Finastra is looking to help its bank clients streamline their mortgage lending processes with AI with multiple lending solutions. The London-based fintech has launched multiple AI-driven solutions including Loan IQ and LaserPro and is seeing banks gain efficiencies with its offerings, Andrew Bateman, executive vice president at Finastra’s lending business unit, told FinAi News. Loan IQ helps banks track their existing loans; LaserPro allows financial institutions to manage documentation and compliance on one platform, Bateman explained. “To understand the impact, you need to look at loan closure rates and the time […]
Finastra is looking to help its bank clients streamline their mortgage lending processes with AI with multiple lending solutions. The London-based fintech has launched multiple AI-driven solutions including Loan IQ and LaserPro and is seeing banks gain efficiencies with its offerings, Andrew Bateman, executive vice president at Finastra’s lending business unit, told FinAi News. Loan IQ helps banks track their existing loans; LaserPro allows financial institutions to manage documentation and compliance on one platform, Bateman explained. “To understand the impact, you need to look at loan closure rates and the time […]
NEW YORK — Fintech Finastra is working with clients to deploy agentic AI within payments processes to boost efficiency and accuracy. The London-based company is collaborating with clients to identify what repetitive processes can be automated or streamlined through agentic AI, Chief Executive Chris Walters told Bank Automation News at the firm’s Americas Lending Day […]
NEW YORK — Fintech Finastra is working with clients to deploy agentic AI within payments processes to boost efficiency and accuracy. The London-based company is collaborating with clients to identify what repetitive processes can be automated or streamlined through agentic AI, Chief Executive Chris Walters told Bank Automation News at the firm’s Americas Lending Day […]
NEW YORK — Fintech Finastra is working with clients to deploy agentic AI within payments processes to boost efficiency and accuracy. The London-based company is collaborating with clients to identify what repetitive processes can be automated or streamlined through agentic AI, Chief Executive Chris Walters told Bank Automation News at the firm’s Americas Lending Day […]
Financial services technology provider Finastra is reportedly exploring the sale of its core banking business. The potential sale, first reported Sept. 1 by Reuters, could bring in $1 billion for the tech provider. News of the divestiture follows Finastra’s May sale of its treasury and capital markets business to global private equity advisory firm […]
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 […]
As real-time payments become integral to growth strategies, small financial institutions are increasingly signing on with instant payment rail FedNow to boost transaction volume and improve efficiency. Of the 990 financial institutions FedNow has onboarded since its July 2023 launch, 80% are community banks and credit unions, according to data from the Federal Reserve updated […]
The U.S. Federal Reserve’s FedNow platform has exceeded expectations in its first year, expanding its reach to 10% of financial institutions, so far. FedNow is expanding its reach to financial institutions on the network and volume is expected to follow in the coming years, Kristin Robertson, director of account management at fintech Finastra, told […]
Card giant Mastercard and digital bank bunq are teaming up on open banking and AI, the companies announced this week at Money2020 in Amsterdam. The partnership breaks down “how open banking is helping to provide the next generation of financial insights to their users,” Bart Willaert, executive vice president of open banking international markets at […]
Cache Valley Bank has selected fintech Finastra for its core banking and digital banking offerings. The Logan, Utah-based bank will use the tech provider’s core banking platform, Fusion Phoenix, and its mobile banking platform, Fusion Digital Banking, for commercial and retail banking clients, according to a May 16 release from Finastra. Cache Valley Bank has […]
Lending-as-a-Service platform Epic River has integrated Finastra’s loan documentation system LaserPro into its platform to give customers a place to send the additional borrower information being collected. “We had a lot more banks generating loan application data in our system instead of having borrowers fill out PDFs,” Epic River Chief Executive Jeff Grobaski told Bank […]
Fintech Finastra has appointed Mike Stawchansky senior vice president, chief technology innovation officer, according to a release from the on March 6. Stawchansky was senior vice president of platform engineering at data intelligence company Collibra and vice president of system engineering at Salesforce, according to his LinkedIn profile. “My previous roles gave me a robust […]
Mastercard extended its collaboration with The Clearing House today to allow customers and businesses to use real-time payments. Mastercard will be the exclusive instant payments software provider for The Clearing House’s (TCH) RTP network, according to a news release from Mastercard. TCH’s RTP network has been gaining traction since the launch of FedNow, with more […]
Technology providers Alkami, Finastra and Temenos all brought on new financial institution customers in the third quarter as demand for cloud-based solutions and digital banking rose. “Digital banking is an essential product now for a financial institution. We might not have been able to say that several years ago,” Allison Cerra, chief marketing officer at […]
Adam Lieberman, head of artificial intelligence & machine learning, Finastra
With ChatGPT reaching 100 million users within two months of its release, generative AI has become one of the hottest topics, as individuals and industries ponder its benefits and ramifications. This has been further spurred by the fact that ChatGPT has inspired a slew of new generative AI projects across industries, including in the financial services ecosystem. Recently, it was reported that JPMorgan Chase is developing a ChatGPT-like software service to be used by its customers.
