Tag: the buzz

Podcast: Reimagining payment experiences with agentic AI

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AI, in some capacity, has been used within payments for 30 years. The latest evolution in AI is through the agentic lens — transforming transactions and experiences alike.

“We’re actually thinking about really reimagining not one payment, but an entire experience,” Zachary Aron, principal, Deloitte Consulting, tells FinAi News on this episode of “The Buzz” podcast.

For example, how can agents be used for travel, business spending or even date nights, he says, noting that you bought the airfare, but do you need to add a hotel or sightseeing package? Agentic AI can facilitate those payments.

Listen to “The Buzz” as Aron discusses the possibilities for agentic transactions this year.

Register here by Jan. 16 for early-bird pricing for the inaugural FinAi Banking Summit, taking place March 2-3 in Denver. View the full event agenda here.

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

Whitney McDonald 08:06:01
Happy New Year and welcome to The Buzz a fin AI news podcast. My name is Whitney McDonald, and I’m the editor of fin AI news. Fin AI news has rebranded from bank automation news, marking the next step in our mission to lead the conversation on innovation and Financial Services Technology. Joining me today, January 6, 2026 is Zachary Aaron, a principal at Deloitte Consulting. Zachary is here to discuss agentic AI’s role in shaping the future of payments. Thanks for joining us.

Zachary Aron 08:06:27
Zachary, sounds good. Whitney, thank you very much for having me. Zach Aaron, I am Deloitte global and US banking and capital markets payments leader. I have over 30 years of experience focused on payments overall. And I lead Deloitte practice on payments. We have over 2000 people globally that focus on payments, literally, 24 by seven for all of our clients, which includes everyone from corporates that are thinking about payment acceptance and how payments can help enable their business to the fintechs, to the traditional networks, the banks, and also the central banks and the regulatory areas. So we try to take really a complete view and look of payment around payments, so we can really help advise our clients on how they best can make payments fast, safe, secure, and enable people, individuals and companies, to really be able to best use their money the way that they have intended to do.

Whitney McDonald 08:07:40
As you said you’ve got about 30 years under your belt, so I’m excited to have this conversation, especially during a time with AI agentic payments. It’s obviously a lot of change. There’s been a huge evolution just this year. So why don’t we kind of start with the state of agentic AI right now? Where are we today with agentic payments?

Speaker 1 08:08:02
Sure, and I’d say maybe even the start. I think payments is one of those really fun areas where people don’t realize that AI has been involved in payments for literally over 30 years. And we, you know, when we look at, you know, payment processors and networks that were actually that have been using artificial intelligence to detect fraud in real time, to be able to look at patterns in real time, so that when a payment came through, they can immediately flag it as a safe or an unsafe payment. And so I’ve always felt that way about cloud. People have said cloud and payments have been around for literally 4040, almost 50 years. And so there’s a little bit of a misnomer in that this is a new concept for the payment space. And so AI has always been a part of it. What’s really happened to your to your point, Whitney, is we really see an evolution no different than, you know, the broader business area and broader technology around Hey, I has evolved from the, you know, the artificial intelligence to analytical. AI, conversational AI, such as your interaction with a chat bot, your ability to use voice to be able to make transactions like paying bills now, all the way to where we are on agentic AI, where we can start to create really true, if you will, agents to be able to accomplish tasks around payments. And so it’s definitely become prominent this year. I think this is the year, and I’ll say it’s an early year. I mean, we’re early in this story. This is the year where we’re starting to lay the foundation around agentic AI. We are starting to think about interesting use cases where this can be applied. We’re also starting to lay out standards. And so what we’re seeing as an example. Or you see the payment networks rolling out standards for how to enable agentic payments. You see some of the technology companies trying to also say, this is how you can execute an agentic transaction from the moment that you want to be able to pay. And so what we’re really seeing is a lot of entities coming in trying to lay the foundation. And I would say we’re sort of going to move to where, you know, how do we enable an agentic transaction probably happens next, and then from there, how we actually reimagine and enable real agentic experiences. And so again, I think we’re really early in this story around the agentic piece, but we’re also very well into the story around artificial intelligence overall and how it’s enabled payments.

Whitney McDonald 08:10:52
Yeah, I think that’s really important to note that, you know, AI isn’t necessarily a new player, it’s just we’re kind of getting into this evolution. Where the technology is going, what it’s enabling that is now, you know, new you’ve mentioned here some use cases that you’re starting to see emerge. You talked about the foundation. Obviously, we’re in the early innings of where agentic AI, you know, can go. You have to start somewhere. Let’s talk about what are some of those use cases that you are seeing, Where can this kind of be a reality?

Speaker 1 08:11:27
Yeah, and I think what we’re, you know, what we’re seeing right now from players in the space is right now trying to do, what I would say is sort of like 1.0 type payments. In other words, I would like to buy something. How can the agent go out and buy on my behalf? As an example, we’re also seeing examples of, how can the agent help suggest a payment, and so that’s a little bit on the front end. We’re also starting to see how can an agent be there to help immediately detect perhaps a fraudulent payment and provide alerts. Similarly, how can an agent help provide support around payments, enabling disputes, as an example, if you need to contest the payment. And so we’re seeing a little bit of that, which I think is sort of, again, sort of foundational step. We look at a payment, we look at the flow, we look at the interaction. We go, where can an agent do this job better? What we are finding, though, is, you know, thinking further afield is, how do you really reimagine something? And so one of the things as an example that we’re looking at, and to use, sort of a possible example is say it’s, you know, it’s a Friday night, and you realize, like, oh, it’s date night for me and my spouse. And you know what, I just I have not given it enough thought, and I need to plan a really cool date night for my spouse. So I really want to go to movies, and I want to be able to go to dinner, and I want to be able to kind of, you know, maybe it’d be great to have, like, you know, get some flowers at the, you know, to start the date off, and and all those sort of things. And now, the way I would do that today is, right. I’m going to go on, I’m going to call up the restaurant, or I’m going to go on an app and see if they have space, or I’m going to try to look at a variety of restaurants, and I’m going to look at their different ratings that they have. Similarly, I got to go and I got to, you know, pull up and look at, you know, what movies are available and the like. And now I got to figure out how the timing of all of it works, right? So now I’ve got to do 6789, 10 things. I kind of throw up my hands, I close my eyes, I take a guess, maybe I did, well, maybe I didn’t, on my date night. Or I have to go, sorry, it’s not dinner and a movie, you know, how about we order pizza and, you know, you know, watch, watch something on the couch, which I probably failed on, on that, on that assignment. So yet I’m going to try to figure this out. But now maybe I’m going to go to say a search engine, or I’m going to use an app, and I’m actually going to say I need ideas for a date night that involve dinner in a movie, ideally Italian, ideally a rom com. I also want to make sure that there’s enough time from when the dinner ends to when the movie begins that I can also get the popcorn and the Raisinets, which, by the way, is a phenomenal combination put together, you know, a couple of sodas. And also, by the way, it’d be really cool if we could maybe stop at the ice cream parlor on the way back. And also, by the way, it’d be great if I could get, you know, a dozen roses. And now an agentic agent is going to say, let me do some work. You should actually go to this restaurant. They have a seat available at 6pm you can then have an hour and a half dinner, and you’ll be able to make the 8pm showing of the latest great rom com out there. And we’re going to get you seats, by the way, if you know you want the popcorn and raisin nets, we can get that pre ordered for you. You know, what do you want to drive or do you want to get a ride share? And I start adding that in. They’re like, How much money do you want to spend? And I’ll go, You know what? You know, I have the best spouse on Earth. Money’s no object. Get the best seats, right? All those sort of things.

Unknown Speaker 08:15:38
Get two boxes of raisin nets,

Speaker 1 08:15:40
exactly, right? We’re going to double up on the raisin nets. In fact, no budget, right there. You know what? There is absolutely no budget when it comes to good popcorn and raisin nets and gummy bears, to be honest. And it’s like, hey, you know, by the way, to maximize your time at the restaurant. Do you kind of know, is there a favorite dish that you have? Do you want to, you know, pre order a bottle of wine and have that ready? Or, you know what it’s gonna let’s have fun. Get the champagne. All right, we’ll even send that request for the champagne. So now what the agent has done is it suggested an experience. Now let’s move it to payments. I have potentially a payment for the car service, for the restaurant, for the movie theater, for the tickets and the concession I still have to, you know, and maybe even you know, the ice cream place at the end, imagine now this experience says, Do you want to pay for this stuff now? And that way, also you’re not fumbling around. You’re also maybe not even thinking about, Oh, well, Shoot, maybe money wasn’t no object, or whatever the case may be, as things went around, you’re like, you know what? That would be great. And I can show up. We’ll be at home. The car service comes. I just get out of the car. I walk into the restaurant. The wine’s already there. We’ve eaten, right? I maybe, you know, go back on my app and said, Yeah, I had the lasagna, and, you know, my spouse had the scampi. Great, done. I walk in the popcorn and raisin nets are right there. And there the tickets were printed out. I go get the double box of the rate of the raisin nets and the popcorn, little extra butter too. And then, you know, the seats are there, the car is there. Right when the movie ends, it takes us to the ice cream we got in before it was over. They already had the rocky road ready to go, and then takes us home. And I maybe never reached for my wallet and it said everything was paid for. Or even at the end, it said, here’s the total for everything. Are you good? And you’re like, yeah, by the way, I like to tip these people some stuff. You do it, you’re done. And when we think about that agentic AI experience, we have made payments invisible and easy, and we’ve taken that challenge out. It’s going to split the payments out to the movie theater, to the restaurant, the ice cream people, the car people. And I’ve basically been able to have an easier experience, easier to find, easier to pay, and I’ve really been able to enjoy my date. And so when we think about the agentic AI experience that’s coming up. We’re actually thinking about really reimagining not one payment, but an entire experience. So you think about that. You can now think about all sorts of things, travel as an example. You think about businesses. And you think about just even how businesses have to procure supplies and all the different things. And now you could have an agent that just says, Hey, we’re nearing the end of the month. You’ve got to, you know, this is normally the time you want to replenish. I looked at your cash flow. This is what that looks like. How about, you know, we pay these invoices this way. Place these orders. This is where you’re going to get the better vendor discount on supplies. You know, if you wait another week, you can get this deal. And all of a sudden, we’re stringing together multiple transactions into one thing. We’ve created time savings. We’ve created safety as well, and we’ve created the ability to customize the way those payments work and those transactions work for the way that that individual or that business really wants to operate.

Whitney McDonald 08:19:33
Now, to go back just a little bit here, because obviously, like the the sound of all of that is, you know, it’s promising and it’s exciting, and you don’t want to have to worry about, you know? Okay, now we’ll go through the payments process at all of these different, you know, when you’re talking about the date, all of these different places, the restaurant, the theater, wherever you are, let’s kind of talk about the reality of getting there. You talked a little bit about the foundation and how we’re kind of laying the foundation in 2025 let’s talk about the things that need to go into that foundation to ensure that you know, if you’re enabling this type of experience, that you do have accountability, liability, trust, that you have all of those pieces in place in order to enable you know, The magical date experience, what what needs to be? What do you need to think about? What do you talk to your clients about?

Speaker 1 08:20:27
Yeah, the great, great question, Whitney and you actually, I mean, I think you actually really know that, like this is the number. Like the number, everyone goes, Okay, love the idea. How do we make it happen? Because one of the things that we now need to be able to do is, when you are bringing in, if you will, the agent that is fundamentally making these suggestions and enabling these transactions, you need to do a couple of things. One is be able to and they to have that person have control over that agent. I need. Be able to have the choices around everything from my budget to the vendors or the merchants that I want to be able to do, to be able to spend, to frequent. Pardon me, you know, I can see I want to be able to have preferences what I like and don’t like, I want to be able to authorize, maybe up to a certain limit, or the ability to say I want to change that in the middle of the flow. So I need to be able to give a level of personal control. That’s one piece. The second piece is within the infrastructural aspect, because now what you need to be able to have is participate. You know, ultimately, at the end of the day, you’re enabling payment transactions, which means you’re asking banks to essentially say valid person sending the transaction, someone saying, I could this is a valid receipt of a transaction. And now this is a valid agent, and this is an agent that should have been doing what it was doing, that was doing it in accordance to how I wanted that, that transaction to occur. And so you need to be able to create that ability to say, I have a valid agent, and it’s a valid transaction. The third thing that you need to be able to do is, in order is to be have all that is, you need to look at your operational aspects around how you support those transactions, so that when they do happen, if I come back later and say, Uh oh, that no, no, no, I got overcharged. I didn’t have five boxes of Raisinets. I had two right? How do I make that change? And people are able to look at that and say, Yes, that was the movie theater concession transaction. These other transactions were good in that chain. This is the one that they’re disputing. And how do I appropriately handle that? And similarly, I want to be able to see each and every one of those transactions if I look at it on my app or my statement, whatever the case may be. And so it actually involves securing the entire chain, from all the way to the front end, all the way through to how you authorize, settle and support and service that transaction, as well as adding in that additional level to ensure we have true agent to agent validation as well.

Whitney McDonald 08:23:35
Yeah, it kind of changes the authentication process. Who are you authenticating? Obviously, we’re all familiar with, you know, the biometrics or two factor authentication. Now you’re, you’re validating or authenticating agents that they should be making these decisions or, you know, approving these transactions. And obviously, with the guidelines or the guardrails that you mentioned to up to a certain amount, things like that are definitely important. But, yeah, those are all questions that that definitely come up when it when it comes to, you know, liability, you know, who’s responsible for these transactions?

Speaker 1 08:24:13
Well, you know you’re absolutely right. And, I mean, we did, we did some research, and exactly to your point, number, top two concerns. So, so the good news, if you will, is when we talk about these things, and we, you know, we surveyed consumers on the on, you know, on their preferences. We also surveyed businesses, and you have a majority, greater than 50% on both consumers and businesses that says, I want to try this. That being said, the flip side of that equation is when you list that, where are going to be the concerns around how you would use this to drive a good amount of the way that you make your your paying decisions. 58% said, Look, security, data, privacy hacking, number one concern. 57% almost the exact same amount, also said incorrect decisions that were being made. And so the other aspect to what you’ve said, and this is why we’re sort of doing this in this step function way, is as much as we want to roll out the great date, you know, Agent right now is you have to ensure trust, and that’s the number one thing, and that means prove that you can do a transaction in a trustworthy way, prove that you’re going to keep people’s data secure, prove that you’re not going to the agent Isn’t now going to run amok on what I’m doing or or, I think the other thing that we’re hearing is start to overly suggest things, and it turns from an agent that’s acting on my behalf to an agent that’s acting on someone else’s behalf and all like, and it’s now basically spamming me with, Hey, do you want to go on an. Their date over and over and over again, and you know? And that’s not what I want. And so the thing we talk to our clients about is create that level of security, focus on doing the basics right, but also design it so that it is acting in the best interest of the end user, and if you’re not, if you’re not doing it that way, then your level of adoption and your margin for error becomes extremely low.

Whitney McDonald 08:26:34
Now let’s kind of talk about 2026 here. We talked about 2025 what, where we kind of stood, what was, what conversations were had between, you know, you and clients. Now, 2026 what could be tangible experiences? Do you think we’re going to get to the, you know, the great date? Or do you, do you think it’ll still continue to kind of be like a pump, the brake, slow roll, maybe a hybrid of that. What’s your expectation for the year? Likely a hybrid

Speaker 1 08:27:08
and, and, and, I think the you know, I think we’re going to see some, some really interesting things be, be, be offered out there. It may not be the great date, but it may be certain things that perhaps are linked purchases around a common topic, such as, you know, as an example, travel might very well be an interesting one, where you kind of, you know, you think about things that are commonly linked. You bought the airfare. Do you need a hotel? You bought a trip? Do you want to add a sightseeing package? Things of that nature? I think we’re going to look at what I would say is more tightly connected, coupled transactions that are going to be there, are going to be brought out there. There’s still a lot of work. And I think we’re going to see that kind of hybrid attempts kind of come as people will really want to test right the efficacy and the safety of the agents. I also think, you know, we talk a lot about the things that we can experience every single day. I would be remiss. I think we’re going to see a lot of movement on the infrastructure side with agents. I think we’re going to see that on servicing. And I think we’re definitely going to see that on fraud. And I think we’re going to see a lot of, how do we ensure that, you know, agent to agent transactions are going to be safe and secure. And so I think we’re going to see a little, a lot of that, you know, if you will, the stuff you don’t see the middle, back office side of payments happen on the agentic side. And I think you’re going to see a couple of these hybrid rollouts, and then maybe we’ll get to the great date agent as well.

Whitney McDonald 08:28:51
You’ve been listening to the buzz a fin AI news podcast. Please follow us on x and LinkedIn, and as a reminder, you can read this podcast on your platform of choice. Please be sure to visit us at finaI news.com. For more finaI News, thanks for listening. You.

Transcribed by https://otter.ai

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Whitney McDonald

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January 6, 2026
FinAi’s ‘The Buzz’: Bank and fintech CEOs talk AI Strategy, fraud defense and lending growth

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FinAi leadership took to “The Buzz” podcast in 2025 to discuss approaches to AI.

Chief executives from banks and fintechs shared insights on AI strategy, how to combat fraud and opportunities for AI-driven lending.

The following CEOs sat down with FinAi News in 2025:

Austin Capital Bank CEO Erik Beguin on AI-driven fraud

AI is part of the problem and part of the solution for fraud at large, Austin Capital Bank CEO Erik Beguin says on this episode of “The Buzz.”

Fraudsters are using AI to target individuals, read social profiles and identify the best way to attack a person, he says. The technology streamlines a laborious task for bad actors.

Listen to Beguin on this episode of “The Buzz.”

Casca CEO Lukas Haffer on opportunities for AI in small business lending

For small business owners, the “No. 1 problem is access to capital,” Lukas Haffer, CEO of AI-native loan origination provider Casca, says on “The Buzz.”

Listen to Haffer on this episode of “The Buzz.”

White Clay CEO Mac Thompson talks 8 steps for AI implementation

Financial institutions are implementing AI at scale, but logistics should be the focus before diving headfirst into emerging technology, Mac Thompson, CEO of software provider White Clay says on “The Buzz.”

He shares eight steps for AI strategy, including building a business strategy, prioritizing market research, organizing data and more.

Listen to Thompson on this episode of “The Buzz.”

Register here for early-bird pricing for the inaugural FinAi Banking Summit 2026, taking place March 2-3 in Denver. View the full event agenda here.

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Whitney McDonald

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December 30, 2025
Podcast: Rabobank, Santander Brazil see returns from Pega GenAI

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Rabobank and Santander Brazil are seeing efficiency gains from generative AI.

The European banks use Pega GenAI from AI workflow automation system provider Pegasystems, Steve Morgan, global banking industry lead at Pega, tells FinAi News on this episode of “The Buzz” podcast.

Santander Brazil, for one, is using Pega GenAI in legal operations to automate screening, reduce risk and free up human capital, he says. Pega GenAI allows the bank to interpret legal terms with 99% accuracy.

When Santander Brazil introduced gen AI, “they took what I think is a very sensible approach,” Morgan says. The bank pointed the technology to documents with the proper procedures, policies and escalation paths to see how good it could be with strict guidelines.

Listen to “The Buzz” as Morgan discusses how gen AI is being used at financial institutions.

Register here for early-bird pricing for the inaugural FinAi Banking Summit, taking place March 2-3 in Denver. View the full event agenda here.

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

Whitney McDonald 12:01:05
Whitney, hello and welcome to The Buzz a fin AI news podcast. My name is Whitney McDonald, and I’m the editor of fin AI news. Fin AI news has rebranded from bank automation news, marking the next step in our mission to lead the conversation on innovation in financial services technology. Joining me today, December 16, 2025 is Steve Morgan, global banking industry lead at Pegasystems. Steve is here to discuss how banks are using generative AI, including best uses of the technology, and also where Gen AI might not be the best fit. Thanks for joining us, Steve.Steve Morgan 12:01:36
Well, thanks Whitney, thanks for having me on. My name is Steve Morgan. I’m pega systems, global banking industry lead. And Pegasystems is a AI and workflow automation company that’s been around for 40 years. Great.

Whitney McDonald 12:01:49
Well, we’re going to talk here about the rush of getting into generative AI. It’s not necessarily a surprise that folks are interested in Gen AI and financial services, but they obviously need to, they need to weigh, you know, the benefits and the risks, speed to market and compliance, and sometimes that isn’t the case. Maybe you can kind of talk us through what you’ve seen in the space in terms of balancing that, that want for competition, but also the need to pay attention to compliance. Yeah, it’s

Steve Morgan 12:02:22
been, it’s been a really interesting journey the last couple of years as generative AI has become mainstream, and yeah, for sure, I can show you, share with you, some client examples and what we’re seeing in the market. I mean, what we did straight away was think about how, how and where is the best place to build into our product. And when we thought about that, we thought about in the context of clients. I work in the banking sector and in the most common focus for improvement and application of AI in general, AI and automation is sort of in broadly, sort of three big categories. One’s around customer engagement, one’s around customer services, and then operations more broadly. And in the last two years, we’ve seen clients look to understand the possibilities, the art of the possible experiment. Experiment internally, sometimes first and then do something external, client facing. And I think what’s become more important, important interesting debate is, let’s think about the business outcome first. Let’s think about the right kind of AI for the right use case, and where we need AI, where we where we don’t need AI, where we just need something rule driven or process driven to achieve the automation and the customer outcome.

Whitney McDonald 12:03:34
Yeah, I think that’s really important, identifying that need first, rather than working backwards and saying, You know what we want, AI, we want to be able to, you know, attach AI to the to the name or the brand, and then kind of determining where to put it later. Maybe we can talk here through what the risks of doing that backwards approach is what you might encounter.

Steve Morgan 12:03:56
So yeah, I think with any big program of change, or even small program of change, you need to think about, yes, as we said, the outcome first, and then how you’re going to approach the project and the change management. And if you do that, and you look end to end, to end of the whole process, you’ve got more chance of success. What we have found is in some organizations, there’s a real desire to experiment, test things out, try things, and if that’s not done in the context of the outcomes and the change management, project management, you can get issues, and it’s widely known, and in fact, there’s been almost like new words created about hallucinations, conflict, conflagrations, which is basically mistakes that generative AI can make, which is different, to say, statistical AI or machine learning, which is very disciplined, can learn and react and create predictions. So maybe forgive you, an example might bring it to life with a client, how they’ve approached it, which I think is very sensibly so rabobanks, a decent sized European client of ours, and they looked at a very important use case internally, which is helping customers manage financial, economic crime and processes around that. Clearly, it’s one of those like moments of truth for for a customer, how well the bank deals with that? So they wanted to see, firstly, how could they apply AI and automation to improve the performance their staff who are dealing with the customer, who are solving the issue, or getting to investigating it, getting to the bottom of it, and they used a combination of our technologies and others to to really improve the knowledge, the guidance, the coaching to their teams. They still had a person doing doing the doing the work in the large percentage of cases. But even if a person was involved, they had the ability to trigger automations. The generative AI let them do conversational like chatting with the policies, procedures, all the internal docs, and then they could trigger a workflow automation into our systems that could get the work done automatically. They did that internally, and they actually talked to our conference this June, just gone about going from millions of dollars of losses to 1000s of dollars of losses, which is brilliant, brilliant outcome for the customer and for the back. Bank, they then decided to take it to the next level and look at external facing, customer facing examples where the technology is fully exposed, and they, like many organizations, had a number of different chat bots or intelligent virtual assistants. And one good use case is plugging generative AI so it can become more conversational, more access better information so that you can get a better interaction with the customer, and also then a better, more clear action to complete for the customer. And they’ve been doing that with a couple of their their agents and and I think that’s an approach we’re seeing most most banks take. Is look at some internal use cases, you know, have a look at how what the outcome can be. And then look at some external customer facing use cases off the off the back of in some internal success.

Whitney McDonald 12:06:52
Yeah, that’s definitely something that we have been seeing and following as well. Using those internal use cases first kind of being able to practice and see how it works within, within the company, before deploying anything on the Gen AI side externally. Do you think coming into 2026 we’re going to see more of those forward facing, client facing, Gen AI applications?

