates back to the early 1980s, when state leaders enacted the Financial Center Development Act to welcome out-of-state banks and attract new investments. Today, financial services is the state’s largest traded sector. In Wilmington alone, nearly 170,000 financial services professionals work for venerable institutions like Bank of America, Barclays and Capital One and newer firms like College Ave Student Loans, Marlette Funding and PayPal, among many others. Another 100,000 technology experts are employed in the city’s metropolitan labor market.

With that amount of fintech expertise, it made sense for Rob Habgood and his team – all veterans of the Delaware credit card industry themselves – to launch Fair Square Financial (now part of Ally Financial Inc.) in Wilmington in 2016.

“There’s a very deep talent pool here in Delaware,” said Habgood, head of Ally Credit Card and former CEO of Fair Square. “There is more credit card talent here in Wilmington, Delaware, than any other place on the planet.”

Fair Square was created as a customer-centric, digital-first credit card company and quickly became known for its competitive brand of transparent and low-fee Ollo products.

What sets the Ollo (now Ally) card apart in a state known for credit cards is its digital-first strategy. Customers do everything from applying for a card to making payments and servicing their accounts online and via the mobile app. On the back end, machine learning models and advanced analytics drive decisions from targeted underwriting to customer management and collections, with teams all working hand-in-hand to execute a strategic plan in an open-plan fintech space.

By the time it was acquired by leading full-service digital bank Ally in 2021, the entrepreneurial, stand-alone business was operating in a lean, effective and successful manner with fewer than 100 Wilmington employees serving 693,000 customers around the world. The new Ally Credit Card headquarters remain in Wilmington, and operations there are growing.

“Ally’s strong nationwide brand allows us to go after more aggressive growth and compete effectively across the full spectrum of customers. We’re going to be growing pretty rapidly here and welcoming high-quality people to continue to build our team,” Habgood said.

In 2022, Ally announced it was investing $520,000 to renovate 22,000 square feet of the Wilmington site and adding up to 150 positions – which will increase employment there by up to 200% – through 2025. Supporting the company’s investment in this expansion are a $20,000 Capital Expenditure Grant and a $2.64 million Jobs Performance Grant from the Delaware Strategic Fund.

Hiring is across the board, from marketing and product personnel to data scientists with credit card experience in analytics, risk, compliance, operations and project management. Many of those whom Ally hopes to welcome already live in Delaware or the surrounding area, but more and more talent looking for a great place to live, work and play are discovering Delaware’s advantages.

Habgood, himself, moved to Delaware in 2011. “We enjoy a high quality of life here in Delaware,” he said. “We not only have access to major metro areas, but to beaches and beautiful countryside — and to great schools.”

“Delaware is a great place to live — a great place geographically — I couldn’t speak more highly of it,” he said.

What fintechs are saying about SVB collapse

In the wake of Silicon Valley Bank’s failure, several fintechs are looking at the effects of SVB’s collapse on the market, regardless of whether they had accounts with the bank.  Money movement platform Astra did not have deposits with SVB, but Chief Executive Gil Akos believes that even companies that did not have exposure will […]

Listen: How embedded banking can reduce fraud

Adoption of embedded banking by both businesses and customers is on the rise, and it is helping to reduce the risk of payment fraud along the way.  For consumers, tokenizing user credentials for their protection is a benefit; meanwhile, businesses gain security by using integrated systems to accept payments safely, Bennie Pennington, vice president of […]

Failing banks invested in fintechs

Signature Bank followed in Silicon Valley Bank’s footsteps Sunday when regulators overtook the spiraling financial institution. Today, First Republic Bank is drawing attention as its shares take a dive. At 2:30 p.m. ET Monday, First Republic Bank’s shares sat at $41.46, down 50% from market open. Before last week, all three banks played integral roles […]

APEXX Global Raises $25 Million to Expand into North America
  • APEXX Global has raised $25 million in a Series B round.
  • The funds come from existing investors Forward Partners, Alliance, and MMC Ventures.
  • APEXX Global will use the new investment to expand further into North America and to boost product development.

Global payment solutions company APEXX Global has raised $25 million in Series B funding. The investment, which comes from Forward Partners, Alliance, and MMC Ventures, brings APEXX’s total amount raised to $37.1 million.

“I’m delighted to announce that we have successfully closed our Series B funding round,” said APEXX Global Co-founder and CEO Peter Keenan. “Since day one we’ve been laser-focused on our mission to build the world’s leading payment orchestration platform and deliver clear benefits to merchants. We‘ve seen strong growth across international markets, delivering significant cost savings and transaction conversion benefits. We look forward to using these funds to further consolidate our position in driving the future of global payments.”