On the flipside, as new stories about generative AI tools and applications spread, so do conversations about the potential risks of AI. On May 30, the Center for AI Safety released a statement — signed by over 400 AI scientists and notable leaders, including Bill Gates, OpenAI Chief Executive Sam Altman and “the godfather of AI,” Geoffrey Hinton— voicing concerns about serious potential risks.
Finastra has been closely following developments in AI for many years, and our team is optimistic about what the future holds — particularly for the application of this technology in financial services. Indeed, at Finastra, AI-related efforts are widespread, touching areas from financial product recommendations to mortgage process document summaries and more.
However, while there is good to come from AI, bank leaders — responsible for keeping customers’ money safe, a job they do not take lightly— must also have a clear picture of what sets tools like ChatGPT apart from past chatbot offerings, initial use cases for generative AI for financial institutions and the risks that can come with artificial intelligence, particularly as the technology continues to advance rapidly.
Not your grandma’s chatbots
AI is no stranger to financial services, with artificial intelligence already deployed in functions such as customer interaction, fraud detection and analysis well before the release of ChatGPT.
However, in contrast to today’s large language models (LLM), previous financial services chatbots were archaic — far simpler and more rules-based than the likes of ChatGPT. In response to an inquiry, these previous iterations would essentially look to find a similar question and, if such a question was not registered, they would return an irrelevant answer, an experience many of us have no doubt had.
It takes a much larger language model to understand the semantics of what a person is asking and then provide a useful response. ChatGPT and its peers excel in domain experience with a human-like ability to discuss topics. Massive bots like these are heavily trained to provide a far more seamless experience to users than previous offerings.
Potential use cases
With a better understanding of how new generative AI tools differ from what has come before, bank leaders next need to understand potential use cases for these innovations in their own work. Applications will no doubt expand exponentially as the technology develops further, but initial use cases include:
Case workloads: These documents can be hundreds of pages long and often take at least three days for a person to review manually. With AI technology, this is reduced to seconds. Furthermore, as this technology evolves, AI models may develop such that they not only review but actually create documents after having been trained to generate them with all their necessary needs and concepts baked in.
Administrative work: Tools like ChatGPT can save bank employees meaningful time by taking over tasks like curating and answering emails and supporting tickets that come in.
Domain expertise: To provide an example here, many questions tend to arise for consumers in the home mortgage market process who may not understand all of the complex terms in applications and forms. Advanced chatbots can be integrated into the customer’s digital experience to answer questions in real time.
Considerations
While this technology has many exciting potential use cases, so much is still unknown. Many of Finastra’s customers, whose job it is to be risk-conscious, have questions about the risks AI presents. And indeed, many in the financial services industry are already moving to restrict use of ChatGPT among employees. Based on our experience as a provider to banks, Finastra is focused on a number of key risks bank leaders should know about.
Data integrity is table stakes in financial services. Customers trust their banks to keep their personal data safe. However, at this stage, it’s not clear what ChatGPT does with the data it receives. This begs the even more concerning question: Could ChatGPT generate a response that shares sensitive customer data? With the old-style chatbots, questions and answers are predefined, governing what’s being returned. But what is asked and returned with new LLMs may prove difficult to control. This is a top consideration bank leaders must weigh and keep a close pulse on.
Ensuring fairness and lack of bias is another critical consideration. Bias in AI is a well-known problem in financial services. If bias exists in historical data, it will taint AI solutions. Data scientists in the financial industry and beyond must continue to explore and understand the data at hand and seek out any bias. Finastra and its customers have been working and developing products to counteract bias for years. Knowing how important this is to the industry, Finastra actually named Bloinx, a decentralized application designed to build an unbiased fintech future, as the winner of our 2021 hackathon.
The path forward
Balancing innovation and regulation is not a new dance for financial services. The AI revolution is here and, as with past innovations, the industry will continue to evaluate this technology as it evolves to consider applications to benefit customers — with an eye always on client safety.
Adam Lieberman, head of artificial intelligence & machine learning, Finastra
The U.S. federal government’s instant payment service network FedNow will launch in July, triggering financial institutions and tech providers to come together to prepare operations for the new payment rail. “If you’re not focusing on FedNow, you probably should be,” Al Carpetto, lead solutions consultant on the payments team at Finastra, tells Bank Automation News […]
As a potential recession looms and inflation persists, individuals and organizations across the U.S. and globally are feeling pressures from the current macroeconomic environment.