Steve Morgan 12:07:16
Yeah, definitely. We’re already seeing a few. I mean, two weeks ago, I was at one of the large retail banks in the UK. They’ve got a tool which does, does take some if you’ve got any extra deposits in your account, it will sweep it and put them in a like higher interest saving or invest them, if you want to. And they were talking about that tool and saying it’s quite basic. It’s quite basic automation at the moment, but they want the ability to trigger like a next best action for the customer, and even trigger potentially either the customer automatically decides, you know what, there’s enough there. I want to invest it in the market, or put it in a term deposit or something else, or I’d actually like to talk to someone and get some wealth advice, some investment advice, and advice on my pension. So it’s taking a simple say, automation and making a bit more advanced. And then we had a client this year, actually, Santander Brazil, and they did. They talked as well at our conference in June, who took a really interesting case, a very important area as well for a bank of legal operations. And they wanted to not only improve the internal operations of it, but for the customer. You can imagine, with legal cases, you know, banks have to provide information to the client, to the judge, to the lawyers, plus they have to use a bunch of lawyers sometimes review documents, and no one likes paying money for lawyers. So they looked at, how could they improve that process, both internally and the client facing aspect. And when they introduced generative AI to it, they took what I think is a very sensible approach around going, we’ll point it just internally, at documents we know are the proper procedures, the proper policies, the proper escalation paths, and we’ll see how good it can be. When they first did it, it was 67% accurate, which is not good enough. Their best staff member doing it was 95% accurate. So they trained the model with experts in legal and legal operations area. They trained over a period of three months, and they got it months, and they got it to 98% accurate, so better than the best person doing that role. And some of that role was taught boring stuff, you know, like 200 page documents, extract the information, analyzing it. So they enabled some boring work to be made redundant. They redeployed people into some more interesting stuff, which is like, you know, I have to talk to you, Whitney, the lawyer, or I have to talk to the customer and give them certain documents and stuff like that. And the best result of all wasn’t removing the redundant work. Wasn’t removing the the steps that were unnecessary or boring. The best result was for the client that the service levels went to like 96 to 100% and the service levels used to be sort of 50, 60% you know, like, so I mean that great outcome for the customer and also for the bank, because they they’re freeing up staff to do much more interesting work.

Whitney McDonald 12:09:55
Yeah, that’s a great example of how it’s, you know, improving internal operations and what you you know, have to do manually or not, but also improving that a customer experience. It kind of shows both sides of shows both sides of the coin. So thanks for that example. Now I want to talk through this idea of prompt and pray that you’ve mentioned before. Obviously, with generative AI, you need to have the right prompt you talk through the training and why that’s important, maybe kind of tell us what prompt and pray means to you and how financial institutions can avoid that, you know, I hope this works.

Steve Morgan 12:10:31
Mentality, yeah, we have a I adhere to this personally, but the company, we have a firm view on this, which is grounded, wouldn’t surprise you in our workflow automation or process policies, background, any important piece of work at a bank has policies, procedures, escalation, paths, you know, audit, risk oversight, right? And then, in many cases, regulatory oversight as well. Just because we’ve got new AI and automation tools, none of that stuff goes away. None of that stuff goes away. So if you want to replace a person with an AI agent, they still have to follow so. And policies, procedures, escalation paths, oversight, checking, you know, QA, so you know the prompt piece, prompt and pray piece is referring to people thinking they could just use a generative ai, ai agent, not grounded in policies, procedures, escalation paths, not grounded in a repeatable process with clear stages and steps, and, you know, almost allowing it to have some element of creativity. Well, are you really going to want creativity when someone’s making a decision on a small business loan or a home loan with with the bank already has a set risk appetite. They have a set risk profile of customers. They want to lend to, amounts they want to lend, exposures they want so there’s an, there’s a, there’s a chance of doing a misusing generative AI, which can be good for creativity, good for summarization, good for pulling information out. But unless you point it and tell it to have no creativity and just look at a certain set of documents, you can you can have mistakes coming up. You could have errors, or they call them hallucinations. I hate that word. It’s errors. It’s mistakes. And you there’s no tolerance for mistakes or limited tolerance in today’s processes, even if they don’t have some AI and automation. So Why would, why would you treat those procedures any differently by applying AI and automation?

Whitney McDonald 12:12:23
Jeremy, yeah, yeah. I think that’s great. And I think that it’s it’s a great reminder that you need to have those policies in place. You need to have, you know, some sort of guardrail that’s still going to allow you to be compliant, still operate how a bank operates.

Steve Morgan 12:12:39
Just, yeah, yeah. The other thing I thought, You mean, it’s important to think about, is this is auditability, Governability, transparency. I mean, we’ve, we’ve had built into our AI for at least seven or eight years now what’s called a transparency switch on our decisioning AI, which is for next best actions, next best decisions. But the most important thing that we’ve done, I think, is look at being being able to be transparent and clear on what’s the AI doing. So, whether you’re using predictive machine learning AI, whether using generative AI, whether you’ve got an AI agent, it needs to be explainable to the level, like a bank has to do today when they go to the when they have to go and see their regulator once a month, with the chief risk officer and like head of credit assessment or lending, and say, how are your algorithms working? How are your decisions working? Are you seeing any uptick in collections when you’ve changed your automated lending procedures? Have your manual procedures stayed in line? How are you checking that your people are doing the right thing? Same thing applies to an AI AI agent or AI or automation. How do you know it’s operating the same way? How do you know what’s happened when you’ve made a change? How have you made sure it’s gone consistently across all channels. How has it gone consistently across your staff? What’s the customer experience? So I think there’s a huge element there which people underestimate, that any regulated industry, but especially banks, have to, have to and should comply with so that they can make sure that the outcome is the right one for the customer ultimately,

Whitney McDonald 12:14:05
yeah, I’m glad you brought up auditability, because you need to be able to follow that path backwards of how certain decisions were made, or, you know, what, what was presented to a client. You have to be able to, you know, cross those t’s and dot those, i’s along the way. That’s 100% necessary. Now, you mentioned a couple of examples with some of your clients. Maybe we could go a little bit further there and talk through some use cases, both on what Gen AI should be used for, what are some good applications, and then maybe what it’s not ready for, what it should not be used for? Where’s the risk not worth it?

Steve Morgan 12:14:38
Yeah, sure, it’s a really good question. So and we like to stay in touch with the market through both our clients, but also our partners that are really important that we work with. And in fact, it was just three weeks ago I had like, the heads of banking from our key partners, you know, like Accenture, ey, cognizant, Capgemini, et cetera, get together, and I actually asked them this question. I shared with them a list of, like, sort of our main pipeline areas and areas of focus with banks. And I said, which areas are you guys and girls all seeing as being the key areas for the application of agentic AI and Gen AI. And there was unanimous agreements that there was, you know, a couple of main areas where it’s really applicable and is being looked at and will be used more next year. And I think the first one is definitely customer service and operations teams, which most operations teams now have a an element that touches the customer, an element that doesn’t touch the customer, non customer facing. They have a mix generally. So those areas of customer service, which people tend to think of as contact centers and area and branches, and then operations, which tends to be everything that is everywhere else, but still customer facing and non customer facing, those are some of the best use case areas for the application of Gen ai, ai and automation more generally. And part of the reason for that Whitney is because they are large cost pools for the banks. But the real other important thing is there the service levels sort of give you a very good goal. Of how happy the customer is, whether they’re going to be thinking about renewing whatever they’ve got product wise with you, like a home loan or extending and using other products. So they’re a good influencer to the revenue stream as well. The other area I’d highlight would be just broadly, the one of customer engagement, where, wherever you’re interacting with a customer, whether it’s digital and digital only, or whether it’s with a combination digital and getting, you know, really seamlessly or frictionlessly to to a person to help. I think that, again, is a critical area where you can use generative AI with no create with limited creativity. So you could almost set the creativity to zero, but get it to help with procedures, policies, options, and then at a certain point, either the customer might request, you know what, I want to talk to, someone live, or the bank may go, You know what? This is a point where we should intervene to give them some advice, discuss some options. Yeah, so I think there’s, broadly speaking, those, those the main areas, the areas where you don’t want to use, we don’t use use any creativity linked to generative AI, but you could still use elements of generative AI for like summarization type things could be areas like payments, payment exceptions, payment disputes, payment fraud, where there can be quite complex cases, quite wide ranging, especially on the commercial side. So there, it’s quite handy to have something like generative AI that can help you summarize it, summarize the situation, summarize the case. But again, it’s again looking internally. It’s looking at your fact base, your knowledge base. It’s not what some people think of as Gen AI as a large language model that’s public and being used, you know, for everyone on their mobile phone, for example. So I think the other areas where you’d stay away from would be similar to, like the payment fraud dispute example, areas where it’s it’s very clear, and you know, very clearly set what the process is, the policies are, and there’s a high amount of interaction. So unless you want some conversational element, Gen AI is probably less applicable in some of those examples.

Whitney McDonald 12:18:06
I’d like to close out with with this final thought of, let’s say you’re an institution that’s looking into Gen AI, approaching it, you know, kind of starting to think about what their what their pathway or journey to Gen AI should be, what would be step one before taking on a project. You know, you can, you can think about, what will the returns be? Or, you know, how will this improve our operations? But really, what’s step one? If you take it down to the bare bones,

Steve Morgan 12:18:36
I think step one is, what’s the art of the possible? You know, if you’re there, thinking about your area, whatever processes, whatever area you’re working at in the bank, what is the art of the possible. And then when you think about the process and what’s possible, you then, obviously, by implication, look at how to transform, re engineer the process, but also what supporting technologies can do. So So you look at the non technology and technology aspect of an end to end process, and yeah, think where do you want to get to and what’s possible? And I there’s a number of clients doing this in different ways, having different ways, having things like hackathons, where it’s a mixture of idea generation, plus using technology to come up with a, you know, a prototype solution quickly, in a matter of hours a day. I think those sorts of things are very effective, because then you’ve got some ideas gone through some process, you’ve looked at Tech and non tech processes, then you can put together a really strong business case, get support and put together a good project team, you know, after that. So I think that some people call it ideation. I don’t particularly like that word. Things are made up word, but yeah, like sort of

Speaker 1 12:19:37
creating ideas, ideation and hallucination, yeah, made up words.

Steve Morgan 12:19:43
It’s basically coming up with the ideas and where you want to focus, and then that leads to everything else. I do think Gen AI and AI and automation right now has such a big impact potential on most industries, especially banks. I do think the change management pieces are going to come more and more important because it’s affecting it will affect lots of people’s jobs, processes, the way things are done with the customer, so the change management becomes critical with

Whitney McDonald 12:20:08
all of it. Well. Thank you so much for joining us on The Buzz. It was a pleasure to have you and talk about all things. Gen AI, looking forward to having another conversation about this in the future.

Steve Morgan 12:20:17
Thanks very much. Whitney, it’s been great being on thanks.

Whitney McDonald 12:20:22
You’ve been listening to the buzz a fin AI news podcast. Please follow us on x and LinkedIn, and as a reminder, you can rate this podcast on your platform of choice. Please be sure to visit us at finaI news.com. For more finaI News. Thanks for listening. You.

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December 16, 2025
Podcast: White Clay CEO Mac Thompson talks 8 steps for AI implementation

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Financial institutions are implementing AI at scale, but logistics should be the focus before diving headfirst into emerging technology.

Mac Thompson, chief executive of software provider White Clay, tells FinAi News the eight steps he shares with financial institution clients when approaching AI on this episode of “The Buzz.”

It is also essential to define AI in terms that are applicable to your institution, he says. “Write a one-page definition of what AI means to your financial institution, bank or credit union.”

Listen to “The Buzz” as Thompson explains how FIs can get their institutions ready for AI.

Register here for early-bird pricing for the inaugural FinAi Banking Summit 2026, taking place March 2-3 in Denver. View the full event agenda here.

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

Whitney McDonald 08:11:48
Matt, hello and welcome to The Buzz a fin AI news podcast. My name is Whitney McDonald, and I’m the editor of fin AI news. Fin AI news has rebranded for bank automation news, marking the next step in our mission to lead the conversation on innovation and Financial Services Technology. Joining me today, November 25 2025 is Mac Thompson, CEO and founder of white clay, Mac is here to discuss what financial institutions must consider when implementing emerging technologies from data strategy, basic business goals and talent. Thanks for joining us. Mac.

Mac Thompson 08:12:19
Awesome. Thanks, Whitney, hi. I’m Mac Thompson. I’m CEO and founder of white clay. We started about 20 years ago. My partner and I left bank of Bank of America and our last jobs at the banks before we left. And for about 10 years, we were a custom software consulting company, and we pivoted about nine years ago to a more SaaS model. Took us a couple years to do that, but we’ve been in business. Our clients range from about three 50 million in size to 200 billion, and we help our clients build deeper, more profitable relationships, and one of the ways we do that is embedding a lot of intelligence about the clients, utilizing very large data sets from transaction data and account types of all kinds. So very excited to have the conversation. Great.

Whitney McDonald 08:13:06
Well, we will get into all of that. Let’s kind of take a step back first. Let’s start with the state of AI adoption. We’re really at a place now where it’s not so much if financial institutions are going to be implementing AI, but rather when, obviously it comes down to size, capital, resources, priorities. But where does AI adoption really stand today?

Speaker 1 08:13:32
Well, I think probably one of the challenges in answering that is what? Because a lot of this is a definitional thing, because AI has been in banking for a long time, there’s about 20 different technologies that are kind of AI Artificial intelligence related technologies, and some of them I used, we were using back when I was at the Bank of America a long time ago. I think a lot of AI now is more large language models, generative AI, and that’s how a lot of folks are defining it. So I think adoption of some kind is pretty high. It may be as simple as someone on a personal level, signing up for it in terms of generative or large language model kind of usage. But most of the fraud models, most and a lot of the customer service models, chat bots, particularly, and things of that nature, being using some version of AI for quite a while, a fraud particularly. And so while most banks are using that and it’s more mature, a lot of the smaller ones are getting into it, I think the giant nationals are much further along in building their own internal, large language models, trained by themselves, built internally, utilizing their very large, comprehensive, statistically relevant data sets. And so there’s a large variation in that capability, but the nationals are definitely leading the way in terms of pure capability.

Whitney McDonald 08:14:57
Now when it comes to questions that your clients are asking about implementation, and maybe we can kind of lean more toward the emerging AI technology, what are they asking of you? What are kind of those questions that come across your desk that you kind of see a little bit over and over

Speaker 1 08:15:15
again? So I used to have a, I used to be a CFO when I was at the banks. Is one of my jobs. And I switched over the, you know, the dark revenue side, which is a lot more fun, the dark side, yes. So the, one of the questions I ask is, what’s going to be the ROI on this, the return on investment? And I think it’s a challenging question, especially the emerging AI technologies. I mean, the study from MIT, it came out in July, basically that 95% of projects don’t generate any discernible financial benefit. They may be benefits, but it’s not necessarily financial. Those 5% that do them have pretty outsized benefits from it. It’s one of the high levels from that. And I think when I answer the question about, How do you determine ROI, I said, I don’t think you should be worried about ROI at the moment. It’s like the internet in the early 90s. Mid 90s, it’s going to mature, it’s going to have much better use cases and return on investment cases, but as an organization, you’re going to have to think about what it means to be aI empowered, AI powered as an entity, and that’s a journey that’s not just technical, that’s a Cultural one, and just how you think about yourself, a paradigm almost. So the ROI question comes up a lot because they’re like, Well, should I go invest a lot of this? And one of the other things, if you’re a very small bank, going out and hiring three or four AI scientists is probably not going to be your best return on investment. You know, you’ve got 120 people in your. Company, you’ve got more people in your AI department than you do in your IT department. Probably not going to work out great, so partner up with some people would be my recommendation on that. The second thing that probably comes up biggest is data. And it’s, is my data ready? And the answer for most folks is, no, it’s a mess. It’s not it’s got all kinds of issues, and you’re gonna have to work on that. The other thing about data, though, is it’s not an end state. You need to start working on it. You need to start using it. By using it, you’re gonna figure out what you need to fix. You aren’t have perfect data before you start using AI,

Whitney McDonald 08:17:29
yeah, I think that those are two things that we have definitely covered on our side as well, that ROI that has to be a hard mindset shift, especially coming from a CFO background, that maybe the ROI doesn’t need to be the top priority at this exact moment. Now, let’s kind of talk through this eight step process that you have, that you share with clients. You have these, these eight steps that you share when approaching AI and implementing AI, that should be top of mind. Can you talk us through those?

Speaker 1 08:18:01
Yeah, I’ll sort of walk probably with you all eight steps. But that really starts with, what do you try to do business wise? So a lot of technical reason why the ROI on a lot of technologies, including AI, don’t work, is that the technology investment wasn’t grounded in a business something you were trying to do. And so, you know, I think the MIT article actually came back to the number one challenge a lot of folks are having is integrating these new AI technologies into their workflows and the work processes and all that. So the first thing is figure out what you want to do business wise. And then second part of that is determine if there’s any of those things you want to do where AI would be very helpful to you. And you kind of just start with those basic business questions, because if there’s not really anything that AI can help you with, and what you want to do business wise, you got to think about what you’re doing. Probably the next two pieces we just talked about the data piece. Start working on your data governance. Start working on a data strategy. Start down that data path. It’s going to be a path. Don’t try to bowl the ocean. Don’t go out and hire 12 vendors to work on your data. Starts more slowly but deliberately, working on evolving your your data capability. But with a data capability also comes to people, is that you’re going to have to you’ve got large teams that have worked with you, that love to work, take care of your customers and all of these things, you have to come up with a way to help develop that talent. So as you’re developing strategy in parallel to that, you’ve got to develop your organization’s human capital capability to be able to start thinking about these technologies. Not that they have to be experts, but they have awareness and they can what they need to do. You know, probably the I’ll actually stop, I’ll stop one. There’s one thing I probably do to start on all this, though, write a one page definition of what AI means to your financial institution, bank or credit union. So when you’re talking about AI, are you talking about generative AI? Are you talking about large language, whatever that is. Just to find the terms, because I’ve been in rooms with 20 people in there, there’s five different definitions of AI being used, and they don’t know what it is. So that that common language around what this is, it gives you a basis to start working on education. But the first is that when you’re using terms, that everyone knows what those terms mean. And if you have a vendor or someone coming in, it’s also helpful, because you can define the same terms. So when they tell you something, you may think they’re saying X when they’re really saying y. So it’s probably one of the first things. Don’t overthink target, like where you’re going to be in three years on this? Because we don’t know, there’s a lot of people coming up with AI strategic plans for five years, and I don’t know how in the world they’re ever because if you had talked gone back three years, what would we have been talking about, right? It wouldn’t have been this. So don’t overthink that. Don’t overthink long term tech strategies. Unless I’m not talking about the giant nationals. I’m not talking about even some of the Super Regionals that are making very large investments, talking about most of the banks out there. And probably one of the more important pieces around all of this is how you start thinking about governance, around your data, around models you may use this to help empower decisions with does it have any regulatory impact? Are you creating unintentional bias and things that you’re doing? And you know, all these sound kind of complicated, and they are, well, what helps is don’t try to solve everything initially and just start the journey, because it’s going to be a journey we’re going to be on for a while, and it’s going to take a bunch of different turns. And. It’s all right, but just start. I would say, start the journey is probably the first thing. I would say,

Whitney McDonald 08:21:57
Yeah, I like what you mentioned there about, you know, you don’t necessarily have to have that three to five year strategy in black and white. Just start. And I also like what you mentioned too, about, you know, defining what you’re really trying to solve for? Create that one page plan for your institution specifically. Don’t just invest in AI for the sake of saying that you’re doing it. We’ve seen that, you know, backfire a little bit too. But making sure that you have a definition, what are you trying to implement? What are you solving for? Is it, you know, not just using AI as a broader term, but do you want an agent? Do you want a chat bot? Do you want X, Y or Z? And I think that having a really simplified, a simplified document that says exactly what you’re solving for is a great place to start. Do you

Speaker 1 08:22:47
because one of the things I’ve seen a lot of boards are just we have to be an AI. They have no idea what that means, but they’re demanding that their bank, whatever or credit union, whatever institution, be involved in AI, even though they don’t know what that means.

Whitney McDonald 08:23:01
Now looking ahead to 2026, we’re seeing more real applications. We’re seeing more efficiency gains, we’re seeing more manual processes being replaced. What are you watching for, for 2026 what are some of those tangible use cases of AI that you think are gonna pop up? What are you excited about? What are you hearing from, from white clay clients?

Speaker 1 08:23:27
Some of the ones that are more tangible are the operational automations of workflows where we’re pushing paper around, right? I mean, it sounds funny, but we banks, we push a lot of paper out. Even where we have automated systems, there still seems to be a lot of paper going around. So I think that this isn’t really large language models doing this. This is more text paper to text to and then how you embed it all more workflow oriented. Lots, lots of folks are doing that on a practical level, and they can get some efficiencies, because they’re essentially digitizing processes. One of the things I think is a challenge is they’re digitizing the legacy processes, not thinking about, if I had this technology, how would I, how would I not even use this process? I would just do something completely different. And this is banking, and we’ve been doing this for a while. And when we basically automate cow paths, you know, where cows walk from one destination to the other, they build these paths. And a lot of roads are actually built on these old legacy wilderness paths that animals, Buffalo and whatnot, would create. And a lot of what we’re building is automating those, digitizing those paths. And I think the really big step this goes back to your business. What are you trying to do? If you really thought about do I even need to do half the stuff that I do is where there’s tremendous opportunity and efficiency and impact, because we, right now are doing a lot of digitizing of legacy things. So we’re seeing that that’s on the more operational, trying to get some efficiencies right now. The other thing that is out there is this movement from and this has been gone up a little bit, but we ran into this headlong you originally think about a spectrum where you go from offers to insights to recommendations to solutions. A lot of folks are using AI and other technologies to create all these offers, next product, logical product and things, product pushing on a way the other thing we got into is we’re generating insights. And here’s all these insights that we can now generate, and our ability to generate insights has massively outpaced the ability of the people in the field, they’re interacting with clients, to do anything with these insights. We did this ourselves. We’re guilty of this. We created, you know, we had couple 100 insights per client, and that, you know, in a branch may have 2000 clients. And so what do you do with all so what I’m seeing is coming up is, how do you take all of this, simplify it, and turn it into something that can be really constructive for both the client and the bank. And that is, I think, the next evolution of all this, and that’s getting into agentic, is one word. But agentic, of course, means 25 different things to all kinds of different people, right? I mean, they Gartner’s symposium down in Orlando. You know, agentic was, you know, agentic AI and a Genty web was buzzwords that are out there, but what it means really depends on the problem the person. But that concept that we’re going to be able to take all of this intelligence and put it in motion, put it into action, is, I think, the next evolution, and I see some people trying to get into that. There’s vendors trying to do it. There’s things trying. Union is trying to do it, but I think that agentic evolution is coming, and it probably will be talking more about agentic in 26 than we were talking about generative, because it’s basically, how do you get a personal assistant? That’s this agentic agent doing things for you instead of but once again, we’re probably back to automating Cal pass, because we’re trying to get them to automate things that we currently do. I think the next generation, which probably a 27 thing, is when we’re starting to get into the agentic web, where the web is more like a resource we interact with that we have people go do things with. What happens to the web was a more proactive agent for you, instead of a resource, it more empowers how you were thinking. It’s just a very different way of interacting with these massive data sets that are out there, kind of scary in some ways. I mean, people run into that, but I think, you know that’s kind of longer term where we’re going. But in general, it’s how you start taking all these capabilities that we’re building, that we have created and beginning to integrate them in a way that makes people’s lives actually simpler. Because right now, we’re actually making life a lot harder for a lot of our bankers. We’re trying to help them, but we’re just give overloading them with so much stuff they can’t use it. And how do you how do you get that value out? I think will depend upon us simplifying it, making it more actionable, more simple, and I think that’s where we’re going.

