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M&A activity is on the rise, and AI can get deals to the finish line faster. In the third quarter, 52 U.S. bank deals were announced, marking the most in a quarter by quantity since Q3 2021, according to S&P Global’s October M&A report. Top Q3 deals include: Pinnacle to acquire Synovus Financial for $7.9 […]
The post AI streamlines M&A due diligence appeared first on FinAi News.
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Whitney McDonald
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Fifth Third Bancorp agreed to buy Comerica Inc. for about $10.9 billion in stock, the largest US bank deal this year and a sign that the logjam blocking big mergers in the industry may have broken under the Trump administration’s deregulation efforts. The deal will create the ninth-largest bank in the country, with about $288 […]
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Bloomberg News
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Tech provider Temenos on Oct. 7 announced Barb Morgan as its chief product and technology officer. In the role, Morgan will prioritize innovation, including products focused on client needs that tap into “AI, cloud and advanced data and analytics,” she said in the Temenos release. Additionally, Morgan will add to Temenos’ ongoing cloud and […]
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Courtney Blackann
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American Express and card-on-file management company Knot are launching a card-on-file payments solution to improve the payment experience at trusted retailers. “Amex has integrated with Knot’s CardSwitcher technology, which allows eligible card members to quickly and securely provide their payment information to participating merchants directly through the Amex website,” Stephanie Schultz, vice president and head […]
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Whitney McDonald
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Whitney McDonald
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AI and generative AI uses exploded in 2023 and the financial industry felt the ripple effects.
Ninety-nine percent of financial services industry leaders have deployed AI and are planning to use the tech across their operations, according to a Dec. 11 report by EY. Of 300 financial services executives surveyed at companies with revenues of more than $2 billion, 77% view gen AI as an overall benefit to the financial services industry.
This year, financial institutions implemented AI and generative AI into their operations to streamline both internal and client-facing chatbot experiences.
Here are Bank Automation News’ top five AI-related stories of the year:
1. Bank of America deploys AI assistant Erica internally
Bank of America deployed its AI-driven chatbot, Erica, internally in May to save bankers “hours of research and manual work,” Jorge Camargo, senior vice president of digital product management, told BAN in May.
As Erica adds efficiencies internally, the chatbot’s consumer adoption is also ticking up, according to the $2.4 billion bank’s Q3 earnings report. During the quarter, Bank of America reported that consumer adoption of Erica increased 27% year over year to 170 million interactions.
2. Fifth Third updates chatbot for fluency
Fifth Third Bank looked to ChatGPT to enhance the capabilities of its chatbot’s natural language understanding model in September.
The bank’s chatbot, Jeanie, facilitates around 200,000 conversations per month and can understand close to 30,000 customer phrases and queries, Michelle Grimm, senior director of conversational AI at Fifth Third, previously told BAN. The chatbot knew about 35 phrases when it was launched in 2020.
Fifth Third increased its tech spend 8% YoY in the Q3 to $115 million and is modernizing its platform to better serve its customers and make operations more efficient, according to its earnings supplement.
3. TD Bank explores AI for cross-selling
TD Bank is exploring the use of AI to predict consumers’ needs and use the technology to cross-sell its products.
AI will help TD in identifying targeted offerings toward a customer that will help it bring the customer deeper into its ecosystem and increase revenue for the bank, Chris Giamo, executive vice president and head of commercial banking, told BAN in September.
The $386 billion bank aims to use existing customer data to predict what issues they might run into or what financial product might help them, Giamo said, noting that if a TD Bank commercial customer accepts payment in checks or cards, the bank can suggest an upgrade to its payments channels or provide merchant services to them.
4. Inside look: Discover Financial Services’ approach to responsible AI
Card giant Discover Financial Services is using static and supervised machine learning algorithms to train its models to remain compliant and develop AI in a responsible manner.
Static machine learning (ML) consists of models that are trained offline, Arjun Kannan, director of data science research, told BAN in June.
For certain operations, Discover uses models that are not trained with real-time data, Kannan said.
“Why that’s important is when it comes to compliance,” he said. “It’s hard if you are constantly updating with real-time information and making decisions with rapidly updating models.”