APEXX Global, which currently holds offices in New York, London, and India, plans to use the funds to expand further into North America via its New York office. The company will also leverage the investment to boost product development.

APEXX offers a payment orchestration layer to help merchants optimize their payment stack. The company’s payment gateway enhances the global payment processing experience by processing payments locally to help circumvent foreign exchange fees on cross-border transactions.

In addition to traditional payment methods, APEXX enables businesses to offer alternative payment methods to their end customers. The company currently partners with more than 120 alternative payment methods, including Apple Pay, Klarna, Alipay, and PayPal. Allowing users to pay using their preferred method not only enhances the user experience, but it also has the potential to increase sales.

“We’ve seen good momentum in terms of customer growth, and we are delighted to continue to back Peter and his talented team as they work with merchants to rethink payments and save money,” said MMC Ventures Chairman and Co-founder Alan Morgan. With today’s agreement, Morgan will also take a seat on APEXX’s board of directors.

Photo by Monstera

PayTech Awards 2023 Now Open for Nominations

This highly acclaimed awards program, now in its sixth year, has been supporting, celebrating and recognizing excellence in the use of IT in the finance and payments industry worldwide.

PayTech Awards are open to banks and financial institutions, paytech software and services providers, and individuals and teams working in the payments industry across the globe.

Click here to start your nomination.

PayTech Project Awards are open to banks and financial institutions to enter:

  • Best PayTech Overhaul – Back Office
  • Best PayTech Overhaul – Front Office
  • Best New Payments Brand
  • Best Use of Tech in Consumer Payments
  • Best Use of Tech in Business Payments
  • Best Consumer Cards Initiative
  • Best SME Cards Initiative
  • Best Corporate Cards Initiative
  • Best Mobile Payments for Consumers Initiative
  • Best Mobile Payments for SMEs Initiative
  • Best Mobile Payments for Corporates Initiative
  • Best User/Customer Experience Initiative – Consumer Payments
  • Best User/Customer Experience Initiative – Business Payments
  • Best Bank & PayTech Partnership
  • Best Contribution to Economic Mobility in Payments
  • Top Innovation in Payments
  • Best Use of Tech in Combatting Fraud
  • Best Use of Artificial Intelligence/Machine Learning
  • Best Use of Data
  • Best Green Initiative
  • PayTech for Good

Excellence In Tech Awards gives recognition to tech service and software providers:

  • Best Retail Payments System
  • Best Business Payments System
  • Best Spend Management System
  • Tech of the Future
  • PayTech Start-up of the Year
  • PayTech For Good

Leadership Awards are open to individuals or teams to enter:

  • Woman in PayTech – Bank/Financial Institution
  • Woman in PayTech – Software & Services Provider
  • PayTech Leadership – Bank/Financial Institution
  • PayTech Leadership – Software & Services Provider
  • Rising PayTech Star – Bank/Financial Institution
  • Rising PayTech Star – Software & Services Provider
  • PayTech Team of the Year – Bank/Financial Institution
  • PayTech Team of the Year – Software & Services Provider

Click here for more information on the nomination process and to enter the awards

Nominations close on Friday, 17 March 2023.

The awards ceremony will be held at the beautiful Merchant Taylors’ Hall in London on 30 June 2023. We look forward to seeing you there!

Reducing Payment Fraud Through Modernization

Payment fraud continues to plague the financial services industry.  According to the American Bankers Association, fraud against bank deposit accounts totaled $25.1 billion in 2018[1].  In 2022, eight U.S. Senators sent letters to the CEOs of seven of the largest U.S. banks concerning fraud at one real-time payment firm.  With real-time payments growing globally by 41% in 2020[2], there is an obvious need to modernize fraud prevention as criminals try to exploit the system.

To help combat payment fraud, companies are investing in technology that leverages hybrid cloud architectures and AI / ML.  In a hybrid cloud, compute workloads can be spread across on-premise data centers, private clouds, public clouds and even edge locations depending on requirements such as data sovereignty, latency, capacity, cost and more.  Advances in AI / ML, allow machines to be trained to recognize patterns across billions or trillions of data points.  These relationships are then incorporated into “models”  which are built into real-time payment workflows.

One hybrid architectural pattern is for high privacy payments infrastructure to remain on-premise with the public cloud being used for model training.  By using the public cloud, firms can parallelize training across a vast number of nodes, only pay for time used and have access to hardware acceleration such as GPUs.  To protect privacy or improve data quality, firms can generate synthetic data which is transferred to the cloud and used for training.  Trained models are then imported into a firm’s runtime environment where they execute on-premise with local access to privacy data.