Whitney McDonald 08:28:15
You’ve been listening to the buzz a fin AI news podcast. Please follow us on x and LinkedIn, and as a reminder, you can rate this podcast on your platform of choice. Please be sure to visit us at finaI news.com for more fin AI News, thanks for listening. You.

Transcribed by https://otter.ai

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Whitney McDonald

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November 25, 2025
Podcast: Austin Capital Bank CEO Erik Beguin on AI-driven fraud

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Fraud is on the rise, and AI is contributing to both the solution and the problem.

“Fraud is a really large problem and growing exponentially,” Austin Capital Bank Chief Executive Erik Beguin tells FinAi News in this episode of “The Buzz” podcast.

Consumers reported losing $12.5 billion to fraud in 2024, according to the FTC.

And that’s probably understated, Beguin says, noting that not all consumers report being defrauded, due to embarrassment, being in denial or other reasons.

Fraudsters are using AI to target individuals, using it to read social profiles and identify the best way to attack a person, he says. This streamlines an extremely laborious task for bad actors.

On the other hand, FIs are using AI to boost account security, Beguin says. For example, consumers and financial institutions are likely to start moving away from usernames and passwords and even traditional multifactor authentication methods. Instead, the market should move toward biometrics and AI-driven device and image authentication.

Beguin will speak at the inaugural FinAi Banking Summit in Denver, during the panel “Gen AI in the ring: Fight against fraud” on Tuesday, March 3, at 1:15 p.m. local time. Register for the FinAi Banking Summit here to take advantage of early bird pricing.

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

Whitney McDonald 12:04:39
Whitney, hello and welcome to The Buzz a fin AI news podcast. My name is Whitney McDonald and I’m the editor of fin AI news. Fin AI news has rebranded from bank automation news, marking the next step in our mission to lead the conversation on innovation and Financial Services Technology. Joining me today, November 18, 2025 is Eric begin, CEO of Austin capital bank. Eric is here to discuss the state of fraud in financial services today and how to navigate an environment where AI is both streamlining fraud for bad actors and supporting security at FIS. Thanks for joining us, Eric. Well,

Erik Beguin 12:05:14
perfect. Whitney, thank you so much for having me. Yeah. So Austin capital Bank is a bank located in Austin, Texas, we’re about a half a billion dollars in assets growing pretty rapidly. I think we grew about 60% in assets last year. And we specialize in digitally delivered products nationwide. We build our own, say, FinTech products. We have products for credit building. And our most recent product that we’re launching is a product designed to protect American consumers and small business from fraud. For my part, I’m a non traditional banker, and I really think about banking in community as a set of consumers or set of small business owners with common unmet needs, versus being geographically located in close proximity. So we serve customers in all 50 states across the nation. Perfect.

Whitney McDonald 12:06:03
Well, you mentioned one of the products that you have is to address the state of fraud today. Let’s kind of talk big picture. We’ll get into what you guys offer, and we’ll get into Fort Knox specifically. But why don’t you kind of tell me about where we stand today, the state of fraud from that, from that broader lens,

Erik Beguin 12:06:22
Whitney perfect, fraud is a really large problem and growing exponentially. There are estimates for fraud range anywhere from like, I think there’s an FTC estimate from $12 billion of consumer losses a year to the Aspen Institute just put something out that estimates fraud might be $150 billion of losses to Americans in just one year. And when whatever those those numbers are, they’re actually understated, because when somebody is the victim of fraud, sometimes they don’t realize they’ve been defrauded. Sometimes they’re in denial that they’ve been defrauded, and sometimes they’re just too embarrassed to tell anyone that they’ve been defrauded. So whatever the fraud numbers are, and they are large and growing rapidly, they’re understated. So fraud is a massive problem, and it might even be a what some might consider a secure national security threat at this point.

Whitney McDonald 12:07:13
Now, we can’t really talk about fraud or financial services or anything these days without talking about artificial intelligence, and just like financial institutions and tech providers are investing in AI, fraudsters are obviously also leveraging the technology to defraud people. How is fraud making it easier for fraudsters? What are some of those threats that financial institutions and consumers alike should be watching out for

Erik Beguin 12:07:41
Yeah, that’s a great question, Whitney, and what, what really has happened is fraud has moved from, you know, the hacker and the hoodie in their mom’s basement into large corporations with 1000s of workers. And I use the word workers intentionally, not employees. These are people who are usually tricked into coming into some country where they’re essentially held hostage, and the companies are run by criminal syndicates in these safe haven countries, and there might be 1000s of employees in a compound, and they are using the very best in technology. They’re investing in technology because they’re making billions and billions in dollars a year in fraud gains. And they turn around and they use that, and they vest it to just like a business, right? They’re in the business of fraud to maximize the gains they get. So they have the best tools, they have the best technology. There’s actually training on psychological how to psychologically break somebody down, and then these workers are punished if they do not bring in money. So what might they do? So in the past, every American should know that all of our information has been sold and is available readily on the dark web. And so in the past, I would say these efforts were more broad based and hodgepodge by these companies, but with AI, they can now specifically target an individual consumer. They would say, like, I want to target Joe Smith. And they will have aI get all the information for Joe Smith, and then specifically target Joe Smith. Like, where does he bank? What’s he involved with? Go read his social profile, all these things, and then then decide on the type of attack they might do using AI, and before this would be an extremely laborious process, taking a lot of hours, and just like a normal business, like they want to invest, they want to get the maximum return on the hours they invest, but with AI, they just accelerate those efforts and make them much broader, so that. Red is growing exponentially with AI.

Whitney McDonald 12:09:42
Now I kind of wanted to talk a little bit here about what to do to prevent that fraud. Watch for that fraud. Authentication is one of the topics that I wanted to talk through, and that also kind of bleeds into Fort Knox as well. But authentication isn’t always, you know, the perfect solution. What are some examples of authentication that should or maybe should not, be trusted,

Erik Beguin 12:10:04
perfect. So authentication for for years now, we’ve been using usernames and passwords. Everybody’s got usernames and passwords, and everybody has too many username and passwords so they can’t remember them. So most people actually recycle their username and some passwords. And the bad thing is, is, if the hackers ever break into one website with your username or password, and I think it’s something like I had the stats here somewhere, it’s like 60% of Americans reuse their identity. 62% of Americans reuse their username or password, and then the fraudsters will use those username and passwords that they get off the dark web, and they’ll do what’s called credential stuffing. And so they will go in and they will try to use those credentials on every banking website or financial website that that consumer is associated with. And 50% of login attempts use credential stuffing, right? So username and password, I think the time of the user and password is quickly coming to an end. I also think one time use text codes. Those codes can be intercepted fairly readily, so that that’s multi factor authentication for all your listeners, right? You’ve got username password, and I’m going to send you a text code. I can I can trick you into I can buy your username and password, and I can intercept your your text code, and I can readily access your customers financial services, interestingly, also where banks have been moving to sort of authentication and using AI for voice recognition authentication. I believe the CEO of OpenAI came out and said, AI has already defeated voice recognition. And so there are some companies that use voice recognition to call and confirm a trade, and I think that the days of that being a secure method of authentication are over. So username, password, one time, text, code to a to an unsecure phone number, and voice recognition authentication, I think all of those are likely on their way out. So where are we going? So, right? Well, we’ve replaced that, yeah. So, you know, I think the things where we are going is biometrics, for sure, and I think we’re going to on device biometrics and we’re going to off device biometrics. And there’s a difference between those two. I can go into more detail if you’re interested in that. I think we’re going into user behavior and device behavior. And really this is where AI can come in and say, okay, is this device being used in a place, in a manner that would be typical of a human, right? And then it would be typical of this specific user. And then onto the biometrics match. And then, of course, you have to defeat live image injection that’s powered by AI on the other side. But I think we’re going to end up in a world like this, where it really is your device, your biometrics, and then also what you know, so some, some sort of like challenge thing that you know. And I think contrary on the on the inverse side of that is that something that we put in Fort Knox, and I think that will become more prevalent, is the ability for the user to actually challenge the identity of the bank, because there’s a lot of scams today, like the Phantom hacker scam, for example, where you know the bank is calling the consumer, but it’s not really the bank, and the consumer can’t really verify it’s the bank. So we’ve built in where the consumer can create challenge questions, questions for us, and, you know, Vice like, we want to know it’s them, and then they can prove that it’s us. And we don’t know anything about that challenge question, except when you’re at the right level of access, you can see like what the answer is to that question on our side. And then we both know that we are speaking with the intended party

Whitney McDonald 12:13:54
for our listeners that might not know, can you share what Fort Knox is and what the innovation behind that is,

Erik Beguin 12:14:01
yeah, sure, so Fort Knox is, I believe, America’s first high security banking platform. So about five years ago, I sit in my office during covid, and I was looking at the fraud landscape, and I just thought fraud was going to explode. And I really saw this, this conundrum that banks were facing, where they’re trying to provide convenience and they’re trying to provide security. And the problem with this is these two things are fundamentally juxtaposed against each other. The more convenient you make it to move your money. 24/7, real time payments, you know, P to P payments, the less secure it is, and the more secure i. You make people’s money, the less convenient it is to move it. And so we really looked at breaking those two apart. And so what we created is Fort Knox, and it’s really complementary to the current checking account that you already have, so that you can have the convenience of your checking account and the security of Fort Knox for your savings. And really under the premise that you shouldn’t keep all your money in one bundle. And whereas you need the ability to quickly move money for payments, you have your utility payment, you have purchases and whatnot, and those are all attached to your spending account, your checking account, you don’t need the ability to send your money instantly overnight to sub Sahara Africa or Southeast Asia for your savings account. And so really, you break these two apart and Fort Knox, dot bank high security savings focuses solely on savings, and it has a whole host of mechanisms to keep your savings safe and still allow you to have the convenience of your current checking account.

Whitney McDonald 12:15:38
Now our listeners should read more about that. I’ll plug up that we have covered that savings account as well. For more details about that. We have, you know, covered that too. Now you talked a little bit about the beginning, and that about this at the beginning, and you just talked about Fort Knox as one example. But you really do have an entrepreneurial mindset. You look for those needs, and you try to innovate against those needs of the market, fraud being one. Any other innovations in the pipeline? What’s peaking your interest right now? Maybe even just an approach to how you approach technology at Austin capital, but but also, you know, through the innovations that you come up with, but anything in the pipeline? What’s, what’s, you know, sparking your your interest? Yeah. So we

Erik Beguin 12:16:26
have an existing product line called credit strong, right? We have hundreds of 1000s of clients on that. We had close to 1000 every day, and that’s really for people with no credit, then credit or bad credit. And really what we’re seeing over there is a lot of and this is what got us into the fraud space. Also is a lot of identity theft and synthetic identity theft and first party fraud. So we have a lot of interest in that. We’re building out some data tools that we might share with some other banks. They are very interested in the analytics that we’ve developed here. So we’re looking at that, and then really we’re looking at Fort Knox today, it’s designed to protect your savings for consumers, account takeover. And corporate account takeover is a massive problem for small business. The losses there are much larger and the number of people that you can potentially compromise are much larger, because all they need is one employee to use business email compromise, for example, get into a business and just monitor and just wait and get access to those commercial accounts. So Fort Knox is going to expand to protecting small business cash reserves, and then it’s going to expand into payments and receivables. We have a whole product product roadmap for Fort Knox to provide these high security measures. Will never be an all encompassing bank with Fort Knox, because it will carve off the pieces that need to be highly secure and secure those and still allow you to keep your current banking relationship and the flexibility and the relate the probably local relationship that you have there. I think the things that we could hit on is that education is not enough. Everybody’s been preaching education for fraud prevention for so long and and it just doesn’t work because the fraud attacks are so sophisticated. I think we also need to focus on protecting our elders. Over 50% of fraud attempts are against people who are 60 years or older. And so to enhance our efforts, really, we need to look at structurally building products and services that have security and fraud prevention built into the product to protect the consumer when they just aren’t aware of what they even need to be protected from.

Whitney Mcdonald 12:18:44
You’ve been listening to the buzz a fin AI news podcast. Please follow us on x and LinkedIn, and as a reminder, you can rate this podcast on your platform of choice. Please be sure to visit us at finaI news.com for more finaI News. Thanks for listening. You.

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November 18, 2025
Podcast: Casca CEO Lukas Haffer on opportunities for AI in small business lending

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That’s the reality that Lukas Haffer, chief executive of AI-native loan origination provider Casca, tells FinAi News on this episode of “The Buzz” podcast.

For small business owners, the “No. 1 problem is access to capital,” he says. The time it takes to close a Small Business Administration loan, one guaranteed by the SBA, is 90 days, Haffer says.

No one has time for that, he says. And this is where AI and a streamlined experience come in.

Manual procedures in the lending process, including document collection, analysis and communication, can be streamlined with AI, he says. In fact, Casca is working with financial institutions to do just that.

For example, when a client sends an email, creating a response that includes personalized messaging, previous correspondents, and necessary information, it can take 20 to 25 minutes, Haffer says. With Casca, that message can be created in 63 seconds.

Casca, founded in 2023, continues to grow. Its most recent fundraise consisted of $29 million in a series A round, bringing total funding to $33 million, according to the company. The round was led by Canapi Ventures. Live Oak Bank, Huntington National Bank and Bankwell Bank also participated.

Listen to “The Buzz” as Haffer discusses the opportunity for AI in small business lending and where Casca plans to expand its business.

Register here for early-bird pricing for the inaugural FinAi Banking Summit 2026, taking place March 2-3 in Denver. View the full event agenda here.

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

Whitney McDonald 11:17:02
Hello and welcome to The Buzz a FinAi News podcast. My name is Whitney McDonald and I’m the editor of fin AI news. Fin AI news has rebranded from bank automation news, marking the next step in our mission to lead the conversation on innovation and Financial Services Technology. Joining me today, November 11, 2025 is Lucas Hafer, CEO of AI native loan origination provider, Casca. Lucas, is here to discuss the role of AI in streamlining the lending process, specifically for small businesses. Thanks for joining us,Lukas Haffer 11:17:31
Lucas, of course. Thanks for having me. Whitney, I’m Lucas. I’m the CEO and one of the two co founders of Casca. I have a background in banking software. I basically spent my entire career building, maintaining, deploying core banking systems, not a career I can recommend to anyone. Core banking systems are a pain, but it did give me a pretty solid understanding of how the underlying it, infrastructure of a bank really works all the way from the mobile and online banking at the front to the connection to the exchanges, the payment rails, the regulatory reporting on the back. And then I spent two years at Stanford really diving deep into computer science and machine learning. And at the end of it, started Casca with a mission to bring the innovation and technology that I saw in academia and research back into the real world, into the world of banking that I had spent my entire career in, to have a real world impact, to automate tedious, repetitive work and lead to magical, better customer experiences.
Whitney McDonald 11:18:35
Well, we will definitely get into all of that, the AI behind Casca, and how that all works. But before we do, let’s kind of talk bigger picture here. We’re going to talk through the state of small business lending. Where are there gaps here? Where can AI fit into those gaps? But let’s kind of, you know, start back one step and just talk about the gaps that need to be addressed in the small business lending space.
Whitney McDonald 11:19:01
Yeah, let’s talk about the reality of running a small business in the United States. Your number one problem is access to capital, regularly cited in surveys and statistics. And if you talk to a small business owner, what they’ll tell you is that if you’re looking for capital for your small business, you’re not going to Silicon Valley venture capitalists. You are looking for a loan, and you have two sub optimal alternatives right now. You either go to a bank and they will give you if you go to the right one, the best conditions, the lowest interest rates, the best terms, but it’s going to take forever. The average time to close an SBA loan, that’s one that’s guaranteed by the Small Business Administration. That’s typically the best funding for a small business owner that’s starting out, trying to expand, trying to acquire another business. The average time to close one of those is 90 days. And let’s be real. Ain’t nobody got time for that 90 days you are trying to get that funding for that big inventory purchase, for that big contract that you just won. If it takes 90 days to get the funding, you might lose out on that business opportunity. So the second alternative that many small business owners now fall prey to is the tremendous number of predatory online lenders that have spawned up that will give you the funding really, really quickly, and then you have a rude awakening when you realize now you’re paying 45% APR I now see On a regular basis, small businesses apply for funding through our system that have merchant cash advances on their balance sheet that clock in at aprs above 100% and I don’t know about you and about our listeners here, but to me, that’s not okay, that is not adequate, that’s not ethical, that’s not moral. I don’t even know how that stuff’s legal, but we’re in America, so our response is we compete on the open market. The banks have the better interest rates. They have the better conditions. What they lack is the technology to compete with the online lenders, and that’s where Casca comes in. Our mission is to help the trusted banks in America to put additional billions of dollars of funding into the hands of small business owners by giving them the technology that they need to do it faster and with less manual effort.Whitney McDonald 11:21:27
Let’s talk about some of the manual effort that still exists in the in the lending process that does hold up, you know, speed to lending and how AI can address those gaps.Lukas Haffer 11:21:37
Yeah, I mean very practically. If you’re a small business owner, you’re looking for funding, you go to the bank’s website, and the first problem is you’re searching for that apply now button where you can start your application. Many times it doesn’t even exist. Many times there’s a little contact form or a list of email address. Of loan officers to reach out to, which immediately causes churn. That’s an opportunity for any bank to make an immediate impact, even before we think about AI just have a proper online application. Problem is now with this process, you end up in 90 days of back and forth emailing, because the process starts in email, it continues an email. And what happens over those 90 days is you reach out, I would like some funding. Here’s a little bit of information about my business. You get back a list of questions you answer to the questions. You get a list of more questions you answer to those questions. You get a PDF form. You fill out the PDF form, you get feedback. The PDF form was filled out the wrong way. You fill it out again, and that process continues until the bank has gathered all the information they need to make a good underwriting decision, which typically is multiple years of tax returns, bank statements, projections based on the management’s view on to the company. And because it’s all manual, emailing back and forth. That means there are two three day turn times between each of these cycles. That’s how you get to 90 days. It’s 90 days of I respond to the banker on Saturday, because throughout the week I’m running my business, the banker is not working on Saturday. So now on Monday I get the feedback. Well, Monday is the busiest day in my business, so I’m going to respond whenever I get the time, maybe on Wednesday night, and then the banker responds to me Thursday morning. Now I’m busy, and I’ll respond the next time on the weekend. And now the exchange of just a little bit of information took forever. Once the bank has all the information that they need. Now they need to analyze all of that information right now that’s completely manual. That’s people pulling up on one screen a PDF and on another screen an Excel sheet, and then they type things from a PDF into an excel sheet to calculate the spreading of the financials of the business, see whether the business is actually going to be able to repay the loan, and with the number of sheer documents that you collect for the average small business loan, this might take days, maybe even weeks. It’s 1000s and 1000s of pages that are manually reviewed and pulled over, and that’s just the beginning of the process. There are many more steps in order to actually compliantly close one of these loans, and all of it can actually be tremendously automated using a combination of beautiful online experiences in an application form, an applicant portal to let people self guidedly Go through applications, AI to answer simple questions for folks and follow up with them at the right points in time, and then AI to analyze all the information that came in and hundreds and hundreds of integrations with third party data sources like the credit bureaus and the Secretary of State, to gather all the information that an underwriter needs in order to make a proper decision on whether the business is going to be able to repay the loan. So that’s what cascade us. We help get the small business owner, in a self guided manner through the entire flow, and we help automate the analysis on the side for the underwriter.Whitney McDonald 11:25:13
It’s really interesting when you put into perspective the days it takes to get back and forth. You know, Monday is a busy day. I’ll get back to you this day and, you know, the back and forth, and it’s kind of like this unending cycle that can, you know, last up to 90 days. Is there any way to quantify savings that Casca clients are seeing when they do streamline these processes. How much you know time is being saved on that back and forth?Lukas Haffer 11:25:41
Yeah, I can give you three statistics here. Number one, this like anecdote around someone responding on the weekend isn’t just an anecdote. We now have the statistics and 63% of all interactions happen outside of banking hours. That means nights and weekends. And it makes sense, if you think about it, right? It’s a small business owner. They’re busy throughout the week. Our peak time of interaction every week is Friday night, 10:30pm again. Think about it makes sense. It sounds curious in the moment, but then think about it. It is a small business owner that just closed up the shop for the week, brought their kids to bed and is now ready to do their admin work of applying for that funding they need. Right? That is first of all statistic. This is literally what we’re seeing. And if you talk to small business owners, they also don’t want to talk on the phone with a loan officer about the loan funding they are applying for in front of their employees. They don’t want to do that throughout the week. They also don’t want to miss a day at work. They are usually one out of 1520 people running the thing. They are not managers CFOs accountants that just oversee the business they are in. It. They are living in it. They are running their small business. They don’t have time to go to the bank branch either during the week. So we live in a reality where you need to meet the small business owner where they are at, and you need to meet them during that times. Next statistic, what we see with these typical you can reach out online, fill out a contact form, we’ll send you an application. Is roughly 90% of people churn. And it makes sense again, right? You’re trying to get this done, and then all you’re met with is, let’s make an appointment. And you realize you don’t have time for this. So you go to the next link on Google, and it is some online lender that says, close in 15 minutes, and you say, that’s the only thing I can reasonably do. Or you go through the third turn of questions, and you realize this is taking forever. You don’t even know whether any end is inside. No one is giving you a clear direction on how long this is going to take. And so you turn in that moment. That’s why we see extremely high churn rates throughout these long, slow, complicated processes, and what we’ve seen when we took loans out of that into a paradigm of the small business owner can go through the online application completely on their own time, upload all the documents, get instant feedback as they go through the process, whether they check all the boxes, all the criteria that the bank has, and then can get feedback. Within 24 hours, we see conversion rates skyrocket to above 80% of people submitting full application forms, and that leads to banks just straight up closing more loans. That’s a that’s the second part of this here. On the other side, let’s look at what it takes to do follow ups with applicants over email, because you’re not getting completely out of email communication. There’s no way small business owner, busy CEO, running his business, if you send him a list, even if you send him a list of here are the like five documents I need from you in order to make a decision. And here’s a link to some people will anyways, respond via email. They won’t log into the portal. They will respond via email. And banks might try to re educate their customers, but that’s not your job. Your job is to treat every customer like the only customer need to meet them where they are at and the end result is they send you documents via email. You take the documents, you put them in the right place, and you respond to them over email. So how long does it take someone to formulate the right email if all of the information that’s necessary to write that email exists on sticky notes on your computer and within a 25 year old loan origination system, and some of it you need to come up with on the spot, some of the documents that were submitted exist inside of your email. Some of them might have been uploaded to a Dropbox somewhere, and you spend all of your time putting checklists against what do I have? What was my last message with them? It takes you between 20 minutes, 20 and 25 minutes, that’s what we’re measuring there, to have a full, full follow up email sent out to the customer that reflects all of the questions that they asked you and your responses that reflects what are the outstanding documents that we still need and what are the questions that I still have for them? While on our side, we have all of that information within one single pane of glass, because Casca is the system of record about the customer information. It is the workflow system for the origination process, and it is the CRM system for the communication with the customer. So I know exactly what information I have on the customer, what documents they have submitted. I know which ones I need in order to get them into underwriting and which ones are still missing, and I can immediately draft up a follow up message, send it out via email, SMS, and it takes someone on average, 63 seconds to approve that message to go out. So that is just me putting right side, here’s the message that the system drafted for me. Left side, here’s information that we have and information that we still need. My job is just to confirm send it out hyper personalized message that increases conversion rates, makes the customer feel like they are the only customer, because they’re getting that special white glove treatment. But it didn’t take you half of a day to respond to your 1015, leads. These are the three statistics I got for you, higher conversion rates, less manual effort, and lots of people apply on weekends.