Ally Financial has developed an AI playbook to help its employees understand the technology and aid in the development and deployment of AI across the organization.
Employees can pitch ideas to Ally’s AI development team about what features they would like to have in their department and existing limitations of the technology, Sathish Muthukrishnan, chief information, data and digital officer at Ally, told BAN. Ally is using Ally.ai to help assist its customer relationship team and uses gen AI for targeted marketing purposes.
Get ready for the Bank Automation Summit U.S. 2024 in Nashville on March 18-19! Discover the latest advancements in AI and automation in banking. Register now.
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Vaidik Trivedi
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Whitney McDonald
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Whitney McDonald
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Whitney McDonald and Victor Swezey
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Like a lot of regional banks, Fifth Third Bancorp raised its deposit rates substantially during a volatile first quarter as it sought to defend a key source of funding.
Deposits still fell last quarter at the Columbus, Ohio-based bank, but by a smaller percentage than at some other banks. Meanwhile, deposit costs rose, but not by enough to prevent the bank from posting a year-over-year increase in net income.
Fifth Third started taking steps last year — when the Federal Reserve was earlier in its rate-hiking campaign — that positioned it to weather the banking crisis.
“We’ve been in a more defensive position for probably nine months now as it relates to deposits,” Fifth Third CEO Tim Spence said Thursday in an interview following the bank’s earnings call. “We believed that we were reaching the point in the cycle where deposit funding really mattered.”
During the first quarter, Fifth Third’s interest-bearing deposit costs rose by 172 basis points from the same period last year, and by 64 basis points from the fourth quarter. The bank’s interest expenses of $696 million were up 40% from the previous three months.
But interest income also climbed in a rising-rate environment, and Fifth Third reported quarterly net interest income of $1.5 billion. That metric was down 4% from the fourth quarter of 2022, but up 27% compared to the same period last year.
Meanwhile, the $205 billion-asset bank reported total deposits of $163 billion — down 4.5% from the first quarter of 2022, but nearly flat compared with the fourth quarter.
Fifth Third recorded quarterly net income of $558 million. That result was down 24% from the fourth quarter of 2022, but up 13% from the year-earlier quarter.
Looking ahead, the bank lowered its guidance for full-year adjusted revenue growth to no more than 8%. It had previously been 9%-10%. Guidance for full-year net interest income growth, which was previously 13%-14%, was lowered to a high end of 10%.
In recent days, some other regional lenders have reported lower deposit volumes during the first quarter.
Citizens Financial Group said its total deposits fell 4.7% from last year’s fourth quarter. Deposits declined by 8.8% year over year at Western Alliance Bancorp. and by 16% at Zions Bancorp.
At Fifth Third, deposit volumes are expected to remain stable during the second quarter and could possibly show growth by the end of the year, Spence said. He added that the bank’s forecast is dependent on how economic conditions play out.
“If cracks in the economy start to materialize and appear more profound than the current outlook for sort of a run-of-the-mill recession, then that might cause us to be more defensive on capital and credit,” Spence said.
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Jordan Stutts
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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 […]
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Whitney McDonald
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Charlotte – Fifth Third Bank plans to reduce the footprint of its applications by 30% in the next three to five years as the $206 billion bank focuses on refactoring and rewriting apps for the cloud. The Cincinnati-based bank’s cloud strategy does not entail “any lift and shift, we are doing a lot of either […]
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Whitney McDonald
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Technology spend at banks varied during the fourth quarter of 2022 amid talk of a recession. The $3 trillion Bank of America saw 8% growth in non-interest expenses in Q4 to $5.1 billion and $1.8 trillion Wells Fargo saw a 5% year-over-year increase in tech spend to $902 million contributing to the bank’s 23% increase […]
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Brian Stone
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Fifth Third Bank saw higher technology-related expenses during the fourth quarter as it continued to invest in “platform modernization,” including the launch of its new cloud-based mobile app, Chief Financial Officer Jamie Leonard said during today’s earnings call. WHY IT MATTERS: Fifth Third increased technology and communications spend 8% year over year to $111 million […]
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Brian Stone
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