For global financial institutions, data sovereignty requirements might dictate another architectural pattern that keeps payment and fraud data in the originating country.  With federated learning, a single foundation model is created centrally and distributed to remote sites.  These sites then train the model on their local, private data before sending their model, without privacy data, back to the central site.  The models are then aggregated into a new global model that can then be sent to the remote sites for more iterative rounds of training.  Once the model is fully trained, models run locally without ever having to move privacy data outside a regulatory jurisdiction.

While architectures will vary based on needs, financial institutions will all agree that running these workloads at scale requires a modern platform that leverages the hybrid cloud, improves operational efficiencies, reduces operational risks and helps improve the security posture.  With a platform such as Red Hat OpenShift, firms can successfully build, modernize and deploy applications with a consistent experience both on-premise and in the cloud.  As business needs evolve, workloads can then be shifted between on-premise servers or those running at Amazon AWS, IBM FS Cloud, Microsoft Azure or Google Cloud. To learn more, visit Red Hat

– Aric Rosenbaum, Chief Technologist, Red Hat

Aric Rosenbaum serves as the Chief Technologist on Red Hat’s Global FSI team, where he helps clients meet their strategic priorities through the use of open source technology. Prior to joining Red Hat, he led large, digital transformation projects at Goldman Sachs’ Investment Management Division and was co-founder/CTO of several FinTechs in equity and FX trading.

[1] American Bankers Association: 2019 Deposit Account Fraud Summary

[2] ACI Worldwide Research

Silicon Valley Bank swiftly collapses after tech startups flee

Silicon Valley Bank became the biggest US lender to fail in more than a decade after a tumultuous week that saw an unsuccessful attempt to raise capital and a cash exodus from the tech startups that had fueled the lender’s rise. Regulators stepped in and seized it Friday in a stunning downfall for a lender […]

SVB races to prevent bank run as funds advise pulling cash

Unease is spreading across the financial world as concerns about the stability of Silicon Valley Bank prompt prominent venture capitalists including Peter Thiel’s Founders Fund to advise startups to withdraw their money. The turmoil followed a surprise announcement from Santa Clara, California-based SVB that it was issuing $2.25 billion of shares to bolster its capital position after […]

Jonathan Alloy on the State of Digital Banking

Jonathan Alloy is a seasoned financial services professional with years of experience in the sector. He formerly served as Vice President of Design Thinking at Credit Suisse, where he was responsible for driving innovation and fostering a culture of human-centered design across the organization. Today, he is Vice President for Customer Experience and Innovation Consulting at Publicis Sapient.

Last fall, Jonathan Alloy and Steven Ramirez, CEO of Beyond the Arc, sat down to discuss the current state of digital banking. Here are some highlights from their conversation.

When it comes to partnerships, how does a fintech work with a bank to get a solution in front of customers?

Jonathan Alloy: Fintechs, or any new entrant into the banking industry, really need to understand that banks have two separate departments at the highest level. There’s a group that likes risk– that’s the front office, the people who take deposits, make loans, and trade securities– they thrive on correctly evaluating risk.

The back office, by contrast, thrives on minimizing risk. They’re looking for reasons to say no to protect the bank’s integrity, its reputation, its cybersecurity, and its trust with customers. They’re going to say no to things, even if they’re innovative, because it violates a policy that they’re incentivized by the bank to uphold. Maybe [the solution being offered] is only available in the cloud and the bank only allows things that are on-prem. That’s a very common example. So when you’re developing a solution, you have to understand the risk profile of who in the bank has the authority to say yes.

What is it about digital banking that excites you?

Alloy: I think the biggest opportunity right now in some ways remains where it was 20 years ago. [This opportunity] is increasingly being where the customer is. This enables us to deliver financial services when, where, and how they want to consume, not just how we want to provide it. And that’s an important distinction.

Whether [you deliver] through mobile payments, through white labeling, whatever the case may be– it’s a matter of getting out in front of the traditional banking silos, breaking down the walls we have internally, and getting it out in the world to understand it from [the customer’s] point of view.

When we look at the world through the eyes of how customers want to make purchases, payments, take out loans, and invest for retirement, we’re going to learn things that we don’t get if we stay in our silos.

Any tips for banks that want to think like a customer?