Whitney McDonald 11:31:23
Yeah, no, when you can quantify and put numbers, it really puts into perspective here, especially, you know that last number that you were just sharing, you know, from 25 minutes down to about a minute 63 seconds, I think what you said, the numbers speak, speak for themselves, in what technology can do, in in streamlining, one the process for the lender and, you know, getting those conversions, but also getting the funds into the hands of the small businesses, which is, you know what, what it’s all about. Talk through some examples here. I know recently that Casca just closed. Those 29 million and some in series a funding, wondering if you could talk a little bit about that capital, what that’s being allocated to, kind of tell us a little bit about the plans for Casca. I know you talked through examples of how the technology is being used. You know, it’s it’s in action at these institutions, giving these quantifiable results and returns, but what else is is in the pipeline? Yeah,

Lukas Haffer 11:32:21
it’s an incredibly exciting time for us. We are very proud and grateful for the support of our investors, most of which are existing customers. We, as a technology company, see ourselves as the champion of the American banking sector, for the American banking sector. So our series, a funding round, was led by canopy ventures, which represents roughly 70 of the US banks, alongside Live Oak Bank and Huntington Bank, which are the top two SBA lenders in the country, and our existing first customer, bankwell Bank, a wonderful community bank out of Connecticut, as well as a number of existing investors that double down investors from Silicon Valley, like Y Combinator, the number one startup accelerator in the world, and a private equipment lender called Alliance Funding group, we are super excited about these investors specifically because it shows that we are partnering with the banks in order to develop great software that solves problems for their customers and for their team members. The way we work is to sit down with them and understand, what are you doing today? What are the things that you wish were easier? How can we reimagine processes together? And that is how we develop our own roadmap. You asked, what’s coming down the pipe? It’s always determined by what are the things that our customers are asking for? What are the things that they imagine? What are the problems they are facing that we can help resolve and we started with loan origination and making that much faster and much easier. We recently started working on loan servicing to also make sure that folks are making their payments on time, and that we check in regularly with the small businesses on how they are doing financially, to do annual and quarterly reviews with them. There’s a tremendous amount of potential in automating servicing processes, and we’re starting to work on what that can look like on the deposit side of the house as well, because banks that are increasing loan volumes also want to increase their deposit holdings?

Whitney McDonald 11:34:38
Well, you just talked through some opportunities in the space. Obviously, the reality of where AI is, how it’s being used, but the technology itself is evolving so fast, more opportunity down the pipeline, like you mentioned in servicing, you know, different processes that can be automated down the line.

Lukas Haffer 11:34:58
I think that two important things to realize at the same time when thinking about AI and banking. One, you said AI is developing rapidly. That’s true. That means that you can’t just rely on what worked today. There’s a revolution happening, and you have to react quickly to it, and you have to shift with it. And that means that use cases that weren’t possible two three years ago are now becoming possible and improving rapidly. A good example of that is financial spreading and underwriting, which really just only worked for tax return analysis because tax returns were highly structured documents. The numbers are always in the same places, at least for a given year in business type. But it never really worked for management prepared financials of a business because they are management prepared, they are unstructured. They might have any any format that is no longer the case, that is now possible. Those are the things that AI and large language models specifically have enabled. And so you can actually read through hundreds and hundreds of pages of rent roll documents that were hand written and extract the individual rent payments to assess whether a property is actually fully rented out and getting the cash flow that you’re projecting from it, those things weren’t possible before they are becoming possible as we speak. That’s point number one. The second point is, AI is not perfect, and that means, in a highly regulated sector, you need to build for something being probabilistic, not deterministic. So there is a chance that the number it extracts from the document is wrong, which means you can’t just let the thing extract the number and make an underwriting decision based upon it. What you need to think through is how you can build it human in the loop, how you can build it fully auditable and fully explainable. So what this means is. Instead of just saying I got the debt service coverage ratio of 1.25 for this business, so it meets our criterion, instead you say I expected at least 27 different values from this document, and I’m showing them to you. Left side, all the values. Right side, here’s the document and exactly where I got them all from. And if anything is wrong, you can just click a button and change it, and you can click on a different number and pull that number in instead, which makes it a power user interface, something for an underwriter that knows exactly what they’re doing to get their job done faster. That’s the human in the loop that’s making it explainable. Here’s why we pull that value out of that document and fully auditable, because you can see for each individual value where did it come from, and whether a human overrode it, validated it, or whether it was just pulled by the system.

Whitney McDonald 11:37:47
You’ve been listening to the buzz a fin AI news podcast. Please follow us on x and LinkedIn, and as a reminder, you can read this podcast on your platform of choice. Please be sure to visit us at finaI news.com. For more finaI News. Thanks for listening. You.

Speaker 1 11:39:57
You’ve been listening to the buzz a fin AI news podcast, please follow us on x and LinkedIn, and as a reminder, you can rate this podcast on your platform of choice. Please be sure to visit us at finaI news.com for more finaI News. Thanks for listening. You.

Transcribed by https://otter.ai

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November 11, 2025
Podcast: FV Bank CEO Miles Paschini on future of stablecoin

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FV Bank aims to stay ahead of emerging technology trends, including stablecoins.

The Puerto Rico-based digital bank integrated stablecoins three years ago, ahead of the recent excitement around the cryptocurrency, Chief Executive Miles Paschini tells Bank Automation News on this episode of “The Buzz” podcast.

“We had the idea that stablecoins could play an important role in banking, so we integrated with USDC,” he says.

In fact, according to British bank Standard Chartered, the stablecoin market is expected to reach $2 trillion by 2028, up from $250 billion last month.

Additionally, during the first half of the year, crypto and digital asset companies raised $8.4 billion, compared with $10.7 billion in all of 2024, according to KPMG’s Pulse of Fintech report, published in July.

Today, stablecoins are the fastest-growing segment of the Puerto Rico-based digital bank’s business, Paschini says. “We’re processing in the billions of dollars per month.”

Listen to “The Buzz” to hear Paschini discuss emerging uses for stablecoins, the growth in the segment and how the digital bank is innovating.

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

Whitney McDonald 12:29:04
Whitney, hello and welcome to The Buzz a bank automation news podcast. My name is Whitney McDonald and I’m the editor of bank automation News. Today is September 9, 2025 Joining me is miles paschini, CEO of FV bank. He’s here to discuss FV bank’s approach to emerging technology, including their ongoing stablecoin efforts. Thanks for joining us.Miles Paschini 12:29:24
Miles, yeah, well, first, thanks for having me. I really appreciate I know we’ve had a chance to speak off, off of a live discussion in the past. I usually like to start introducing FB bank. By the name a lot of people are. You know, what does FB stand for? And it stands for FinTech ventures. And that really helps tell the story about, you know, who we are and where we come from. When we started this out thinking that, you know, we’re going to start with a bank license. Most people don’t start a FinTech company with a bank license. And so our view is that let’s build a FinTech company that has all of the regulatory framework that’s necessary, you know, to do the the types of projects that we want to do. So first and foremost, we see ourselves as a FinTech company that operates with inside of a regular, regulated banking environment. You know, as for myself, I’ve been in the payments world pretty much my whole career. My last venture before this was in the card issuing space, where we were the first company to introduce crypto link debit cards back in 2013 approximately when it was way before anybody was thinking about this space where, how did you bridge digital assets to the real tradify world? Back in 2013 we were enabling people to swipe a Visa card and spend Bitcoin. So we’ve been in this mindset of, how do you bridge new technologies and payments to the existing world. And that’s really a lot of what FB bank is about is, when I if I have a chance to draw something to somebody, I’ll typically draw a circle that is the TRad fi. I draw another circle, which is, you know, the future blockchain, whatever you want to call it, and there’s a Venn diagram in the middle, and that’s where we see our sweet spot. How do we bridge traditional financial solutions with, you know, emerging or, you know, scaling like stable coin solutions. That’s really what we’re about and figuring out, you know, why? How do we find that sweet spot to bridge what I would consider more of like FinTech initiatives with traditional banking?

Whitney McDonald 12:31:22
I think that’s the perfect segue into the next question, which is exactly that, you know, marrying traditional banking with emerging technology. How do you approach emerging technology? I know that we’re going to talk here about stable coin a little bit more specifically, but maybe just on a broader scale. How do you ensure that you’re keeping up with the new trends? Investing in the right tech, maybe kind of from a from a broader scale. How are you monitoring the emerging technology landscape?

Speaker 1 12:31:51
Yeah, I like to think that we are forward thinking, just in our process, strategically as a as a company, when we wrote our business plan. And, you know, in 2018 2019 timeframe, it’s pretty much the same. And it was, you know, how do we take traditional banking services and combine them with digital assets. And so that business plan that we wrote described a future where the two interoperate with each other pretty seamlessly, and we’ve just been refining that. What does that actually mean? So at the highest level, you say, Hey, we’re going to run a banking service, but we’re also going to run digital asset services. And then, how do you actually commercialize that? How do people actually get benefit from that concept? And so that’s really what we’ve been doing, I think. To give an example, in November, it will be three years that we’ve integrated stable coins into Fe bank. And most you know the I would say the sensational concepts around stable coins have only really emerged in the market in the last year from a broader perspective. And so three years ago, we, I would say it’s more than three years ago, because it takes time to implement these strategies, but we had the idea that stable coins could play an important role in banking. So we integrated with USDC three years ago. And we, you know, we took kind of a novel approach, which was not just to say that will support stable coins, which is what I think a lot of people are looking at, but how do we integrate it? And so when someone opens an account at FV bank, you get a wallet address. So, you know, your typical account would come with a routing number and an account number, and for three years now, we’ve been providing people with wallet addresses, and cross chain wallet addresses at that. So you can, you know, you can get an ERC 20, a Tron, Solana and polygon address with your bank account. And so we’ve taken this approach that you don’t just support it, but you integrate it and you make it useful. And I think that’s really the strategy that we’ve had is, you know, how do we how do we not just say that we support digital assets, it sounds good on the headlines, but how do we actually make it useful for people, and then with that, you know, if you’re running a bank and you’re listening to this today, you’ll soon find out that the devil’s in the details, and that’s really where we. Excelled is figuring out, how do you make the transactionality work for everyone involved, for all the stakeholders, how do you make the compliance work? How do you facilitate treasury management in a world where they’re completely different? You know, Fiat treasury management versus digital asset treasury management are different worlds. And so I think that’s where we’ve done a really good job, is figuring out, how do you, you know, how do you not only embrace it, but how do you make it work, and how do you get the details right?

Whitney McDonald 12:34:34
Now, we kind of talked about betting on emerging technology, and what you mentioned here is that you’ve implemented, you know, stable coins. Three years ago, you were, you know, ahead of the game on this front and now you’re seeing it in the headlines. And, you know, you kind of can’t get away from the stable coin. Maybe talk us through, like, why? Three years ago, this was something to bet on. What were you watching for? What are you seeing now with the adoption that we’re kind of on the other side of it, where it is, you know, all over the news,

Speaker 1 12:35:04
yeah, so our first approach was that stable coins were another payment rail. So we thought of it like, you know, you have Ach, you have fed wire, you have swift you have local payment solutions like Faster Payments and sepa, and you know, that are country specific or region specific. And we looked at stable coins as kind of like a global payment rail, so it’s not tied to any particular country, or, by that point, any particular fiat currency. It was a way to move value from one point to another, and so we wanted to embrace that, and that was really the plumbing level. So how do I enable a customer from anywhere in the world to transfer value from where they are to Fe bank? Or how do I enable a customer that has dollars at FB bank to send value to anywhere in the world in nearly instant transaction? And it was less about stable coins than it was about the payment rail as a means of transferring value over the internet. And so I think that that’s what really got us interested. First, it was a competitive product to Swift and fed wire, if you will, in the concept of transferring value. And then most companies, even today, in spite of the euphoria of stable coins, don’t want to hold on to stable coins. You know, they have, they have Treasury needs in fiat currency, and specifically in dollars. And so that original vision that we had with which was, this was a transport protocol for value. It’s playing out. And I think today, you know, if we, if I go a little deeper, we have generally two types of customers. We have customers who use stable coins for receiving value into the bank. So they’re, they’re receiving stable coins, but converting it to dollars, so they can use those dollars for, you know, Fiat based payments, but we have customers that are the that are the other direction. They’re receiving dollars into the bank, and they’re aggregating those dollars, and they’re sending out stable coins and so complete two completely different use cases, but they’re utilizing the same underlying technology, which is the transportation of value over the internet.

Whitney McDonald 12:37:08
Now maybe we can talk a little bit on the innovation front. You guys have a new, recently launched product, the virtual account identifier.

Speaker 1 12:37:16
Yeah. So interestingly enough, this is one of those needs that was born out of something you wouldn’t, you wouldn’t think is the first driver, which is compliance. We, you know, we have customers who have a need for virtual accounts that you know, the basic function of a virtual account is reconciliation and tracking of value. So if I’m a marketplace and I have 10,000 customers, and I want those 10,000 customers to be able to make payments to my marketplace, how do I make each one of those relationships unique from a payment perspective? How do I reconcile transactions against those 10,000 people and virtual accounts allow you to do that. Allows you to, you know, segregate data by a unique number that’s tied to, let’s say, an individual or a person, but that ultimately is getting aggregated into a bank account, and so it allows very low level and detailed reconciliation of data. That’s the that’s one of the drivers. But for us, the driver was compliance and understanding. How do we embrace this world where there’s a lot of virtualization of financial services, but at the same time, increase our compliance capability? And so for our customer, they see a benefit in reconciliation uniqueness. We see it as a enhancement in compliance. And what this allows us to do is to know our customers. Customer, which is a key emerging requirement for banking as a service providers. It used to be that, you know, the regulatory burden was I need to know my customer. I need to know my customers business, and I need to monitor my customers activity that is now changing in that I not only do I need to know my customer, but I need to know my customers customers, and that that is at the the data level. So you know, who is this person? What kind. Are they from? You know, what is their date of birth? Like PII, about that person I need to know. And I need to know that because we have increasingly more challenging compliance requirements across a global landscape. And so for us, we offered our customers the ability to have a new feature, which really helps their business, but that feature actually helps us to become better at compliance, and that was the real driver for us, is, how do we scale this business in a compliant way while offering our customer more features?

Whitney McDonald 12:39:37
How’s it being adopted? You know, any numbers to share here?

Speaker 1 12:39:43
Yeah, so I just want to mention that we took it kind of a step further where, I mean, we’re not the first company to introduce virtual accounts, but we took it a step further in that we incorporated stable coins into our virtual account scheme. And that is that if you’re a customer of ours and you want to leverage our virtual account capability, not only can you get virtual accounts which are tied to traditional bank account, but you can also get virtual accounts that are tied to stable points. So for example, if I were to create an account, if you were my customer, and I created an account for you, and I give you a routing and a unique account number. The unique account number is your virtual account. But I can also give you, let’s say, an ERC 20 wallet address, which is uniquely tied to you, so that when you as a customer interact with our with the banking system, we can uniquely identify those transactions for you as an individual, whether it’s banking or stable coin. So we took it a step further, and we extended that capability to stable coin transactions, not just banking. And the use cases are kind of similar to what I gave. The example of just use a marketplace in general, if you were on something like Etsy, and Etsy wanted to enable all of their merchants to be able to accept payments in stable coin or to accept payments via ACH or wire transfer. This is a product that they would use, they would create virtual account scenarios for each one of their marketplace customers, and then each one of those marketplace customers would be able to accept payments via direct bank transfers or via stable coins. So that would be a simple example. Another example would be in the in the cryptocurrency space. So if you’re a crypto exchange, and you want to enable your customers to on ramp via stable coins or via bank transfers. You would provide each one of your customers one of these virtual accounts, and then you could uniquely track their transactions. You can register that user inside of our system and and you can not only offer them banking transactions, but also stable coin off ramps. It’s also used in scenarios like brokerage accounts or what we call over the counter trading, so where you have contract based transactions. So this is common in institutional level trading, where you have a liquidity provider or an OTC desk that’s doing block trades of transactions with customers. So an example would be, I’m buying or selling a million dollars worth of bitcoin. When there’s a buyer or seller in that transaction, someone has to pay in Fiat, typically, to acquire the Bitcoin. So how do you uniquely track that transaction in your in your brokerage, let’s say, and the way you do that is by providing with in this example, you provide the buyer a virtual account. So we see that a lot where our clients will create a virtual account. They’re doing what we call contract transactions. So contract transaction is a very specific invoice or or defined transaction. I’m buying $1 million with the Bitcoin, for example, and when you combine virtual accounts with that, the our customer is able to automate and integrate those transactions because, especially in that example, they need low cost, high efficiency. It’s typically like a high frequency trading. There’s not a lot of margin. They need efficiency. And so imagine that if the buyer sends in his funds, my client will get a web hook. Because we’re API integrated solution, they’ll know that that customer has paid. They can trigger off then, let’s say, the confirmation of that trade transaction, and they can deliver the Bitcoin to the buyer. So not only does it allow them to reconcile and track transactions, but it also allows them to integrate data through APIs and essentially create automations in their workflows.

Whitney McDonald 12:43:35
Thank you for those examples and kind of you know, putting it into real life use cases now, in terms of those stable enabling stable coin transactions via this rail. Are you seeing those transactions take place with stable coin? Absolutely.

Speaker 1 12:43:52
It’s the fastest growing segment of our business. From a volume perspective, we’re processing, you know, in the billions of dollars per month. So it’s not insignificant total volume that we’re probably. Processing, and it’s growing. The use cases are growing. We’re seeing different variations of the use cases emerging. A lot of, I would say, kind of the early adopters were the institutional, digital asset native companies. Those are the early adopters of the solutions. A lot of those customers were trying to hedge FX, for example. So we saw clients that were working in Latin America, where there’s a lot of volatility in inflation of their currency, and they’re using stable coins to help stabilize that. Those are kind of the early adopters. Now we’re seeing more transactional customers that are fulfilling, you know, invoice level transactions by either paying or being paid or being or paying in stable coin. We’re also seeing our early days were more weighted by stable coin redemptions, which is our customers receiving stable coin and converting it to dollars. Now we’re seeing a more balanced two way activity, which is, instead of just redemption, we’re seeing customers that have dollars with us, and they’re paying their obligations in stable coins. So the early market was really this one sided redemption. Now it’s changing to a more balanced, two sided type of transactionality, where people are identifying use cases, not to just received stable coins as payment, but also to make payments in stable coin, which means that, you know, when I have a customer that is comfortable and habitually making payments in stable coins, that means that there’s a beneficiary of that payment who’s gotten comfortable with it, right? That means there’s a new party on the other side of the transaction. So that’s where I see the growth is that it’s not just the early adopters anymore. It is other businesses that are seeing the benefit of receiving stable coins and having confidence in the receipt of those stable coins. That’s equal to fiat currency. Yeah.

Whitney McDonald 12:46:01
I mean, there’s two sides of it, right? Someone has to be receiving it. Someone has to be sending it if you’re seeing that that growth there like it takes two to tango, right? Exactly.

Speaker 1 12:46:12
And so I think you know, we’re seeing that growth in more customers, or more of our customers, customers or beneficiaries, are getting comfortable receiving stable coins, if you think about it, from just a basic commerce perspective. Let’s say that you’re selling, you know, widgets in China, and I want to buy your widgets, I need to send you a million dollars to buy widgets. If I do that through traditional way, I’m going to send you a bank wire, and it’s going to be, you know, between one to three days for that payment to settle. It will pass through one or more intermediary banks that may not have, may or may not have compliance holds different things that will happen. So that’s what, that’s where you get the t1 to t3, kind of settlement period. If I take that same transaction and I need to pay you a million dollars for widgets, and you’re in China, I can pay you from Fe bank via stable coin, and you’ll have the funds in 20 minutes, right? So that, what does that mean? That means that maybe you ship my order today, right? And depending on the day of the week, maybe I get it shipped, you know, today, instead of getting it shipped in five days, because maybe it settles, maybe my payment settles to you on a Friday, you can’t ship it until the next Monday, right? Right? And so you’re talking about speeding up the whole economy, which is a huge you know, imagine if you’re a vendor in America and you’re out of widgets, and you need them, right? You want them on the next FedEx flight to the United States. And so, so will people say, Well, you know, Swift is fast, and fed wire is fast. That’s true, but stable coins are faster, and stable coins don’t have some of the features that traditional payments have. Now, in particular, stable coins are generally not reversible, right? I mean, and so bank wires can be recalled, so you can see that as a positive or a negative, depending on your use case.

Whitney McDonald 12:48:10
Now, you mentioned already how you’ve seen changing use cases, emerging use cases, who are the early adopters versus who’s using it? Now, I know it’s hard to predict the future, but maybe just give us a little bit of insight into what you pay attention to, in terms of, you know, I guess, predicting or what’s coming next, or staying ahead of what’s in store for digital assets.

Speaker 1 12:48:38
I’ll take that in two parts, because digital assets is kind of a broader statement. I think for stable coins, I think we’re going to see continued and accelerated adoption. I think that the passing of the genius act is going to help. You’re going to see a lot of competition in stable coins. There’ll be a lot of new stable coins come to market. Not all of them will be successful. I’ll kind of liken it to the early internet days where, you know, there’ll be 1000s of stable coins come to market, but only. Maybe, you know, handfuls of them will survive and thrive. I think those that find that have good distribution have credibility in the marketplace. Those are the ones that will survive. There’ll be a lot that don’t survive. And so I think we’re going to see where stable coins will become woven into many of the applications that we use on a day to day basis. So going grocery shopping, I’m assuming you’re going to be able to be able to pay with stable coins in the near future, buying online. I think that with stripes, acquisition of bridge, for example, that at checkout online, you’ll have the option to pay in stable coins almost everywhere. Give it a couple of years, and as a merchant selling goods online, you’ll be able to get paid in stable coins almost everywhere. So I think you’ll see that kind of seamless integration across the board. It’ll become a very fluid market, and we’ll see lots and lots more competition in stable coin arena.

Whitney McDonald 12:50:03
On the innovation front anything in the pipeline at FB bank that you’re willing to share?

Speaker 1 12:50:10
Yes, certainly. So we continue to believe that digital assets convergence with traditional banking is going to be a key driver. I think there’s a lot of interesting developments in our wa real world asset tokenization, especially around financial products. So we are already, we’re already supporting tokenized money market funds. So we’re working with BlackRock and securitize with their Biddle tokenized money market fund. And I see this as a this is going to be a very interesting development in the market where the ability for a an account holder to move in and out of interest bearing products at a tokenized level is going to become a kind of the speed of the Internet. And so the way that treasury management is managed today, where if I want to, if I want to invest in a money market, I’ve got to send a wire to the fund. The funds got to create my position, and that position will start earning me interest. Let’s say the next business day, I’ll start earning interest on that money market position. From a treasury management perspective, with tokenized money market funds, I think that you’ll be able to enter a position into a money market and begin earning interest on the next block confirmation. So as soon as my funds enter the tokenized fund, my my Fiat, let’s say, enters the tokenized fund into it, into a tokenized money market on the next block confirmation. Instead of most money markets, have a cut off of 3pm Eastern, for example, I think that’s going to change. You’ll have 24 by seven entrance and exit of funds, and I think you’ll start realizing interest earned on balances based on the next block confirmation. That will change the way that Treasury works, because it’ll become a much more fluid 24 by seven market. And we’re looking forward to that. We are we are going to be coming out releasing our announcement of support for Biddle, and we’re going to be treating it a lot like we do other stable coins, which is creating an on ramp and off ramp to a tokenized money market fund. You know, I think the big announcement that’s coming for us, and my caveat, is subject to lots of conditions, including regulatory approval, but we are working on secure, collateralized lending, in particular, looking at loan products that are based around things like Bitcoin and Ethereum. We believe that the movement that’s happening, you know, in at the macro level, in government, where you’re looking at the clarity Act, which is likely to or hopefully to become law later this year, with the passing of the genius act, we think more and more companies are going to be investing in digital assets as a hedge to fiat or just purely as an investment vehicle, like they would choose other investments. And I think that you’re going to see increasingly that companies who take positions in Bitcoin are not going to want to sell those positions. They’re going to only want to hold them for the long term. And that that’s going to create probably one of the largest lending markets in the world where people are going to want to borrow against their Bitcoin. And we think that we’re extremely well positioned as a company. We have full banking license. We are we have a digital asset trust division, and, you know, we’re properly licensed to provide lending products. And so we think that this is going to be an unlock like we’ve never seen before, where people start unlocking the equity they have or the upside they have in their Bitcoin, and they’re going to borrow against that, just like they would borrow against a piece of real estate.

Whitney McDonald 12:53:46
Real estate for financial institutions that are entering the stable coin market, what takeaways or lessons learned would you share with them?