Banks are not immune to these challenges. Finastra’s recent “Financial Services State of the Nation Survey” found that four in five financial institutions have been “belt-tightening” and constraining their investments in technology, reflective of today’s challenging environment. However, even as budgets for new projects may shrink, banks still have an opportunity to invest right now in utilizing new and existing technologies — which can play a significant role in cutting costs in the long term and potentially even increasing revenue.
Ravi Metta, CTO, Finastra
With our complex economic environment in mind, these three technology priorities should be at the forefront of a bank’s strategy to navigate challenges associated with decreased budgets.
Leverage existing data
There is a truthful saying that “you can only improve what you can measure,” making data a powerful tool. Financial institutions of all sizes have customer data at their fingertips, but many do not fully realize the benefits.
The key is knowing how to make data actionable for the benefit of both the bank and its customers. Making use of data already collected allows banks to better tailor their offerings based on customer preferences, which then helps enable them to remain competitive in a challenging market. The right data and analytics strategies can drive growth, enhance productivity, reduce risk, improve the customer experience, personalize product offerings and drive innovation.
The question is: How do banks reach this goal? Data tends to exist in multiple silos across a financial institution, often in different systems, making it challenging to use it effectively. However, with the right software solutions, a bank can place all its customer data in one simple-to-access place. Once this is complete, the bank can then analyze customer behavior across multiple channels, seeing insights that reveal customers’ preferences and their likelihood of adopting a new product or service. Using this information and the appropriate tools, banks can then make personalized recommendations to customers, increasing product adoption and revenue while reducing acquisition costs.
Essentially, it is critical that banks offer the right products to the right people at the right time. Given the potential impact on revenue, customer experience and cost reduction, it is crucial that banks leverage their existing data and analytics during challenging economic times.
Move toward cloud-based solutions
In the Finastra survey, respondents were asked the top five benefits of moving to the cloud; 50% named achieving efficiency gains, while 43% cited cost reduction. This reflects what I have seen throughout my career: Cloud-based solutions are often ultimately cost-savers for banks, allowing them to act more nimbly in response to evolving consumer demands.
In addition to the operational efficiencies associated with moving to the cloud, it’s important to note that Microsoft’s cloud infrastructure is 93% more energy efficient than on-premises servers. These energy efficiencies, in turn, reduce operating costs for banks looking to find areas to cut back. By reducing reliance on physical infrastructure, banks can decrease office space and save on utility costs.
Finastra’s research finds that 59% of financial institution respondents had most or all of their software hosted on cloud-based solutions, showing that the industry is already moving in this direction. If a bank is not yet there, now may be the time, especially when finding cost-savers is more important than ever.
Embrace BaaS and embedded finance
In the survey, the commercial opportunities and efficiency savings presented by banking as a service (BaaS) and embedded finance were strongly recognized. More than four in five agreed that these propositions offer a means for institutions to grow (84%), and a similar proportion agreed that they reduce their operating costs (83%).
By deploying BaaS and embedded finance solutions, banks can place their products directly into an otherwise disconnected customer journey. New entrants in the market continue to deliver seamless customer journeys, which include embedding banking solutions into traditionally profitable products and services. It is critical that banks act quickly to ensure they’re the ones delivering BaaS and embedded finance solutions and leveraging open APIs before new players in the market take hold.
Doing this creates new revenue streams while eliminating marketing and other acquisition costs associated with trying to win over new customers.
In recent years, banks have made significant progress in leveraging BaaS and embedded finance to create new revenue streams in a changing market. It is critical for future success that this momentum is not lost — and the fact that leveraging BaaS and embedded finance can help banks save on operating costs further underlines why they should remain a top priority in the current environment.
While the news continues to remind the industry that a global recession may be looming, or perhaps even have arrived, banks should not cease investing in technology. Challenging economic conditions often remind industry leaders to think differently about how to drive business through innovation, leading to increased revenue and newly realized efficiencies.
Ravi Metta is chief technology officer at Finastra, where he oversees technical strategy, operations, cloud and platform transformation.
Technology provider Finastra is launching an asset liability management solution aimed at helping small- and medium-sized banks with their balance sheet and compliance needs. The cloud-based software-as-a-service (SaaS) solution, named ALM IQ, is a platform-agnostic microservice designed to help banks with data consolidation, operational efficiency and regulatory compliance, according to Finastra. “[Small banks] see that the […]
FinWise Bank chose core banking provider Finastra in December to help update its infrastructure and enhance customer experience. Sandy, Utah-based FinWise aims to use the Fusion Phoenix core banking solution from London-based Finastra to expand its retail and lending business through Finastra’s cloud-based solution, Keith Redding, chief revenue officer of universal banking at Finastra, told […]