Alloy: The number one best thing I could encourage everybody to do is go shopping yourself. So you’re CEOs, your CXOs, your executive team, your management team, your middle managers, your front line employees– everybody should be required to go out, and from another bank that’s not you, as well as you, sign up for a new checking account, get a debit card and a credit card, take out a loan, buy a car– whatever your personal financial needs are. Think about, “was this experience enjoyable or tolerable?” In most cases, what we find, is that for most people, banking is barely tolerable. So when somebody comes along with an innovative new idea or a new approach that makes it just that much more better, they’re going to win great[er] share.

Hear more from Jonathan Alloy in the full conversation.

Photo by Andrew Neel

How to automate AI-powered decisions responsibly and with confidence

With all of the buzz surrounding artificial intelligence (AI) technologies such as ChatGPT, the question becomes “how do we best harness the power of these tools to drive business outcomes?”

In today’s uncertain economic environment, belts are tightening across the board, and investment priorities are shifting away from far-fetched, moonshot projects to practical, near-term applications. This approach means finding opportunities where AI can be practically applied to improve the speed and quality of data-driven decision making.

For banks, these opportunities exist in many areas – from extending credit offers and personalizing customer treatments to detecting fraud and identifying at-risk accounts. However, within the highly regulated financial services industry, leveraging AI to automate these types of decisions adds a layer of risk and complexity.

To get AI-powered decisioning into the hands of the business and drive forward real, meaningful results, technology teams must provide the right framework for developing and deploying AI models responsibly.

What is Responsible AI and why is it so important?

Responsible AI is a standard for ensuring that AI is safe, trustworthy, and unbiased. It ensures that AI and machine learning (ML) models are robust, explainable, ethical, and auditable.

Unfortunately, according to the latest State of Responsible AI in Financial Services report, while the demand for AI products and tools is on the rise, the vast majority (71%) have not implemented ethical and Responsible AI in their core strategies. Most alarmingly, only 8% reported that their AI strategies are fully mature with model development standards consistently scaled.

Beyond the regulatory implications, financial institutions have an ethical responsibility to ensure their decisions are fair and free of bias. It’s about doing the right thing and earning customers’ trust with every decision. An important first step is becoming deeply sensitive to how AI and ML algorithms will ultimately impact real people downstream.

How to ensure AI is used responsibly

Financial institutions need to put their customer’s best interests at the front of their technology investments.

This means having robust model governance practices that ensure enterprise-wide transparency and auditability of all assets – from ideation and testing to deployment and post-production performance monitoring, reporting, and alerting.

It means understanding how models and systems arrive at decisions. AI-powered technology needs to do more than execute algorithms – it must provide full transparency into why a decision was made, including what data was used, how models behaved, and what logic was applied.

A unified enterprise platform provides a common place to author, test, deploy, and monitor analytics and decision strategies. Teams can track how and where models are being used, and most importantly, what decisions and outcomes they are driving. This feedback loop provides critical visibility into the end-to-end impacts of AI-powered decisions across the enterprise.

Unlock a secret advantage with simulation

Designing robust decision strategies and AI solutions often requires some level of experimentation. The development process must include adequate testing and validation steps to ensure the solution meets rigorous standards and will perform as expected in the real world.

With both aggregate and drill-down views, decision testing can reveal how input data moves throughout the strategy to produce an output. This provides useful traceability for debugging, auditing, and governance purposes.

Taking this a step further, the ability to simulate end-to-end scenarios gives users the crystal ball they need to creatively explore ideas and respond to emerging trends. Scenario testing, using a combination of models, rulesets, and datasets, provides a “what-if” analysis for comparing outcomes to expected performance results. This allows teams to quickly understand downstream impacts and fine-tune strategies with the best information possible.

Combining testing and simulation capabilities within a unified platform for AI decisioning helps teams deploy models and strategies quickly and with confidence.

Bring it all together with applied intelligence

With the right foundation, technology teams can create a connected decisioning ecosystem with end-to-end visibility across the entire analytic lifecycle. This foundation accelerates practical AI development and facilitates getting more models into production, ushering in a new age of tackling real-world problems with applied intelligence.

Learn more about how FICO Platform is giving leading banks the confidence they need to move quickly, deploy AI responsibly, and deliver outcomes at scale.

– Jaron Murphy, Decisioning Technologies Partner, FICO

Fifth Third enhances AI strategy

Fifth Third Bank is enhancing its AI strategy by increasing the amount of data ingested by the language model it uses to build conditionals into the bank’s mobile application and messaging platform improving customer experience and self-service options. The $206 billion bank will update its language model in June to ingest more than 2 million […]