Speaker 1 12:53:55
I would say that you know, one of the most important things, like, if there’s companies that are looking to lean into this, is that supporting stable coins. Can seem quite easy, like a couple lines of code and you can start, you know, potentially supporting this. But the reality is, is it’s a very compliance intensive project. We have, you know, tried and tested and extensive rules around anti money laundering, terrorist financing, etc, in the banking world, there are, they’re just well documented requirements from a regulatory perspective, the requirements that you have as a financial institution to start dealing with digital assets is not insignificant, and so I would say that you know, any financial institution that’s looking to get involved, they should look into it, because we want more and more financial institutions to do what we’re doing, but take a serious look at your compliance obligations and understand. How do you integrate compliance controls of digital asset world to a Fiat world? And that’s one of the areas where we spent a lot of time. And we think that more responsible market entrance is what we need. We don’t need, we don’t need irresponsible entrance into the market. We think stable coins are going to grow, and the numbers are going to amaze people, the volume that gets transacted in stable coins, but I firmly believe that the dollar is still going to rule, and that one of the most important roles that we play is a bridge between Fiat and digital assets in particular with stable coins, because there’s always going to be a need for companies to go back into dollars, especially if you look at stable coins now, it’s, it’s unclear where gap rules are going to go. How do you treat stable coins on your balance sheet? Right? Right? I mean, there’s, you can take a position as to how you should treat them on your balance sheet, but until you have really clear International and GAAP rules around stable coins in your balance sheet, it’s going to continue to be a challenge. So it’s it is as easy as couple lines of code, but it’s also very complex. At the same time,

Whitney McDonald 12:56:04
you’ve been listening to the buzz a bank automation news podcast, please follow us on LinkedIn, and as a reminder, you can rate this podcast on your platform of choice. Thank you for your time, and be sure to visit us at Bank automation news.com for more automation news, you.

Transcribed by https://otter.ai

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Whitney McDonald

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September 9, 2025
Podcast: Esquire Bank to launch lending platform in 2025

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Esquire Bank considers client needs when determining where to invest in products and innovation.

The New York-based bank, which provides small businesses lending and litigation finance, is working on customized lending for its litigation platform that is expected to roll out early next year, Chief Executive Andrew Sagliocca tells Bank Automation News on this episode of “The Buzz” podcast.

“The best thing we can do in either vertical we serve nationally is to make sure we shut our mouth and listen to what the client not only has to say, but more importantly, let them describe their business, … their pain points and what their frustrations are,” he says.

When lending to niche markets, traditional tech providers often don’t have the products necessary out of the box to serve those clients; that’s where significant customization of technology comes into play, he says.

To offer customized tools to clients, the bank keeps two to three projects in its innovation pipeline with 20 to 30 programmers at a time, he said.

Listen as Sagliocca discusses Esquire’s approach to serving underserved markets tapping tech-driven solutions and quality data.

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

Whitney McDonald 09:45:01
Whitney, hello and welcome to The Buzz a bank automation news podcast. My name is Whitney McDonald and I’m the editor of bank automation News. Today is September 30, 2024 Joining me is CEO of Esquire bank, Andrew saglioka. Esquire is a national branchless tech enabled bank that serves two niche verticals, merchant acquiring and the litigation market. He’s here to discuss how the bank leans on tech to serve these underserved markets, tapping its partnership strategy and its in house team of programmers. Thanks for joining us. Andrew,Andrew Sagliocca 09:45:35
great. Thank you, Whitney. We appreciate the time, and we appreciate you taking time out of your busy schedule to spend time with myself and discuss Esquire. So I’ve been in banking for 37 years. I’ve been at Esquire since the beginning, which we are on year 1817, full years we’ve been prior to that I worked at a regional $60 billion bank that when I joined, we grew from about a billion and a half dollars to 60 billion through acquisitions and growth the old fashioned way, going from about a dozen branches to over 300 and prior To that, I started my career at KPMG in the financial institutions group.

Whitney McDonald 09:46:26
Great. Well, why don’t we take the introduction a little bit further, and you can tell me a little bit about Esquire too, the market that you serve, and then, and then we’ll get into the tech. Great.

Andrew Sagliocca 09:46:37
So Esquire is a national branchless, tech enabled bank. We service two verticals nationally. Both are underserved verticals. One is a contingent fee, plaintive litigation. Vertical. That’s about half a trillion dollars a year that settles through the banking industry and is very underserved by the banking community, including when I was more of a traditional banker the first half of my career. And the other is a payment vertical that bankers call the merchant acquiring vertical that is about 10 and a half trillion dollars a year. Merchant acquiring banks clear payments for debits and credit debit and credit cards for those merchants or small businesses. And from what I understand, that no there’s about 120 odd banks out of over 4000 that service that industry. So we chose purposefully to focus on two underserved national verticals that we could service on a branchless basis with a tech enabled platform.

Whitney McDonald 09:48:04
Now, let’s talk through this branch list strategy, this tech driven strategy, with the markets in mind. Why is this the right approach? What does this give to these markets, you know, on the small business side, what is this accessibility on the on the tech front provide, as far as a banking experience, you know, at your fingertips.

Andrew Sagliocca 09:48:25
So if you were to be a partner with you know, Alexa at a law firm, and you ran a plaintiff law firm, you’d be servicing people that have catastrophic car accidents, medical claims, you could be involved with people in the BP oil spill down in the Gulf Coast, or the California wildfires. There’s so many examples. So that is a half a trillion dollar a year industry. There is no cash in the industry. Think about it. Money settles between defense, which is usually the insurance carrier, to the law firm, which represents the injured party, via check or wire or ACH, and that money then, or those funds are dispersed to the claimant or claimants the same way. So it is a cashless platform. As far as I’m concerned, the half a trillion dollars is a pretty big platform or vertical on an annual basis. So tech and rolling out, not only tech enabled marketing content and the like, which we’ll talk about, but rolling out the branch within your law firm’s office, the cash management platform, the Remote Deposit. Capture technology that banks use throughout their branch networks, along with the security is critically important to success of this. And on the payment side, I’m sure you have a credit card and a debit card in your wallet, unlike the dinosaur that I am, I’m sure you don’t carry around cash. So when you purchase goods and services, either by going to the store or to the deli or to the supermarket or you do it online, or both someone and it is a bank, someone clears those payments, there is an issuing bank, right? That’s the Bank of America card you have in your wallet, or the American Express card you have in your wallet. That’s different. That’s consumer focused. Someone needs to clear 10 and a half trillion dollars or more of payments between the credit card issuers, Visa, MasterCard, American, Express, Discover, and the merchants, which are the small businesses selling the goods and services, which that that money that we clear is their revenue, someone needs to do that. There’s about 120 odd banks that do it in the country. So it’s a great opportunity. So so both platforms are very tech enabled, because the solutions you’re delivering are by definition, branchless. They have to be. And like I said, That doesn’t include the tech enabled Salesforce based CRM digital marketing, cloud tech enabled content that we used and rolled out, first and foremost in the litigation market, which was our focus, first before the payment market, that that not only has the content and the branding and the sales type approach for those prospective clients, but also utilizes the the the limited AI that we use right now to Make sure that the content is delivered that those prospective customers and or clients want to see.

Whitney McDonald 09:52:28
Now, couple things to break down here, and thank you so much for describing both sides of the business. And of course, stands out that, yes, of course, these are tech driven, tech enabled. Maybe we can focus on the payment side for a second what your small business clients are asking for. Maybe share a little bit about why Esquire what may be a traditional institution. I know that you mentioned the other institutions that offer capabilities or clearing capabilities like this. Why being tech enabled? Why Esquire what capabilities kind of draw those small businesses in Sure.

Andrew Sagliocca 09:53:03
So on the payment side, it’s more of an indirect platform. So we have 85,000 small business nationally, in all 50 states. However, the sales function to quote acquire those 85,000 small businesses or merchants is done by commercial entities called ISOs, independent sales organizations. Our job is to underwrite risk manage from a financial perspective, risk, manage from a compliance card brand perspective, and clear those payments and manage that money so that it gets to the small businesses in a timely, effective and efficient manner, and it keeps them happy. What makes us different on that side of the equation, different than a first data, which is now Fiserv or a chase or city or Wells, which are monsters in the market, is our ISOs and our merchants have access, not only to my merchant group or the bank’s merchant group, but they have direct access to the senior leadership right up through me, so we have quite a bit of technology in that area for Managing underwriting, underwriting itself, boarding, managing risk and the like. But that’s much more back end technology than front end. I think probably for our discussion, the more interesting vertical is probably the litigation, where we are from front to back, the sales engine, market. Engine, and obviously, back in bank, providing products and services and the like to that industry.

Whitney McDonald 09:55:09
Now, when it comes to the offerings that you have, of course, the the magic happening of clearing of payment, or, you know, the underwriting capabilities, what drives that technology? Do you build that all in house? Do you partner with different tech providers or kind of, kind of talk me through how the magic happens?

Andrew Sagliocca 09:55:30
Great question. So first and foremost, that the ground floor, there are multiple systems out there, and most banks are providers of so the most known systems that that I know in the market, that most people hear of is first data, which is now Fiserv and tsis. Those are core processing platforms, no different than a traditional Fiserv loan and deposit type system, or Jack Henry or FIS on top of that, the interesting thing there is, we are a provider of three core platforms, tsis, first, data and a smaller platform that we can customize and work with, well, that we use on a limited basis. That’s very unusual. Most banks service one core platform. It’d be like me telling you, well, I use Jack Henry for this, and Fiserv for that, and FIS for this, which you would think I was crazy, and I would be crazy from a underwriting standpoint. We built the platform ourselves. It’s an underwriting database and risk management boarding system that is proprietary to what we built. That’s not probably the most important piece, although it’s it’s important where we partner with people away from what we have built is on the risk management side. So the the fiservs and the first datas of the world and the teases of the world don’t sell front end platforms, which is why we had to build it, nor do they sell risk management platforms. So we partnered with a FinTech on the risk management side, but it’s rare, if ever, that we don’t highly customize what we buy out of the box with our in house team and in house programmers to meet specifically our business needs.

Whitney McDonald 09:57:40
Can you share a little bit more about who you have in house. I know you just mentioned a team of developers and programmers. How many do you have in house?

Andrew Sagliocca 09:57:48
Sure. So we have a, when I say a true CTO, he’s a C not a CTO by type. So my CTO, Marty corn, who works with us, comes from the investment banking and brokerage side. So when I met Marty almost 10 years ago now, Marty said after the interview, if you want to call it, that it was more, more of a discussion. He said, My only problem that I have, Andrew is I’m not a banker. And I said, that’s the best news you could have ever told me, because I’m not looking to hire a banker. I’m looking to hire somebody who looks outside the banking network. So Marty is a true CTO. He worked at Oppenheimer credit, Swiss Bank of America, both nationally and internationally. Um, So Marty is very accustomed to running teams of programmers, as you could probably imagine. So Marty runs a team internally of about six or eight internal programmers. They will they will work on the programs themselves. They also are great project managers and project leaders. So we couple on bigger projects, which is probably three quarters of what we do. We couple on larger projects his team with an outsourced service. But the outsourced service is not in any remote way leading the project. We are leading the project Marty is leading it with his project leader, using the outsource services more as programmers than as project managers. So at any given time, let’s say we’re working, typically, on several, two, three major projects at the same time. At any given time, we’re probably working with upwards of 20 or 30 programmers across different projects.

Whitney McDonald 09:59:51
Now maybe we can talk through what those projects might entail, what what are the focus of those? Are they kind of client driven on what the clients are at? Asking for more internal projects or back end processes. Maybe you can kind of give me some insight as to what those entail.

Andrew Sagliocca 10:00:10
Good. So I’m going to switch over to the litigation side only because it makes a better point. So on the litigation vertical, which, as I said, is half a trillion, there is about 80,000 there’s 100 plus 1000 law firms in the country. There’s about 80,000 that are both plaintiff or contingent and non contingent. Call it hourly. 50,000 are purely contingent. And our focus for our high value targets is about 15 to 20,000 arguably, depending on how you look at it, ranges in there. If I go a little bit backwards, the first thing we needed to do was focus on data right because if we want to talk about technology and we want to talk about AI. Let’s start with how we get there, which how we get there is data and data enrichment, which we’ve been doing this now for about five years. Soup to nuts and data enrichment and data quality is every moment of every day. It never stops. It never ends. It’s never good enough. It’s always not right, because it’s never good enough. And we spend a lot of time and a lot of resources and quite a bit of money on enriching data constantly, and our focus off of that database, which was built on Salesforce CRM, but again, highly customized to our vertical. Our focus was to get out in front of thought leadership. What does that mean? That means if you’re a lawyer out in the marketplace, you want to know that we understand your business and your business model, right? Who cares about selling products and services? If, if I am empathetic to your needs and wants and and and and knowledge that most bankers don’t have, only because they don’t focus on it, not because we’re smarter than smarter than anybody, but if I am speaking your language through the marketing content that we deliver, then you’re Probably going to know of Esquire bank, our brand, and hopefully think of us when you have financing and or banking needs, right? So, so our focus, in a very long winded, roundabout way, was building a very customized Salesforce, CRM, building out a very robust Salesforce, marketing cloud, building out a very customized website, which, as we all know, is really the front end skin of what’s being done. We’ve built out a digital content page for lawyers separate in the state from our website that you can go out and visit that shows that we understand the business of law and how to run a law firm. And last but not least, we went out with some industry information about people in the law community and the good that they do for the claimants to to promote the fact that, you know, lawyers and law firms are an integral part of what goes on our society, and nobody ever thinks of them until they need them, and until you have a major injury, and then it’s, oh, I need a lawyer. Um, so those are a multitude of things that we are we have done and continuously work on. We have an underwriting platform called Encino, that I’m sure you have heard of, that’s built on Salesforce. So you see the theme here. All of these platforms are interlinked, including all the way down to Fiserv. And believe it or not, uh Encino, at the end of the day, is our one source of truth for our clients, holistically and how we view our clients, because it it journeys the whole life cycle of marketing, perspective, sales, sales, customer updates, underwriting, boarding and the like, including then back from Fiserv. So it’s those are the kind of focal i. That got us here, and now we’re working on solutions that, if I back it up a second, I think the best thing we can do to either vertical we serve nationally, is to make sure we shut our mouth and we listen to what the client not only has to say, but more importantly, let them describe their business. Because usually when you allow them to have that conversation, they typically explain their pain points and what their frustrations are. And I think we do a pretty good job of listening and then trying to diverse solutions. So one of the things that we are working on currently, which is a significant project, is a customized lending platform for the litigation market that will probably roll out early part of next year. That is not Fiserv, not FIS, not Jack Henry, that we had to work with the software provider over the past year on some significant customization for our vertical.

Whitney McDonald 10:06:13
Now I know that you kind of just talk through a little bit of a future look and what’s to come on the litigation side, anything on the small business side that you’re seeing or hearing from your clients, that they’re asking for, on the innovation front, anything specific to that side of the business that you’re innovating around, or I know that you just mentioned, of course, listening to clients is the key. So anything that you’re hearing on that front,

Andrew Sagliocca 10:06:40
you know, in the in the litigation vertical, all start there that we service. They are looking for. It’s a it’s a very unusual market. You know, we don’t see non bank finance companies as competition, their business partners. We don’t see fintechs as competition. We see them as business partners. So at the end of the day, what? What the small businesses we service on the litigation side, which we are a fraction of, which is why we spend so much money on marketing and growth, and which is why we grow it 20% or more a year, because there is a lot of upside and a lot of opportunity. They are focused on an institution that understands their vertical one. We already talked about that too, is willing to partner with non bank finance companies, which we do, because we can provide every solution they are looking for, in house solutions so that the branches in their office, we do that they are looking for a one step process for their accounting or controller or CFO area, which is the backbone of any business. So what we’re hearing is is pretty simple. We want to be able to serve self service our banking needs. We want you to be very flexible. If you can’t provide all the financing. So we want you to forge those relationships, because we don’t want to do it. We want self service on the lending side for these micro loans we use for the cases we manage. We want to be able to be more granular on our escrow management side, because at the end of the day, an escrow account is really a conglomeration of claimant money, and the more you can fragment that and bifurcate it and break it down, the easier it is for them to manage. And the traditional, listen, I think Fiserv and FIS and Jack Henry do a great job. They really do. But at the end of the day, as far as cutting edge technology, you know, they typically buy it rather than build it. When they buy it, they don’t integrate it. And if we understand what our client needs are, then we’re able not only to go to them, which typically other than the core platform, they’re not the ones we select, not for any other reason, but they’re usually not at the forefront of the technology, and they’re usually not willing to spend a lot of time customizing that technology for our needs. On the payment side, small businesses want to be paid quicker. I. Yeah, right. I you walked in Whitney walked in today and swiped her card and bought a dress, and I’d like to be paid today or tomorrow morning. And you know, ACH and wires don’t cut it. Wires will never cut it. ACH is more of a delay, and they are looking for real time payment, which we are involved in and on the forefront of with, obviously, the Fed and the Clearinghouse, looking at real time payments, not only looking, but actually in the middle of testing it and making sure that we like it with select customers. And the card brands like Visa, for instance, have great programs called visa direct that we are speaking to them and working on that not many institutions are involved in. So you know, on the payment side, My head spins every day with the amount of technology. I think there’s more technology on the payment side than there is room for growth on the payment side, and there’s endless room for growth.

Whitney McDonald 10:11:15
You’ve been listening to the buzz a bank automation news podcast. Please follow us on LinkedIn, and as a reminder, you can rate this podcast on your platform of choice. Thank you for your time, and be sure to visit us at bankautomation news.com. For more automation news, you.

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Whitney McDonald

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September 30, 2024
Podcast: JPM connects to French payments network Cartes Bancaires | Bank Automation News

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J.P. Morgan is joining French payments network Cartes Bancaires, Mike Lozanoff, managing director and global head of merchant services at J.P. Morgan, tells Bank Automation News on this episode of “The Buzz” podcast.

The bank is tapping cloud-based Renovite to build the connection to the network, Lozanoff says. The bank acquired Renovite in 2022 and is using the cloud-based solution and its team to build the tech, he says.

“We’ll be the first American bank actually part of the French banking system, where we’ll be registered and able to offer that card type directly in France,” he says.

Cartes Bancaires is “favorable to merchants” as a network as the cost of payment is low, Lozanoff says. The bank plans to have the card offering available by 2025.

Listen as Lozanoff discusses updates to JPM’s merchant acquiring business, including international efforts, e-commerce innovation and in-store offerings.

Early-bird registration is now available for the inaugural Bank Automation Summit Europe in Frankfurt, Germany, on Oct. 7-8! Discover the latest advancements in AI and automation in banking. Register here and apply to speak here.

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

Whitney McDonald 10:09:05
Music, hello and welcome to The Buzz a bank automation news podcast. This episode of The buzz is brought to you by bank automation summit Europe 2024 which takes place October 7 and eighth in Frankfurt, Germany. This event is tailored to resonate with financial services professionals focused on business optimization through technology and automation learn how to overcome implementation challenges by hearing first hand from C level executives from institutions including JP Morgan, Barclays, Starling bank and more. There’s no better place to get a read on the competition than at Bank automation summit Europe 2024 on October 7 and eighth. Register now at Bank automation summit.com my name is Whitney McDonald and I’m the editor of bank automation News. Today is August 20, 2024 joining me from JP Morgan is Mike lozenov. He is here to discuss his global efforts in the merchant acquiring business at JP Morgan, including tapping into a French network and boosting in store services. Thanks for joining us, Mike

Mike Lozanoff 10:10:01
first. Thanks Whitney, for having me on I’m excited to be here with you today. I have a little bit of unique story. Probably, in this day and age, I started my career out of college with JP Morgan, I guess it was bank one, and there were mergers along the way. And I spent, like, the first 12 years in engineering in our credit card issuing business, you know, from working second shift as a as an operator, to writing code in our card issuing business, and then moved over to our Merchant acquiring team about eight years ago, and now have run a lot of the engineering platforms for our card issuing and merchant acquiring so I got, like, a deep engineering background, but over the last five years, got the chance to run product and engineering for our enterprise business, and then recently, just was elevated to be the global head of merchant services for JP Morgan. So that remit includes leading the strategy and execution and full PNL accountability of our business here that provides merchant acquiring solutions to some of the largest global clients, and then also small businesses through our Chase branch network.

Whitney McDonald 10:11:09
Great. Well, thank you again for being here with your background in engineering and then, of course, leadership as well. You have a great kind of combination of background here that I’m sure helps you with innovation. So before we get into new technology and what you’re focused on right now. Maybe you could tell me a little bit about who you’re leading, what your team is made up of, and kind of give us a little glimpse into what your team looks like.

Mike Lozanoff 10:11:32
Sure, sure. So, you know, we have being a global merchant acquire we have a team that focuses on international markets, and I have a team there focused on on our gear up and Asia. We have teams in the US that are focused on our small business distribution and the solutions there, as well as our enterprise segment, which can be quite complex in enterprise payments, whether you’re selling directly to the largest retailers on the planet or distributing to partners and payment service providers that you know, offer their services as an intermediary. You know you have to manage those relationships, and many of them have relationships with the bank. So quite have to navigate that. Quite complex from time to time, teams focused on commercial sales. So how do we get the product and how we want to sell it? How do we want to price it? We talk to clients about it, a team very much focused on that. And then a team that gets a lot of work these days is focused on our payment networks and government relations. A lot can a lot can happen in this industry and regulation differs by by country and region. And so need to have a team there that also focuses on that. And then obviously, you know, my my comfort in engineering, I have that team as all as well focused. But of late, that’s kind of where I grew up and have a comfort zone. So I’m getting to learn a lot more of the business side, which actually has me really invigorated.

Whitney McDonald 10:12:57
Yeah, I’m sure that there is never a dull moment from the innovation to keeping up with client needs, and then the regulation piece of the puzzle, I’m sure, is just the the cherry on top, trying to bail it absolutely. Um, well, when it comes to what you’re working on, what you’re innovating, maybe you could give us a little insight into what you’re focused on right now. How’s the merchant, acquiring business evolving? What are you focused on? What are the client needs? And how do you kind of innovate around that. What’s the focus?

Mike Lozanoff 10:13:25
No, so we’ve one of the things we’ve been we’re a long standing merchant acquirer, operated under the brand, and many of our clients, you know, still use the brand payment tech. That’s what our contracts still state. And, you know, being a long term processor, you have to reinvent yourself from time to time, and we’ve been doing that now over the last few years, putting a lot of money into the platform and re skinning our offering as a commerce solution. And we have that out there where we’re really going deep into our API and digital channels. Clients need different things in today’s day and age, and how fast they need to get up and operating their. Speed of access to data and giving it to them in a form factor that is more modern has been a big investment area for us. We’re also going into it a little bit deeper into in store payments. We’ve been a strength player in E commerce and, you know, in online and online store recurring payments, but getting deeper as a bank processor in the in store, payments is a big investment for us. There’s there’s still a tremendous amount of spend in store, even though most of us, you know, may shop on our phones, but there’s plenty of things that that chat that way you buy online, pick up in store, and the solutions are quite complicated, and retailers like our brand, so they want to do business with us.

Whitney McDonald 10:14:47
Maybe we could take that idea of being a bank processor a step further. What’s the difference between being a bank processor and a payment processor? What’s the benefit there? I know that you kind of just mentioned you have the client interaction piece. Clients are familiar with the JP Morgan brand, but maybe talk through the differences there and the benefits and why that would be the path that merchant takes. Well,

Mike Lozanoff 10:15:09
I think it’s whether it’s a benefit or how you want to frame it. The thing I think is unique with us is, you know, it’s our brand, our systems, our engineers, our service all running it. We don’t outsource any of that relationship to a third party. We don’t white label someone else’s technology. It’s all us. And I think a little bit that the sales team differentiation there is, right when you have a problem, we stand behind it, and our companies been around for a long time, and will, will weather any storm. So I think one that’s a good point of just trust, right there a trusted name, a trusted brand, and we’re going to put, you know, the firm’s reputation behind anything we put in market. At times, it can also be a tough thing, because the firm reputation or brand can be used against you. So I would like to say payments is a very passionate topic. When companies have any issue, they like to leverage their firm, wide relationship against us, so that there’s always a good side and a bad side to to what you have as a being a processor,

Whitney McDonald 10:16:12
yeah, but I like what you said there about owning the whole journey. You’re not outsourcing any of it. I mean, we do a lot of coverage, and we see all the time, there’s different partnerships. There’s different someone owns this part of the journey. Someone owns this, who owns this part? And if there’s issues with the payment, it can kind of get a little bit messy. So having it all in house allows for that to all be in one place. You know, you’re, you’re responsible for the whole journey. When things are going great, or if there’s a hiccup, you can,
Mike Lozanoff 10:16:41
yeah, absolutely. And it is. It’s a complex thing. I think the the item I’ve, I’ve learned more as I speak with retailers or large clients, is, you know, they aren’t, they aren’t payments experts or transaction experts, right? They just want to run their business. So the more we can bring solutions to them that are, are more comprehensive, is something that they’re they’re listening to. And again, if you have one person or one team to call, and the thing I’ve seen is, what’s kept me at JP Morgan for so long, you know, if there is an issue, we swarm to it and we’ll fix it. And that’s the thing, I think, that’s, you know, also resonates with clients that have a long standing relationships. They know we’ll be there.

Whitney McDonald 10:17:21
Now, speaking of having the the ability to problem solve. You’ve been at JP Morgan a long time. You’ve seen the different, I don’t know, the different innovations come out. You’ve seen how the journey has evolved at JP Morgan, just from being on the different teams that you have been on. But maybe you can talk us through a little bit of some projects that you’ve been involved with as of late. What solutions are you bringing to market? What are you working on? What are you investing in to kind of meet some of that client need Sure.

Mike Lozanoff 10:17:49
Let’s see where to start. I think some of the things that are most interesting lately, we spent a lot of time just keeping up with the regulation and ongoing payment reg. But that’s not the coolest stuff. I think the newer things now are one. I’m excited about how we’ve been digitizing our business and then taking a lot of insights and data assets that we have where we can see one of the other advantages of being a major bank processor. We have a huge consumer set of data. How are all the chase customers that have credit cards or debit cards, spending their money, even if they don’t process with us, we have access to look at these kinds of things and help clients see how they may be comparing their spend against other demographic customers in that same segment. Or the example I like to use is maybe helping small businesses, where we can present them as a comparison tool that, and I think we call client Insights, where we say, let’s say you’re a barber shop and you want to open a second location. Well, where are others spending money in different geographic regions around you? And can even help you understand where you may want to open your next door. These are different things. Things that we’re using to able to use data to help give clients the ability to grow their business. The other one, I see that we’re having to really challenge ourselves about not just being part of the transaction flow, but of the client’s journey. So the more we’re getting able to spend in areas around helping them take other parts of their business, whether that’s payroll and building a payroll service that’s integrated for our small business solution, or giving them something to help them with their Let’s see your subscription client. We’re putting logic in to say we can help manage your subscription billers, that you be your clients, that you bill or your customers, and if they get declined, we will retry on your behalf and do different things to help you not lose that customer. These are things that used to be just, you know, think things that a client would have to manage, or a customer would manage, and now we’re trying to build software on behalf of them.

Whitney McDonald 10:19:57
Now, one of the things that’s interesting, of course, is the idea behind the data. And of course, you guys have a ton of data that you’re collecting. You just talked through that, but being able to tap the data and those insights, like you said, the geography or comparing spending on the consumer side or small business side, that’s something that’s key right now. Are you seeing increased demand for that from the client base right now? Are they using these solutions? Are they tapping something like consumer insights.

Mike Lozanoff 10:20:24
They are, they are, you know, they get, you know, what you always find when you present a new product or a new insight is, like, you get a little bit of, you know, click through interest in the beginning, and then you have to watch it right. What, you know, what I what I think may be next is, hey, that insight is neat, but now I have to turn that insight into an action. Maybe I can inject a loyalty program or a marketing campaign. I think continuing to pull the what’s next? How will it help the business? Is where we’ll continue to innovate, invest.

Whitney McDonald 10:20:53
I think that’s the perfect segue to the next question, which is, what are you focused on right now? I know that you mentioned this is, this is a global business. You have your teams in Europe, you have the teams in us. You have a global business. You’re keeping up with different regulation. You’re keeping up with different payments, rails and networks. What are you focused on right now? What has your attention for? What has had your attention in recent months and in coming months that you’re focused on and prioritizing?

Mike Lozanoff 10:21:22
An interesting one. Maybe I’ll jump internationally for a bit. We, we did announce being a large European processor as well, where one item we’re doing is we’re building connectivity into a French local network called carp on care. We’ll be the first American bank, actually, part of the French banking system, where we’ll be registered and be able to offer that, that card type in directly in France. And I think it’s, you know, it is, think of it as a local debit network of sorts, like we have in the US. They have that in French, and has large spend on it, as it’s very favorable to merchants, as the cost of that payment is quite low. We’re doing that with some of the newest technology that we’ve built. We acquired a company a few years ago that was a cloud switching technology that we’ve now incorporated into our full platform. The company was called renovate, and we’re doing it with that team so it’s a full cloud solution. It’s weaved into our target commerce platform, and we hope to be selling that in 2025 that’s got a quite a bit of work. We’re also taking some of the best assets we’ve got from really trying to stitch in a strong digital onboarding for small businesses. We did a lot of that, and have had that in different places across our our software stack. We’re really trying to get it all into this commerce platform. So taking all the digital assets and making sure, whether you’re small, medium or large, we have one way in to get to our services, the only one that I think is kind of a need. I mentioned this in store piece. So you know, just coming from, you know, a tech background, what I didn’t always realize, and it’s now ruined shopping for me, being part of a merchant acquiring business, because I go in and I look at the terminal and I wonder who the processor is, but that the complexity of what retailers have to deal with, with that physical in store device, their ERP systems and inventory. So the investment we’re kind of making, and you know, our we’re calling it our omni channel investment, where we’re going to start to own the software applications on these terminals that will work natively with our online online interface will help to take a lot of that friction away from clients. So, you know, that’s one I’m extremely excited about we’re probably a year into software development and some of the product development we’ve been talking about at various different conferences, but I see it really going live in 2025 and that’s going to be a new channel for us, because we’ve always distributed merchant acquiring through a lot of those retailers, and they’ll continue to be. Strategic partners of ours, but we’re also tiptoeing into it ourselves to see, you know, can we play in that market as well,

Whitney McDonald 10:24:10
to own yet another piece of that, that whole, the whole value

Mike Lozanoff 10:24:14
chain and that and that headache for clients, how can we continue to take that and see how we can bring that more and more in house?

Whitney McDonald 10:24:21
Yeah. I mean, that definitely makes sense. So you said hopes for that to go live 2025
Mike Lozanoff 10:24:27
That’s right, we’re actively talking to clients now and building a pipeline, but yeah, we’ll really start to get that brought in North America next year.

Whitney McDonald 10:24:38
You’ve been listening to the buzz a bank automation news podcast. Please follow us on LinkedIn, and as a reminder, you can rate this podcast on your platform of choice. Thank you for your time, and be sure to visit [email protected] for more automation news. You.

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August 20, 2024
Podcast: Boosting insight-driven digital engagement at FIs | Bank Automation News

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The banking relationship has expanded outside of the walls of a branch and now the user experience is often formed through digital channels, including mobile apps.

Reward and loyalty solutions provider Prizeout, like many fintechs, is working to fill digital gaps at financial institutions to enhance customer experience, Matt Denham, co-founder and chief product officer at Prizeout, tells Bank Automation News on this episode of “The Buzz” podcast.

“Where tech providers come in, big or small, is when there’s a service or customer product that needs to be delivered that‘s not currently [available],” Denham says.

To improve the digital and mobile banking experience, Prizeout helps FIs push app engagement, by providing personal insights to consumers based on spending habits or by offering instant cash back where they commonly shop, for instance, Denham says.

Prizeout credit union clients include Alloya Corporate Federal Credit Union and Michigan State University Federal Credit Union.

Listen as Denham discusses how fintechs can boost digital engagement on FI platforms.

Early-bird registration is now available for the inaugural Bank Automation Summit Europe in Frankfurt, Germany, on Oct. 7-8! Discover the latest advancements in AI and automation in banking. Register here and apply to speak here.

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

Whitney McDonald 10:49:37
Hello and welcome to The Buzz a bank automation news podcast. My name is Wendy MacDonald, and I’m the editor of bank automation News. Today is August 12, 2024 joining me from FinTech prize out is co founder and chief product officer Matt Denham. He is here to discuss how fintechs work to fill the customer experience gaps that are common at most financial institutions, especially as FIS, invest in their digital platforms, and consumers demand digital and mobile experiences. Thanks for joining us, Matt,Matt Denham 10:50:04
great. Yeah. So it’s great to be with you, Whitney. So my name is Matt Denham. I’m co founder and chief product officer at prize out price out to FinTech partner to banks and credit unions that provide rewards and loyalty solutions to their customers and members. So our goal is to provide a whole ecosystem of ways to support members and support customers getting more value for their money, whether that’s through their everyday shopping or through their rewards programs with their chosen financial institution, yeah, and we deliver that through a product called Cash Back plus that we deliver to multiple financial institutions across the country. Well, we

Whitney McDonald 10:50:50
can get into the technology a little bit in a second, and I do want to hear a little bit more about cash back plus, but first, let’s kind of take it back a little bit and talk about just, kind of where we are today in the digital landscape. There’s changes in demand, what customers need, how to boost customer loyalty, a need for tech providers within the space, you’re seeing, of course, a huge uptick in the partnership environment between bank and fintechs. Why don’t you tell us a little bit about that partnership dynamic, what customers are looking for, and how a solution like prize out fits into the mix.

Matt Denham 10:51:26
Yeah, it’s really interesting, because I think historically, you’ve seen relationships be created in the branch when a customer member walks into the branch and starts to get to know the person that’s going to help them with their help them with their banking. And historically, you’ve seen a bank or a credit union be the place where you send money, you keep your money, you take out a loan, you pay for things. What we’re starting to see in this generation, it’ll certainly go forward from there, is those services don’t sort of meet the current needs of customers in today’s day and age where everything’s done by app. It’s more about how efficiently, how quickly, and how great is the customer service. When I do that, what we’re starting to see is that banks and traditional credit unions can’t necessarily deliver on that in a digital world. So it’s about, how do you create that relationship and that service in a digital world? And I think, much like any industry, even if we step outside financial technology, where tech providers come in, big or small, is when there’s a customer service or a customer product that needs to be delivered that’s not currently being there, finding a gap in the market and meeting customer expectations. Yes,

Whitney McDonald 10:52:43
as you, I’m sure, are paying close attention to, we’re in the midst of earnings right now. And one of the things that keeps keeps coming up over and over again at many of the institutions, if not all, is that investment in digital capabilities, mobile apps, digital usership and mobile usership is all just soaring. That’s what consumers want. So maybe we can talk a little bit about how technology really has changed the game for how consumers really use and look at their financial institutions. It’s really more of like a day to day tool. Maybe talk a little bit about how the how technology has allowed for that. Of course, we’re all on our phones all the time. You can easily access your accounts. You can look to it for different insights. Maybe walk us through some of the ways that the Tech has changed the landscape and the game.

Speaker 1 10:53:32
Yeah. I mean, I think the baseline technology of having a phone in your hands started all this, right? It started the ability for you to not have to use one company for your financial services, but you can use 10, right? And I think a beautiful example of this is the Buy Now pay later industry. Buy now pay later has been created from what used to be layaway, and I said, Hey, what does a customer actually want when they’re purchasing something they want the ability to pay for this over time, not necessarily on a credit card, but when they’re actually shopping. What technology has allowed us to do today is embed that into a checkout experience and actually allow you to pay with that brand within that flow, as opposed to needing to go and say, Hey, go to your bank and say, Can I have a personal loan on this? Can I take out money? What’s my credit score, etc. That’s one interesting example where, either through an app or through a shopping process, technology allowed us to embed financial instruments in there with that having to. Go to your like historic financial institutions. We’re sort of seeing that across the board, from payments to loans to transferring money to spending. It’s attacking, sort of all of those financial services that were historically done from banks.

Whitney McDonald 10:54:51
Sometimes it’s a little too easy to make some of those online payments. Right?

Speaker 1 10:54:58
Absolutely, it’s, it’s kind of interesting when you when you’re in a checkout flow, and you click on a button and all of a sudden you have three steps down, you’re like, What? What am I doing here? It’s so interesting because brand plays such a big, like, such a big role in that whether you’re clicking Apple Pay or you’re clicking after pay, these are brands that have been created, which we haven’t really seen brands in the banking space before. Outside of your banking brands, your trusted brands, it allows them to leverage, like their brand recognition, to actually win your payments

Whitney McDonald 10:55:37
now, when it comes to really looking at financial institutions and even tech providers as a tool, something that you can use day to day for something different than just checking your account balance, how does prize out fit into that, that role, and What role is probably playing in that, that you can access different insights, or kind of be more in the day to day lives of its users.

Speaker 1 10:56:05
Yeah, we actually, we think about that in two ways. We think about that in the first ways, how do you encourage engagement with consumers through an app. I think we I spoke about earlier, that a lot of the engagement between a financial institution and their consumers was done in person, through branches and potentially on the phone. What we’re looking to deliver to our customers and members is a way for that engagement to happen digitally. That’s by providing insights to the end consumer to help them with their financial sort of, their financial welfare. So that’s the first thing we like to do is, how do we actually want? How do we allow a person who wants to be smart about their finances to come in and engage, as opposed to, I think what you see with a lot of products that probably don’t go the right way. They’re trying to force someone to come to them. Well, what we’re seeing in today’s day and age is, if you provide great content and if you provide great solutions to people, they will come. So that’s our first thing, is understanding, hey, there’s so much information that your financial institution has that can help you with your financial life, how do we best provide insights into that for the consumer, so they can make informed decisions and still make the decision that they would like based upon their sort of financial landscape, because it’s different for everyone, but just so surface that information, and then the second part of that is provide them ways once they’ve sort of decided what they wanted to do there to take advantage of it. So we have a product that allows them to take advantage of offers when they’re shopping, where they could potentially get better offers of cash back, or they could take advantage of earning cash back in different ways, by taking actions that suit their financial ecosystem based upon insights that we’ve sort of provided to them. So it’s all about an ecosystem that allows consumers to take advantage of their financial sort of person and set up the plan the way that they would like to set it up.

Whitney McDonald 10:58:04
Now maybe we could take that a step further and talk through the tech behind that. How do you connect with financial institutions to grab those insights and make sure that you are giving whether it’s helping make a decision, or you should really be tapping these rewards of these places. How do you how do you tap into those insights? Where do you pull the data from?

Speaker 1 10:58:27
Yeah, I think you can sort of think about it like technology connections with financial institutions in three ways. Sort of one is the front end integration, which is what you show to a user, so actually connecting to be able to provide them the great experience. But as we’re seeing with sort of the way technology is going today, it’s not only about delivering a front end experience. It’s about delivering something that’s personalized and based on data. So the second connection is connecting to the bank itself to understand consumers and provide them things that are tailored to them. And probably the third, and probably the more standard one, is connecting to spend based information, just like you expect a plaid would. Or you can get that directly from a credit card provider. You can get that directly from the financial intrusion themselves. But it’s about, how do you as a FinTech partner with a financial institution to take all that information and provide it to their customer in a way that they potentially couldn’t do on their own, to sort of help engagement and help the sort of consumers life so. Now

Whitney McDonald 10:59:36
to give us a little bit more insight, use the word insight there um, into how prize out really benefits a consumer. Maybe you could walk us through an example or use case of how prize out has kind of changed the user experience with financial institutions.

Speaker 1 10:59:53
Yeah. So one thing that prize out does is we partner with brands to provide great offers to customers when they’re shopping. So one of the easiest ways that we help, and sort of a core way that we help a consumer in their life, is understanding if they’re shopping a lot in a certain category or a certain brand, and providing them a great way to earn cash back on that sort of above and beyond what you would see on a credit card program or a debit card program. So actually taking someone shopping, helping them with a budgeting tool, and actually giving them ways to earn cash back on spending that they may already be doing or things they’re looking to do in the future, what we’ve seen a lot of is, especially now we’re in summer holiday period, is people taking advantage of great offers, right? The Carnival cruises matched with a with Delta, right? Or an Airbnb program with JetBlue and allowing people to say, Hey, I’m actually looking to do this. I know I want to do it in three months time. Not only, how do I prepare for that, but then, how do I make even my money go even further when I’m looking to take my kids on a vacation?

Whitney McDonald 11:00:57
Yeah, yeah, that’s, I think, especially the key is tapping into the spending that you’re already doing. Tapping into those insights, it really creates a personalized experience. And then, of course, right now, when when data is key, you’re collecting all of this data anyway, and being able to say, oh, so and so shops here all the time. There’s a cash back program for that, so you’re not necessarily having to change spending habits, but you are able to tap into rewards that you didn’t know you were leaving on the table.

Speaker 1 11:01:26
Absolutely, it’s how do you how do you make a customer’s experience great, and how do you give them more value for that? That’s sort of our our sort of motto. And maybe someone didn’t know if they wanted to go a Norwegian or carnival. Could Carnival cruises, and help them get through that decision. And then maybe a part of that decision is the price point. Maybe there’s brand loyalists that just want to go with carnival and therefore we help them get some more money back on that. Or maybe they’re not as brand loyal, and they’re just looking for the end outcome.

Whitney McDonald 11:01:53
Yeah, no, I think that’s great. Thanks so much for walking through that example now with what you do and what you what you focus on in the space, what are you really paying attention to, focusing right on right now, themes, trends. What’s interesting to you in the payments world right now?

Speaker 1 11:02:11
Yeah, there’s some. I mean, there’s, there’s so many interesting things happening right now. And it’s it’s so interesting to see where the tech companies, both fintechs and sort of established all the way up to faang companies, are sort of challenging, right? And I think one of the interesting ones is the point of sale. It’s all about the payment. What we’ve sort of seen over the last five to 10 years is that the way banks are really continuing to engage their members is through their rewards programs, right? That is sort of the place that someone’s really interested in. And I think in banking, there’s a saying that’s like, banking isn’t fun, banking isn’t exciting. So how do you take something that is exciting for a customer or member and provide that to them? And that’s what everyone sees, is their rewards programs or their credit card programs. And well, what we’re all starting to see now is how, how some of the bigger tech companies are starting to come in and try and win that payment. Don’t remember the last time you were buying something online, but there’s Apple Pay, there’s Amazon pay, there’s shop pay, there’s every Google Pay. They’re all trying to get to the front of the line to own that payment experience and then be able to expand from there. So that’s that’s something that we’re watching closely, and we’re playing a part of to help our financial institutions also be able to stay top of wallet there and not use lose that customer to a to an Apple Pay. I think, I think it’s been really interesting, over the last three or four years, the adoption of Apple Pay, and now people are saying they pay with Apple Pay. They’re not paying with their financial institution. So we’re paying a lot of we’re paying a lot of attention to that area, and to make sure that we can help our financial institutions stay top of wallet there.

Whitney McDonald 11:03:55
Now with that in mind, and I’m sure that that kind of sparks innovation too within prize out, maybe you could share a little bit about what you’re what you’re working on now, or maybe through the end of the year, any projects, or even recent projects that you’ve been working

Speaker 1 11:04:08
on. Yeah, absolutely. So I think one of the benefits we have as a as the company, is a lot of those relationships that we have with merchants already. So how do we actually integrate to be able to provide offers to our consumers when they’re actually shopping, and actually give them back, a little like the Norwegian example that I had those offers in line when they’re shopping and. And allow them and allow that to be the reason why they choose to to pay with our financial institution that we partner with is because of the great deal they’re getting and the great experience. I think, I think everyone knows that Apple pays created one of the best experiences in the market. You don’t need to put in your information. You can just one click pay. So it’s, how do you take that? How do you build a great experience, but how do you also build in the next lever, which gives the optionality to the customer of what they want to pay with that great experience? But how do they actually get more back, continuing to sort of own the top of wallet for our partners? I think, I think there’s a couple of other interesting pieces going on in the market right now. I think that there’s a lot of banks that are starting to work out what is their frontier with their customers. So if they are starting to lose payments to Apple Pay and the Colin is sort of taking over some of their like historic spend that they would get. Where do they continue to own that relationship? And we’ve seen some really interesting pieces there, sort of particularly in the travel space. So I think getting back to what I mentioned before, where banking isn’t necessarily engaging in a siding you’re seeing so many of the standard banks or credit card providers coming out and looking to engage and win the travel space, whether that’s Chase opening lounges, which historically only Amex had really had cap ones getting into that space, all of the providers almost are now trying to get you to book your travel through them, through incentives and as well as sort of the standard pieces that you’d expect around insurance and whatnot, they’re really looking to double down on that travel and experience place where now you can book through us, you can have your best experience, not just when you’re booking or when You’re paying, but actually throughout your travel, through going to go into the lounges, and also, if something goes wrong, there’s insurance, there’s there’s things that help you out. There’s been a large investment from the sort of, at least the big banks there, all the way to some of the other sort of challenge built has come out and made a big play in in travel. So that’s an interesting thing that we’re keeping an eye on, is that financial institutions are now looking to work out how they can augment the engagement with their customers from just like pure financial services to almost like adjacent industries.

Whitney McDonald 11:07:15
You’ve been listening to the buzz a bank automation news podcast, please follow us on LinkedIn, and as a reminder, you can rate this podcast on your platform of choice. Thank you for your time, and be sure to visit us at Bank automation news.com for more automation news. You.

Transcribed by https://otter.ai

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August 12, 2024
Podcast: ConnectOne Bank invests in data training | Bank Automation News

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ConnectOne Bank invests in technology that generates data to boost efficiencies, but the systems are only beneficial if employees use them consistently.

For example, the $9.8 billion Englewood Cliffs, N.J.-based bank has used nCino’s loan origination system since 2017, Chief Technology Officer and Executive Vice President of the bank Sharif Alexandre tells Bank Automation News on this episode of “The Buzz” podcast. However, the bank since then has added both modules and employees, so use of the technology has been inconsistent.

To increase consistency and usage, the bank has teamed up with nCino to create a re-education strategy for all ConnectOne Bank staff, Alexandre says. The training took place in recent weeks.

The education for employees ensures that the they know how to the tech to create a foundation for “good, clean data to come out of that system so that we can use it going forward,” he says.

Listen to ConnectOne’s Sharif Alexandre and Siya Vansia, chief innovation and brand officer at the bank, discuss technology and data strategies.

Early-bird registration is now available for the inaugural Bank Automation Summit Europe 2024 in Frankfurt, Germany, on Oct. 7-8! Discover the latest advancements in AI and automation in banking. Register here and apply to speak here.

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

hello and welcome to The Buzz a bank automation news podcast. My name is Whitney McDonald and I’m the editor of bank automation News. Today is July 8, 2024 joining me from connect one bank is Chief Technology Officer and Executive Vice President, Sharif Alexander, and Chief Brand and Innovation Officer siya vansia. The tech leaders are here to discuss the bank’s data strategy and innovation efforts. Thank you both for joining us. Sure.Siya Vansia 10:28:54
Well, thanks Whitney for having the both of us. It’s exciting for me to do this with Shari too. I don’t think I can do my job without so I am the Chief Brand and Innovation Officer at connect one bank. I can’t believe I’m saying this, but I’ve been with the company over 13 years. So I started at a a true community bank, a small 45 person, 400,000,400 $50 million bank, and today we are a regional, bordering, regional commercial bank with a presence in New York, New Jersey and South Florida, so I oversee the marketing communications PR, anything with our logo on it for the bank and our other brands, along with innovation, which is really sort of shaping strategies around FinTech partnerships, potential investments and understanding the landscape and where opportunities for connect one exist to partner and obviously work hand in hand with Sharif on that front. And yes, Sharif on

Whitney McDonald 10:30:07
that note, why don’t you tell us a little bit about your role?

Sharif Alexandre 10:30:09
Sure, I’m frika Alexander. I’m the Chief Technology Officer at connect one bank, and I’m responsible for developing and executing our technology strategy, managing our system and data infrastructure and our software development initiatives. I joined connect one bank in 2022 so I’m a youngin in the banking industry, so it’s about two and a half years and before that, I came from the tech world. I actually founded and ran several startups. So it might seem a little odd that I come from the startup world to a bank, and the that journey really started with getting to know connect one bank and its entrepreneurial culture that was completely embodied by our founder and CEO, Frank sontino, he’s, he’s, he’s a builder. And that translates into, you know, the culture of the bank and the way it operates as an entrepreneur, sort of an entrepreneur organization, serving our clients in that way.

Whitney McDonald 10:31:12
Well, this next question, and this will kind of get in, get us into the bank’s actual technology and innovation strategy, but it sounds like maybe you can both talk us through the innovation strategy at connect one, but maybe Sharif, maybe you could kind of kick things off and talk us through bigger picture and then we’ll get into some more specifics here. But how do you really approach tech and innovation, especially from the tech background that you have? Yeah,

Sharif Alexandre 10:31:35
well, like I said, connect one has always been a tech forward institution, right from its very beginning in and it was also, you know, focused on, on the on the client as the primary it’s not wasn’t just technology, it was in technology and service of the client, and what we can do to make their life a lot better, reduce their friction. So if you think back in 2005 you know probably your biggest technological decision was whether or not to have online banking or not, right? So fast forward to today, and the technology landscape has completely evolved and blossomed in ways that I think it’s been great, but also challenging. We have so many different options with different FinTech partners, with fintechs out there offering, you know, very niche solutions. And so a bank today has a choice of, you know, to to buy the technology, to partner with fintechs, or to build so and over the years, we’ve, we’ve actually done all three, you know, it’s just as an example. We ended up, a few years ago, buying a FinTech called bowfly that services and provides products and services for the franchise industry. On the partnership side, we’ve partnered with mantle for our deposit origination system. We’ve been working on that for the last year or so, and that project is just coming along great. And on the on the build side, one of the first things that I did when I joined connect one was to build a data warehouse, a data lake in the data warehouse, so that we can aggregate the data from our various data sources. And that’s just, again, that just lays the foundation for other, you know, everything else that we can build on top of

Whitney McDonald 10:33:24
that. Tia, did you want to also add to the overall strategy on. Innovation site.

Siya Vansia 10:33:28
So I think, I mean, I think Sharif hit the nail on the head, and we’re in an environment where, especially after 2021 where there’s, for me, there’s never been a better time to be in bank innovation, right? There’s so many options where we’re constantly evaluating what’s on the market. I think, from a higher level, strategic position, like Sharif said, we were founded our it’s in our DNA to sort of build a our bank around the client. And so, you know, when we first established the innovations division, first mandate was, okay, what’s the strategy? How? What does innovation mean at connect one bank, and so to put it very simply, my North Star for our company is to continue the existing mission of the bank. So connect one is a high performing commercial bank that delivers a best in class experience to the small, middle market client. Everything we do from an innovation standpoint, or technology investment standpoint, should support that that mission of the bank. And so it’s sort of broad, and it’s a little bit probably more soft than what you may hear from other tech teams, but it serves as a North Star for our entire team as we’re going out and evaluating the market. And Whitney, you’ve been in this space for some time. You know how sort of the trend cycle works, helps us navigate what trends are worth unpacking and what aren’t, knowing that we’re building around our clients and around that company’s mission.

Whitney McDonald 10:35:06
Well, it definitely sounds like you’re both on the same page, of course, of course, client centric. I know that Sharif talked through partnering, building, buying. Of course, that that question of buy versus build, that you’ve talked through many times. But I mean, maybe we can talk through, how do you collaborate? How do you work together? I know that you have this innovation unit, this innovation division, which is unique, and you’re starting to hear more on the innovation front, but maybe talk me through, how do your teams work together? How do you collaborate? How do you get on the same page when it comes to what you really should be innovating when it does come to that client centric approach?

Sharif Alexandre 10:35:44
So I mean, I think we can start with just the idea that, you know, the business drives in the technology, right? And I think that that’s something that I think, especially coming from the tech side, you get lost around the next shiny object, the next shiny thing that’s going to be super cool, super interesting, super hyped up. And we try to stay away from that and always really stay focused on the client, really, what are their needs, and how do we deliver the value that we, you know, started this, this bank for right, for them to and to reduce their friction, increase their their experience. So there’s and that that takes many forms, right, the the actual technology, or the, you know, could essentially be directly facing them, you know, some front facing piece of system or that they interact with directly, or it could be literally just increasing efficiencies on the back end that ultimately allow us to service the client better. So we look at it holistically, right? And we don’t just look at one little thing or what is sort of like in the hype cycle of tech. Obviously, we keep track of that. We try to keep track of what is going on in the industry and what makes sense and how it might fit with our overall larger strategy, or sort of strategic roadmap, but it is always keeping the client front and center and to that. So how do we do that? We do that by talking to them. We listen. I think part of the, you know, the primary job description for that I have, is to listen, both to clients and internally, to our team members, just to understand what their needs are. What are they saying? What are they not saying? What are their pain points? And then to go and, you know, figure out the right mix of build by sort of, to match those, to cover those use cases, essentially.

Siya Vansia 10:37:38
Yeah, and just to add to that, I mean, I think it’s, we’re, we have very different skill sets, you know, I can’t. So I always joke with Sharif. I say, when he’s, he’s like unpacking the tech. It’s like watching a foreign film. But I think it’s, it’s we spend a lot of time together. And I think what is very helpful is, you know, I Sharif brings such a unique perspective because of his background. I think I’m a little I’ve been in banking for so long, so I think the hybrid works, and I we do a really great job of spending a lot of time together upfront in order to make a decision. You know, does does this use case make sense? Is there a business case here? How does this impact our clients? What are the economics of it? What’s the technology and so. Uh, it takes, it takes so much work and collaboration to get to a go or no go decision that by the time we are ready to execute we we’ve created enough alignment to divide and conquer.

Sharif Alexandre 10:38:41
And the other thing I’d add is that sometimes we just just going back and forth and just thinking through ideas. I mean, there’s like, again, the technology is moving so quickly. A lot of a lot of just conversations don’t end up going anywhere. It’s literally just exploring the hey, does this make sense? Is there a real use case here? Or again, you know, just trying to sort of separate the real value that we want to deliver to our clients from, from the hype of that particular tech that might just kind of be in the moment.

Whitney McDonald 10:39:10
Yeah, a couple things to unpack here. One thing is, definitely you don’t need to get caught up in the the shiny new tech, right? And I think that that kind of came full circle at the end of this Converse or at the end of this question that started this you don’t need the sexiest new technology, right? Sometimes it can be a little bit more simple. Sometimes it can be a front end or back end efficiency. So we talked big picture. We talked about how you approach innovation, how you work together. Maybe we can kind of talk through some of these digital tools or solutions or projects that you guys have worked on. Maybe you can talk me through an example or two here of some projects that you do have, either in the pipeline or that are live today that you’ve collaborated on together based on that client need and that strategy,

Sharif Alexandre 10:39:55
yeah, so as far as I mean, we have, it feels like we do a lot, and so there’s several projects that that we’re currently Working on. One is working with our technology partners, Z suite, which is offers a commercial escrow and sub accounting system, again, that’s to enhance the client experiences for our commercial customers. It really gives them something that allows them to, you know, sort of one, I guess the one of the things that help that we understand is that in order to give the best service to our clients, sometimes it’s super high touch, personalized service, and sometimes this is giving them the ability to self service, because that’s what they need to be able to bank on their time and on their schedule. And this product does exactly that. It gives them the ability to sort of manage their their it gives them a self service sort of way to manage that as well as if they decide, you know, they don’t want to, we can still go in with the high touch personalization that we do. Another project like I mentioned before was is mantle we that was, for us, a complete omnichannel deposit origination system, and we did consumer online onboarding, business onboarding, and we’re completing the branch go out right now as well, so completely on omni channel. We’re also looking at it just internally, looking at optimizing workflows that that we have. You know, it’s interesting, there’s, a an organization actually read the stat, and it’s not too long ago, it was just mind blowing that, you know, the average enterprise is over 1000 apps in your organization. So you can imagine 1000 different apps, you know, that don’t necessarily talk to each other, or that might have some very limited sets of integrations. And so there’s a lot of swivel chairing that still happens. And to me that that’s one of, one of the things that we can do a lot is just optimizing that, that connectivity between, between those apps, you know what? I call it, the sort of creating the connective tissue so that, you know, it is, it is just better levels of integration, and that ultimately leads to better data, which, you know, again, is a huge, you know, priority for us, you know, talking back about the data warehouse and ad so, and then we also have, you know, new verticals that were that we launched. We partnered with Nimbus and launched the venture on brand for connect one. And that’s that again. So those are sort of all the different areas that we are exploring,

Siya Vansia 10:42:37
not the continuous development of bowfly, which, which is why Sharif has no hair. Yeah,

Sharif Alexandre 10:42:44
yeah. So yeah, actually, yeah. And then it goes into the, you know, the custom software development that we’re doing and building out again, platforms, the both side platform, just rebuilding and expanding on that.

Siya Vansia 10:42:57
Yeah, and, I mean, Sharif touched on a lot of great initiatives. There’s, there’s always sort of the headline initiatives that you’ll see in press releases, which are important projects. But there’s, I think, since inception, and really, through building a great team, we’ve, we’ve built a culture of continuous improvement. And so there’s, there’s the headline items that we talk about, but they’re sort of the continuous development. Sometimes it’s developing a. Small. I don’t, I don’t want to speak tech, but developing a small solution that, to your point, connects two tools and eliminates manual process for us, and that’s sort of, sort of always going in the background. You know, we’re a growth company. We’ve made it to 9.8 billion in just under 20 years, and so a lot of we’re always looking to the future for new partners, but we also have to continue to optimize our infrastructure to support scale.

Whitney McDonald 10:44:00
Now, speaking of optimizing that infrastructure, and I know that you both gave examples there of what that looks like and what you’re investing in on that front, one thing that I wanted to break into a little bit here, that Sharif was talking through, is the data strategy, the infrastructure, the systems architecture behind that data strategy, Sharif, maybe you could take that a step further. How are you making sure that you are tapping into your your good, clean data, that data is the name of the game right now, and everyone’s tapping into their data. So how are you ensuring that you’re doing that in a secure, responsible way that’s giving you real outcomes based on your data? Yeah,

Sharif Alexandre 10:44:35
no, that’s a really good question. And I think there’s two components to that. There’s the technological component, and then there’s the human component. And I actually realized that the human one is the much harder one, but on the tech side, which is the easier of the two, it is literally getting we decided to build our own data where so, I mean, there are obviously systems out there that we could have built, you know, to off the shelf or customized, but we decided to build from scratch because we wanted to have that control over every part of that, that architecture, right from from how it’s built to the to the ingestion workflows, to the orchestration, and also that because we wanted, not only to be able to take in the data, to be able to clean it and to store it in the way that we wanted, that we needed to, we knew that we were going To be building off of that. So as an example, we had, you know, one system where we were doing, I think it was five to 10 different daily exports out of that system, into into, into other systems, right? And and each one had sort of its own, sort of separate needs and all that kind of thing. So you had all these different scripts running at all different hours, and we took that, you know, ingested it into the data warehouse, we normalized that data, and then, you know, from a single place, we’re able to export it out to all tech, right, that, and now it could go to 10 to 100 the scale is there for us to be able to easily do that. So it that, from it some from a techno from a technology perspective, we architected and built a data warehouse and the ability to intake different data sources so that we could, you know, do that the hard part is the human part, right? Is the the change management around people. Um, using the systems that that are are generating these data to use them effectively, to use them correctly, not to use workarounds, and that kind of thing. And we’ve invested a lot in that as well, you know, we just recently went, you know, we use as an example encinos, our loan origination system, and it’s a fantastic system that doesn’t and, you know, it is really, you know, the the heart of what we do is generating commercial loans, and so it’s a very cool piece of our, of our infrastructure. But, you know, it’s also as good as the data that you put into it. And we were one of the first, or, you know, early. We one of the early adopters of Encino. I think we started using it back in 2017 and over the over the years, you know, we’ve had, you know, new employees come and different, you know, modules get added and that kind of thing. And so we noticed that the usage was not as consistent as we’d like to so over the last six months, we worked through an entire strategy to re educate the entire user, you know, client base here, our employees here, to be able to reintroduce and so, you know, to the to everyone that needs to use it and to norm, sort of normalize, or to get everyone to be able to use it in a consistent way. And that really was in service one of just, you know, getting efficiency, making sure people know how to use it and use it well, but also to create the foundation for good, clean data to come out of that system so that we can use it going forward.

Whitney McDonald 10:48:06
And has that consistency changed over the past six months? Well,

Sharif Alexandre 10:48:10
we spent six months in partnership with Encino to do a week long training for the entire company. That just happened. That just happened a couple of weeks ago. So we are keeping very close tabs on that there were definitely sort of. We baked in a lot of metrics, just, you know, to track how we’re doing in that, in that sort of, in that effort. Let’s talk in about six months, the, you know, the report of how well we actually did

Whitney McDonald 10:48:43
well. I’ll definitely be following up with you on that one, because that’s an interesting initiative and kind of a training effort, but also something that hopefully will be quantifiable in the coming months. So that’s great. So we we talked through strategy, we talked through products in place, we talked through how you look to your clients for what innovation needs they are need to be met for them. So maybe we can kind of do more of a Forward Look here on what the rest of the year, or even further, looks like for you. What are you looking into? What technology are you exploring right now? What are you excited about? What are you working together on?

Siya Vansia 10:49:25
So, I mean, it’s crazy that there’s like less than six months left in 2024 but I think it’s, it’s, I think we’ve been incredibly exciting like close out to the year, and I think 2025 is going to be that’s going to spill over into 2025 so we’ve expanded our talent base. We’ve made some really great hires on the digital cooperation side, and that only propels our our ability to transform our infrastructure and really build best in class solutions. Um, think, very candidly, a lot of the projects that Sharif had talked about are coming to fruition. And so, you know, one once those systems are fully implemented, it creates a whole new layer to to build on and develop on. And so that’s incredibly exciting. I know he touched a little bit on venture on which was built in partnership with a tech provider called Nimbus. We’re live. We’re in production today we’re live, and so the rest of the year is really building that product out in conjunction with the client base. To me, that’s incredibly exciting. So we’ve got, like, the core down, and now it’s really tailoring that product set to the client. And I think what through Sharif’s efforts within our company, I mean, he talked a lot about, like, the hard part about data is that people, but, but, well, I should say, and we built a lot of muscularity around our company, around data, right? For a long time, data was, was the responsibility of a team, and really one department access the data. And now, with so many different departments, running reports, logging into our data lake, understanding client behaviors, or, you know, whatever, whatever is pertinent to their department, I think, allows us to look ahead very differently, because our whole company has built this muscularity right and so we’re leveraging insights. Driving better results. Every division is thinking about their solutions in both a client centric and a data centric way, and I think that’s incredibly exciting. Of course, there’s always going to be the trends, and I we look forward to them. It is exciting to see where the market’s going. Look at new technologies, look at the new use cases that are possible. And so I’m excited to see what happens in the payment space, what happens in identity, what happens in fraud. There’s a lot of talk about open banking. Think it’s too early to make any predictions, but it’s all very exciting.

Sharif Alexandre 10:52:08
You know, I think the one thing I’ll add, and sort of goes back to that people thing, and I hope that didn’t come across, like, in a negative way. It’s coming from the tech space. There really is an assumption that you build it and not necessarily they will come but like, Hey, this is a great solution to solves a real problem. And now I’m just going to, you know, put it out there in the world, and people should use it and and, you know, you know, it was kind of really eye opening, from my perspective, to to come here and to see that, you know, the it could be the best thing in the world, but if you can’t sell it, and you can’t convince people that it’s something that is going to be a real value to them and ultimately, to Our clients, again, going back from service to our client, that, you know, it’s never, it’s never going to be adopted in a way that it’s going to really have that full value. We’ve seen it again with internal systems, and it’s something I keep, you know, very you know, sort of understand that, take that lesson and apply it to anything that we look to either build by or park right? Because it has to be something that, not only is it a good piece of technology, but is it something that we can bring into the organization in a way that allows that, that that will be adopted, in the way that it needs to be adopted. And we’re going to build, build in and bacon enough to. Time and resources to make sure that that technology is adopted correctly. And I think that that’s that’s interesting and it’s exciting. I know that might sound kind of boring on some level, but you know to get people to to use a new system and to use it well so that, and then they ultimately, you can still want to see that light bulb switch right when it all of a sudden clicks, and they start to use it and use it correctly then, and you kind of see, like, wow, this is really making my life a lot easier. That’s, that’s where, you know, you sort of hit like, you know, Jack life.

Whitney McDonald 10:54:02
You’ve been listening to the buzz a bank automation news podcast. Please follow us on LinkedIn. And as a reminder, you can rate this podcast on your platform of choice. Thank you for your time, and be sure to visit [email protected] for more automation news. You.

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Whitney McDonald

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July 8, 2024
Podcast: Mastercard taps into AI to structure open banking data | Bank Automation News

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Mastercard is using AI to help structure the data it collects for its more than 3,000 bank clients in the United States and Europe.

With connections to so many banks, the data that comes into Mastercard “can be very different,” Jess Turner, executive vice president of global banking and API at Mastercard, tells Bank Automation News on this episode of “The Buzz” podcast.

Turner’s team takes those data streams and makes sure the data is usable and accessible.

“We use AI” to structure the data, she says. “Imagine getting a slew of information, but nothing matches. … You can use AI to help match it.”

Using AI, Mastercard can identify which data belongs in each category, such as income verification, for example.

“That’s where the power of AI is brought to life in a meaningful way in open banking today,” she says.

Listen as Turner discusses open banking innovation, regulation and the future of open banking for consumers and small businesses.

Early-bird registration is now available for the inaugural Bank Automation Summit Europe 2024 in Frankfurt, Germany, on Oct. 7-8! Discover the latest advancements in AI and automation in banking. Register here and apply to speak here.

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

Whitney McDonald 12:46:24
Music. Hello and welcome to The Buzz a bank automation news podcast. My name is Whitney McDonald, and I’m the editor of bank automation News. Today is July 2 2024 Joining me is Jess Turner, Executive Vice President of Global open banking and API at MasterCard. She is here to discuss how AI can be used to organize open banking, where open banking regulation stands globally, and how access to data can boost innovation. Great.

Jess Turner 12:46:50
Thank you for having me. Whitney, so my name is Jess as you know, I’ve been at MasterCard for over a decade, actually over 15 years. And prior to that, I spent time at Capital One and the small loyalty programs, my loyalty business. In between them, one of the things in my career that has stayed consistent is my love for data and technology and creating solutions that solve for real world problems. And so I’ve had the luxury of having some component of those things in every role that I’ve had over my entire career. I currently lead the global open banking team at MasterCard, as well as our API and developer team. And what that means, in plain language, is we work as a unit to bring consented data from a consumer or a small business to a third party, and to do that in ways that solve real world problems. And on the API and developer portion of my team, we work across the MasterCard enterprise to make sure that our products are easy to exceed, easily accessible, and so that our developer community can leverage all the assets that MasterCard has around the world, and so that’s what I do now. And I am based out of New York City, but do, do travel quite extensively to all of the different offices, which I very much appreciate. I’m having to Copenhagen tonight, actually,

Whitney McDonald 12:48:17
nice. Well, that’s, that’s key right now, right the data you can’t, can’t really accomplish anything right now without good, clean, quality data. And then, of course, using that data to solve problems is a lot of what we cover through bank automation news today. So I’m excited to dive into this a little bit more. And then also, of course, with what you do on the open banking front. Of course, data is a huge piece of that maybe we can kind of just start bigger picture before we get into the nitty gritty, tell us where we stand today with open banking globally.

Jess Turner 12:48:49
Great question. I think open banking globally is in different places, in different parts around the world, which is exciting and really how most, I would say, profound changes start. They start in different pockets, in different ways. And I believe open banking is a profound change in the way we do many things. I often say it’s a data revolution, and the reason I believe that is because if you think about data as almost like a currency for consumers and small businesses, where they can leverage their data and use it for purpose, whether that’s in a way that’s about financial inclusion, so they can have people look at data and be able to make different decisions, and they would on their creditworthiness all the way down to something that may seem more tactical, but even using their data just to have a better user experience, and for people who may be not as digital, also could be meaningful, right? And so it has, like, this very large tranche of things it can do, and that’s why I think it’s really different in different parts of the world. And I think it’s just getting started, but has, you know, a fairly accelerated horizon for how it will impact many parts of the world. Certain parts of the world are further ahead than others.

Whitney McDonald 12:50:09
I love what you said about data as a currency and allowing consumers to kind of leverage their own data, use it differently, and kind of have something a little bit more tangible with data, rather than something that’s a little bit more out of touch or maybe something that didn’t feel accessible before. With that, maybe you can talk through how your team approaches open banking. I know that you have a couple of different paths that you take there, but maybe we can kind of start with this data as a currency. What does this really bring to consumers when it comes to giving them some more options, more choice? Maybe talk through that approach,

Jess Turner 12:50:43
absolutely the way the team approaches open banking, really open data in general, which is focused on banking today, is, how do we take something that could be complex and make it something that consumers and small businesses can use, and how can they use it through Our partners? So MasterCard is a business to business entity, but also that focuses on what the end users needs are, and that’s our distribution model has been for, you know, 60 plus years, leveraging emerging technology. And so we can still use that muscle and open banking, and so that allows us to help our our partners. So. Globally in the markets that are ready. And so the reason I talk about it in that way is in some markets, open banking is regulated. Europe and the UK are a great example of that. It’s been regulated for a while, and it’s regulated kind of in different fashions, whether it’s the data elements that get sent over the standards in which that happens. Australia is a fairly new market, also highly regulated. The US today is not regulated, but it’s been commercially LED. The three things those markets have in common is they’re all working to solve consumer and small business needs the way they started. The approach is just different, and I think in time we’ll all become more unified. So what we look at is, how do we bring the markets that are ready for open banking to scale and commercialize? How do we bring those three different markets that are so sizable together, both through technology and solutions, with the right partners to help it scale and provide consumer choice. And so everything we do, we think about that. We think about, how does the scale who’s going to be the winner here on the consumer side? Are they getting something they need? How do you unlock the true potential of what this data and technology can come together and bring forward, even though those markets are in different places, whether it be regulation or consumer need? Yeah, I

Whitney McDonald 12:52:46
like what you said. Of course, the regulation is different, but at the same time, the the same idea is that you’re trying to solve for a consumer or a need, but a consumer need on this example. So consumer choice being one area, but innovation being another for MasterCard and open banking. Maybe talk through how open banking allows for innovation within your unit. A great that’s

Jess Turner 12:53:09
a great segue. So, you know, one example I like love to talk about is this idea of consumers being able to give third parties access to it to help them better understand their credit worthiness. So in the US, there’s a ton of people out there that are credit invisible, and it doesn’t mean they’re not credit worthy. It just means they’re credit invisible because of the model we’re in today. What open banking has done with innovation is allowed other entities to let consumers or small businesses say, Hey, look at my bank account data. You’ll see that, although I might not be in the traditional credit model world, I am credit worthy, and then you’re able to provide a loan that makes sense for them, some sense our capital for a small business, that allows them to live their life in a very different way and grow. That’s a sense of innovation that having this data connectivity, if we didn’t have that connectivity with the data and open banking, with safety and security embedded in it with data principles embedded in it. You wouldn’t have an innovation like that, right? You wouldn’t be able to have a different view on what’s responsible lending really mean. And so that’s a really impactful innovation, because you can imagine, especially in the small business space, if you can get responsible lending to a small business, they can make more money, therefore they can put more money into the economy, and it becomes this full circle of old boats rise. That’s one I’m going to give you another one really quickly. Another one I’ll focus on in the US again, is a partnership we have with Chase or pay by bank account. But the reason I talk about it is the bill pay segment is a little bit antiquated in the US, in some pockets, and a lot of people will type in a check number, for example, to pay the utility bill. And the experience is tough. The conversion rate can be low not people don’t always realize that ACH isn’t real time, like a carded product, and what can end up happening is somebody wants to pay their bill. They don’t have the money. When the actual ACH players, the person you know, the biller, is not getting paid, the bank has to provide some type of overdraft on it. And banks in the US don’t want to provide, don’t want overdraft, and the consumer who just didn’t understand is also in a bad position. So we’ve created a score called payment success indicator that can tell the consumer, hey, it’s not likely the money might be there in two days. And so that’s another innovation where old bullets rise, and that’s why I think open banking is so different. It’s a, it’s a phenomenon where everybody in the ecosystem and the chain really, really benefit. And there’ll be so many more innovations, but those are just two that came top of mind. Yeah,

Whitney McDonald 12:55:54
those are great examples, and thanks so much for talking us through those. Now, when it comes to open banking, you have to talk through data security. It’s, it’s a necessity. It’s something that comes up every time you hear open banking. So maybe we can talk through how MasterCard ensures data security within open banking. How do you solve for these problems on making sure that security is at the forefront? The

Jess Turner 12:56:15
MasterCard has had a big data responsibility voice for a long time. We’ve come out with principles well before regulation was put in place and. We talk about putting the individual at the center of all of our data design. So we always say privacy by design and our products right? Consumers, you own it. You control it. You should benefit from the use of it. We’ll protect it. That’s how we talk about things as a product organization, with our engineers as well. Why that’s it matters is because as we build things, we embed layers of privacy and security safeguards into the actual products as they’re being developed, so that they’re easy to use, because people want privacy and security, but not with not with a ton of friction. If you can prevent it, right? You want to still make it easy use. And so for those reasons, that’s how we start and we design the way we’re going after things. One of the examples is we have a product called like identity verification, where, again, with consumer consent, we can go in and say, Hey, you are. This is, in fact, your bank account, and you’re connected to it. And we have a slew of products that we can combine, and actually different data elements we can combine that. Can say, Whitney, you are who you say you are. You are on the device that is you’re typically on. And, oh, by the way, yes, you are trying to connect to your own bank account, and not someone else’s right? And so we can do that. We can embed that in the product design. So it is, in fact, the product. It’s not a product that’s sitting on top of it. And then when you can do that on the forefront, then you can connect to ACH real time payments, general account opening, because you’ve secured the front end of that right end to end, in an easy and friction free way. And so that’s that’s why we spend a lot of time on that and open banking. We think we have a lot of value to add for the entire ecosystem. And also because in certain flows right now, like ACH and RTP, there is fraud and there are things that happening. So we can add value into the ecosystem by creating the front end portion of those connections in a way that’s a singular product,

Whitney McDonald 12:58:19
yeah, ensuring that verification right from the get go, making sure that once you’re into the product or you’re leveraging, or you’re into the account, it really is who you say you are, then you can kind of take the steps from there, however you’re using your account. But we talked through innovation, we talked through data security, we talked through bigger picture open banking. But of course, we have to talk through AI and open banking as well. Maybe we can talk through how AI has been fitting into the open banking landscape, specifically for MasterCard, any use cases or places where it fits into the fold. But yeah, maybe we can kind of bring AI into the conversation.

Jess Turner 12:59:00
Sure. Of course, we have to, right, right? So MasterCard has been harnessing AI to protect over 125 billion payment transactions every year. We’ve been doing that by preventing billions of dollars from being lost to cyber criminals and detect detecting fraudulent activity. And so this isn’t new for MasterCard. We’ve been doing it well before it was a big buzzword, and we’ll continue to expand and do new different things there that are done in responsible ways. For open banking, we’ve been using it for a very long time as well. MasterCard acquired a company called finicity in the US and Aya in Europe, and then we’ve also home built many of our services and platforms in conjunction with the acquisition, but fenicity, well before MasterCard acquired them, was far into AI, and then we’ve continued to embed our expertise there and our data scientist group, and we use it for things like cleaning and categorizing data. So, you know, I talked about how I’ve always had a great love for data, which I do. But you know, we have connections to over 3000 banks between the US and Europe alone. And the access to these banks and the way the data comes in can be very different. And so being able to take these data streams and make that data usable so somebody knows what it is, is a powerful and meaningful behavior and activity, and we use AI for that as one example, and it continues to learn. And there are far others, but that’s that’s what I think people can understand. Like I always I say to my children, imagine getting a slew of information, but nothing matches, and then you can use AI to help it match, and then it learns again, and then you have human intervention and supervision to make sure it’s accurate. But then it allows a slew of data to actually say, hey, actually, that is someone’s income. We can verify it for you. And that’s where the power of AI is brought to life in a meaningful way in open banking today.

Whitney McDonald 13:01:03
Yeah, and I mean, that’s a great example, and a great way to put it for kids, or not kids. I mean, for anyone to connect the dots on how AI what AI can accomplish. So that’s great. Before we close out, I was wondering if there’s anything that you’re working on, or maybe you’re focused on in the short term, that you’re excited about, or maybe kind of just. Share a little bit about what your focus is today, what you’re paying close attention to. Absolutely,

Jess Turner 13:01:29
in our day to day, we focus on, you know, again, bringing, bringing all of these platforms together, and really being a game changer for Financial Inclusion, as well as empowering the businesses that we’re in today. And can expand into some examples that I would say are really leaning into the small business environment. We are a big believer that supporting small businesses and ways either to gain capital, pay more effectively, receive money in a better way and also reduce fraud, is something that we can have a core we can really help advance and help them conquer together. And so we spent a lot of time on that. We’re also very well situated in the account to account space to help reduce fraud, help validate who the bank account owner is, if there’s actually funding in it, like I talked about before, and being able to show risky behavioral patterns there. So we’re going to continue there. Deep believer in more data will help more fair lending around the world. And so we’ll continue that as well. We’re a CRA and the US so that we can do that in a way that’s responsible and help consumers and small businesses really lean in and, you know, have an ability to share the information that’s needed so that more wealth can be went out and provided there. So those are, those are some of the biggest areas that we continue to really, really lean in on. What I will say, as we continue to move forward in the open banking space, and we continue to see global expansion around the world is helping large enterprises connect best practices and really know, like, how can this open banking revolution really help your business, whether it is in a friction for user experience with better security, all the way Through providing capital, providing customer choice on payments, PFM, active PFM tools, right budgeting tools, giving you financial power. How can we do that, and how kids, as we work around the world, you know, as as really, the only global enterprise that does that today in a meaningful way. How can we share best practices to help accelerate the adoption of what is possible and capable, both with the data and the technology surrounding it.

Whitney McDonald 13:03:48
What takeaways or forward look on open banking would you leave the audience with?

Jess Turner 13:03:55
I think the only two things maybe I would leave with is I spend a lot of time trying to solve real problems with data and technology, which I love and enjoy. I do think that the best solutions is when there’s a unification of solutions. And so I didn’t talk a lot about that. But you know, combining open banking with, you know, blockchain technology, you know, possibly loyalty, identity, the things we talked about, carded transactions, that’s where you’re going to start to see like homegrown, combined solutions that connect a lot of different things. And so we spent a lot of time there, too, and that, what I left out is the only way things scale is if consumers and small businesses want to use that and you really have to have trust. Trust has to be at the cornerstone of that which I feel grateful that we are MasterCard, and people have been trusting our brand for a long time, but people aren’t going to give you access to their data for things that make their life better unless they trust you, and the only way you can do that is with a good brand that you’ve been able to stand behind, and doing that in ways that do require you to again, put data, privacy, safety and security at the heart of everything you develop. And I, you know, I often skip over that just because I work at MasterCard and I take for granted the trust and honestly, the rules that we live by across our entire business. But nothing will scale if consumers and small businesses don’t trust what you’re doing, right? And so that’s going to be a big, big driver and how quickly making scales

Whitney McDonald 13:05:35
go. You’ve been listening to the buzz a bank automation news podcast. Please follow us on LinkedIn, and as a reminder, you can rate this podcast on your platform of choice. Thank you for your time and be sure to visit [email protected] for more automation news. You.

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July 2, 2024
Podcast: Retail POS lending is an opportunity for lenders, Pagaya president says | Bank Automation News

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Point-of-sale financing as an alternative payment method is a growing opportunity for lenders, technology company Pagaya’s President Sanjiv Das says on this episode of “The Buzz” podcast.

According to auto lender and Pagaya partner Ally Financial, POS financing is expected to reach a value of more than $81 billion by 2030.

“This new category of loans is a really new exciting asset class,” he says. It “will be transformational to lending in our institutions in the next few years.”

Consumers can obtain retail POS loans for medical purposes, educational purposes or home improvement, Das says. If a consumer wants a home improvement loan, instead of applying at the bank, they’d apply at a Home Depot, for example.

Pagaya works with U.S. Bank and recently extended its relationship with the bank to include U.S. Bank’s subsidiary Elavon’s point-of-sale business, Das says.

Listen as Das discusses POS financing and the opportunity it presents for lenders.

Early-bird registration is now available for the inaugural Bank Automation Summit Europe 2024 in Frankfurt, Germany, on Oct. 7-8! Discover the latest advancements in AI and automation in banking. Register now.

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

Whitney McDonald 13:45:11
Whitney, hello and welcome to The Buzz, a bank automation news podcast. My name is Whitney McDonald and I’m the editor of bank automation News. Today is June 25 2024 Joining me is Sanjiv Das, president of pagaya. He is here to discuss the power of data. Pagaya is banking partners and the evolution of POS retail lending. Thanks for being here on The Buzz.Sanjiv Das 13:45:35
Sure. Whitney, thank you for this opportunity. I joined pagaya About six months ago as president, and as you know, pagaya is a FinTech, credit solution provider. It has a two sided model. It gives loans to consumers that would typically not get a loan from their mainstream lender, pagaya approves these loans through an API interface with the mainstream lender, and then through a pre funded model, it sells those loans directly into an ABS structure. So pagaya is a two sided has a two sided model, consumers on one side, ABS, investors on the other side, and pagaya is in the middle. That basically facilitates loans to people that wouldn’t have normally received their loans through a mainstream lender. By way of background, I was CEO of caliber home loans before this, and had a great extent making sure that consumers got mortgages and consumers bought homes. Before that, I was at first data, which was a KKR owned company. I took, took that public along with a team of people at first data, which now called Fiserv. And before that, I was CEO for Citibank’s mortgage Division during the housing crisis.

Whitney McDonald 13:46:50
Great, well, lots of great experience as you kind of break into this role at pagaya. I know that you mentioned you’ve been in the role as president for about six months. I think you you started or took on that role in October, maybe talk us through what’s been going on the past six months? What have your top of mind? What have you been working on? Or what was your first orders of business? Well,

Sanjiv Das 13:47:12
one of the first things was that I realized banks really needed someone like pagaya to partner up with them, and so we have really sharpened our strategy with respect to complementing the bank offering. We announced our partnership with US Bank not so long ago, and have now extended that relationship from the US Bank Personal Loans business to the elevon point of sale business. We have now spoken to close to 15 banks, and have really, really strong institutional coverage with respect to the bank, so that that business is doing really well. Banks realize that in order to broaden the base of their offerings to consumers, particularly Americans who can’t get credit through normal mainstream institutions, they find pagar to be an excellent partner to complement with. So that’s been really my number one focus, and the second has been making sure that our value proposition is understood there by our abs investors. As you know, this has been a pretty volatile market with respect to interest rates, and so we’ve been making sure that we meet the needs of our abs investors. So making sure that the two sides of our two sided value proposition is strong has been my focus in the last six months. Great.

Whitney McDonald 13:48:33
Well, thank you so much for talking through that focus. And one thing that we can kind of dive into here is some of those conversations that you’re having with financial institutions and kind of broadening what you’re offering to them. Of course, we can’t have conversations nowadays talking to tech providers without mentioning AI and the AI infrastructure that you offer, maybe we can take a step back before we get into the bank conversation and talk a little bit about the innovation. How do you ensure that that your team keeps up with an evolving technology like AI, so that you can be offering tech that’s understandable, usable, that that clients can tap

Sanjiv Das 13:49:12
into? But right now, I would say that the fact that we make decisions that are based on real data that we collect from our financial institutions in a way that there is no human bias, but there is rules that have been codified are extremely important ways in which we have made decisions. Secondly, we’ve made sure that we continue to evolve how consumers will behave through different periods of stresses, as I’m sure you can tell, with inflation being high and rates being somewhat high, we have made sure that we modified our models to make sure that consumers across different asset classes, whether they are personal loans or auto loans or point of sale loans, that the behavior is something that we are monitoring across these different. Asset classes. So if, for example, we find that there is some stress going on in the auto side of our business, we will immediately translate that to the personal loan side, knowing that there is a certain hierarchy or a sequence by which consumer asset classes go delinquent. So we’ve been using a lot of our intelligence, using data, as I said, as opposed to human biases, to really understand how markets are behaving and how consumers are likely to behave. So to us, the use of data right now has been predominant in making sure that we really leverage our models, and understanding cross sectional data has been really critical. Instead of making sure that we focus more on avoiding consumer delinquency for a given set of consumer loans, that’s really been where our focus has been. Yeah,

Whitney McDonald 13:51:05
I mean, a lot of conversations right now around the the data is king, right? So leaning on those leaning on that data in order to influence those AI models. And a lot of financial institutions have a lot of data, but how do you tap into that and organize it? So yeah, that’s great. Maybe we can talk through now, what some of those conversations with your financial institution clients, or those that you’re you’re in talks with? What are they asking for? What are they looking for right now. What are some of those conversations entail? Maybe talk through some of those trends.

Sanjiv Das 13:51:38
There are these discussions have been really extraordinarily exciting. Whitney, it’s really interesting because the financial institutions, or the banks on one side, are really watching what’s going on with rates and really constrained in some ways, with where regulation is demanding higher regulatory capital for them on loans that banks feel are lower credit score for them, and so they find us to be excellent partners who will come in and complement their lending strategy. So there have been really intense discussions going on with banks about how pagaya can help them a lot more. And this is not hyperbole. This is what I’ve experienced in my last six months in meeting with several banks, Bank CEOs, many of them, my colleagues from my prior banking experience, they are all really interested in the pagaya solution across their personal loans businesses, their auto businesses and their point of sale businesses. They all want a second loan provider like pagaya. So at the highest levels, those discussions have become extremely intense because of both rate pressures as well as regulatory pressures. The second thing is, banks really love the fact that pagaya takes these loans off their balance sheet, sells it to the ABS investor market, but gives the customer back to the bank for them to be able to service these loans. So banks find that model to be really complementary to what they do, where they keep the customer and the customer relationship, but not the asset on which they need higher regulatory capital. Those discussions have been going extremely well. And the third thing I would say that banks and us have been extremely careful and diligent about making sure that our models follow all the right rules and regulations around fair lending. It’s not just about the loans we approve, it’s also about the loans that we don’t approve. So we want to make sure that when we don’t approve a loan, they have the right explanatory part about why the loan didn’t get approved. And we continue to make ourselves and our banks robust, because we have to meet the high standards that our banks and our that our banks have to our bank partners have to meet with. And so I feel really good about the industrial strength of pagaya to be able to deliver that, yeah,

Whitney McDonald 13:54:12
having that confidence in the decision making. I mean, explainability is key, even just from a compliance perspective. You have to have that explainability in place now, with those conversations in mind and kind of where those are leading and what ideas are coming to the table. How do those conversations spark innovation ideas, or drive innovation ideas within pagaya,

Sanjiv Das 13:54:36
yeah. So a lot of the innovation that we have right now is in the use of data, as I mentioned before, and I don’t want to make it sound any more exotic than it is, because data in itself is so powerful that understanding, for example, the data that is behind a bank’s existing customer base, as opposed to new customers or. In addition to new customers, is something that’s extremely valuable to us, and that’s been a new source of innovation in terms of our new product development and our new product design. So so far, pagaya has been a second look provider to new loans that a bank would originate. Now, pagaya is becoming a mainstream advisor to existing loans that a bank has, and that’s the innovation, because those existing loans, the bank already has performance data on them. So in addition to bureau data, we also look at Bank existing data, and to us that has been a great source of being able to open up the credit box to more loans for existing bank customers. So imagine if you were, let’s say, a Sofi, and you had a depository customer, and that depository customer had a FICO of 680 and SoFi had to say no to their own depository customer, that would be embarrassing, and that customer now gets a pagaya loan through SoFi and and, you know, so now the customer has a much higher degree of satisfaction with their primary lender and their primary depository bank. And so keeps that relationship with sofa and makes it stronger.

Whitney McDonald 13:56:35
Thank you so much for that example, it’s it kind of helps understand a little bit more what you’re actually accomplishing here with with padaya, and how things are are changing and evolving, and how the technology and the data is being used. Maybe we could talk take that a little bit further. How else are some clients tapping into pagaya now? Or what are some of those other use cases now that that clients are having success with

Sanjiv Das 13:57:03
Yeah, so I mentioned to you how pagaya works with banks. On the personal loan side, we not only work with traditional money center banks, but also the FinTech banks. I gave you the example of SoFi Lending Club. They’re examples of FinTech banks. The major money center banks being US Bank. Pagaya has also had deep relationships with auto lenders, so ally, for example. And the big thing that we are realizing in our relationships with with our lending partners, is that is that it’s not just about being able to provide credit, but it’s also being able to approve more loans that comes through their dealers, for example, or through their branches. So there’s a great deal of intermediary satisfaction when they don’t have to say no, and they can say yes to more customers. Now, the most exciting thing, though, has been in the last few months, and I gave you the example of elevon, is the rapidly evolving asset class, as we call it, or area of lending, which is point of sale. Klarna has for a long time been a big client of ours, but the Klarna small ticket loans that I’m sure you’re familiar with is obviously something that’s been a great, great example for us in the point of sale business. But we are realizing that there is a new form of as well, new for us, but it’s been there for a while now of asset class that’s emerging, which is basically retail like point of sale. So these are loans that are given for, let’s say, medical purposes, or loans that are given for education purposes, or loans that are given for home improvement. So let’s say you want to do a home improvement loan, so instead of applying for a separate home improvement loan, you essentially apply for a loan at the point of sale, let’s say, at a Home Depot, and that loan is given by US Bank. But actually that loan is at the back end, truly being given, approved by pagaya for home improvement purposes. But that loan. For that loan, the customer didn’t have to come to a bank branch for that custom. That customer got the loan, potentially at a Home Depot store, you know what I mean. So those point of sale loans that are larger in in size, 15, $20,000 sometimes longer in terms of duration, 18 months, 36, months, 60 months, as opposed to the small ticket items at a Klarna point of sale, where you had to add an at a digital checkout, you would have a Klarna option available to you when you’re checking out. This, these, these new category of loans, is the really new exciting asset class that is that, in my opinion, will be translational to lending in our institutions in the next few years? Yeah,

Whitney McDonald 13:59:55
the point of sale loans outside of a traditional institution is just one of those innovative avenues where you can get access to capital in a non traditional place, even like within a Home Depot, right? Yes, exactly No. That’s that’s different things that that are in place and you’re working on it. I’m sure seeing adoption tick up there. When you think about the either short term or long term efforts that you’re working on, what’s next for pagaya, what are you working on now? Or what’s next for certain AI, or how you’re developing or tapping into data. What’s next? What are you working

Sanjiv Das 14:00:37
on? Well, we’ve realized that we now have because we have 30 partners, and we have so much data, and we have such good understanding across asset classes, that our ability to scale up and to be able to deliver our solution to let’s just take banks for a second as a as a segment of lenders. It’s just such a massive opportunity that one could say we don’t even know what the market cap of this opportunity is going to look like what the TAM of this, of this opportunity is going to look like. Banks are going to continue to shrink their credit box bug guys continue to go to going to expand its partnership with banks for exactly the same reason. The other thing that’s really important is that as data and machine learning and AI techniques are improving, our techniques are also improving. And I’m sure you’ve been reading and hearing about different kinds of AI methodologies or machine learning technologies which have much greater explanatory power in terms of consumer loan acceptance or rejection. So we are spending a lot of time understanding the power of the underwriting process. And our hope is that as we continue to get better and better at what we do in personal loans and auto and then from auto to point of sale loans, that we will expand that same capability to all forms of consumer lending, including credit card someday, home equity loans, student loans. I don’t want to get ahead of myself, but it certainly is heading in that direction where we are truly becoming an expert in complementing financial institutions across all forms of consumer lending.

Whitney McDonald 14:02:32
Now one more question, and we can kind of get into the technology here. Let’s say you do have a financial institution interested in partnering. What does it take on the technology side in order to tap into the institution? What do they need to have in place?

Sanjiv Das 14:02:48
That’s a great question. So when we talk to a financial institution, we go through a pretty intense process of really ensuring, once we get past the value proposition of what pragaya does, really ensuring that our models are models that they are completely comfortable with, because the because the the consumer is assuming that the lender is the true lender, we have to act, and we are acting on behalf of the lender. We have to make sure that the model standards that we have are up to the standards that the lending institution would have. Second, we want to make sure that the integration of our models into the bank underwriting system, the origination system, is seamless, and so we go through a pretty intense onboarding process. Sometimes it takes Whitney eight to 12 months to really onboard the pagaya technology solution and and make sure that our APIs that are connected to the bank origination systems are absolutely seamlessly integrated, so that the pass through of a loan from a bank to us or from any lending institution to us, is seamless to the consumer. And then we make sure that the loan is approved in seconds, milliseconds, so that it is it basically runs through our our systems and gets approved or not. And then we want to make sure that the chain doesn’t stop there, that, as you know, the delivery cycle goes all the way from from once the loan is approved, to how the loan sits in the bank’s balance sheet for at least, you know, a couple of days. And then comes across to our abs funded structure in a seamless way. The master Trust, the ABS trust, are all sort of involved in this process. And then the loan goes back to the cons, to the to the lending institution servicing side, so it makes sure that the servicing is seamless. So also, it’s a non trivial technology integration process. But the beauty of this whole process. Is, once you’ve done it, then you are able to do two things. Number one, you you are in in the banks or the lending institutions technology infrastructure, so you’re part of their offering. And number two, once you’ve offered it to one side of a techno offer of a financial institution. Let’s say you’ve offered it on the personal loan side to extend it to the point of sale side is actually quite simple, so intense in the beginning, but pretty straightforward once you’ve done the hard

Whitney McDonald 14:05:48
work you’ve been listening to the buzz a bank automation news podcast. Please follow us on LinkedIn, and as a reminder, you can rate this podcast on your platform of choice. Thank you for your time, and be sure to visit [email protected] for more automation news. You.

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June 25, 2024
Podcast: Banks explore AI with consumer concerns in mind | Bank Automation News

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Financial institutions must approach emerging technologies such as AI with experience and empathy at the forefront, New York-based fintech Broadridge Chief Digital Officer Rob Krugman says on this episode of “The Buzz” podcast.

Banks are experimenting with AI to ensure that empathy is considered when implementing the technology, listening to client feedback and deploying the tech internally, Krugman said. “That’s a great place to start, because the risk level with that type of experimentation is controlled.”

Listen as Krugman discusses what banks are doing right with AI.

Early-bird registration is now available for the inaugural Bank Automation Summit Europe 2024 in Frankfurt, Germany on Oct. 7-8! Discover the latest advancements in AI and automation in banking. Register now.

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

Whitney McDonald 08:10:35
Wendy, hello and welcome to The Buzz a bank automation news podcast. My name is Wendy McDonald and I’m the editor of bank automation News. Today is June 17, 2024 Joining me is Rob Krugman, Chief Digital Officer of Broadridge. He is here to discuss what banks are doing right with AI. He will also share what consumers are asking for from their financial institutions and how technology can help meet those customer demands. Thanks for being on The Buzz, Rob,

Rob Krugman 08:10:58
absolutely well first, thanks for having me. So my name is Rob Krugman. I am the Chief Digital Officer of Broadridge. A little bit about my background. I’m a bit of a unicorn in that. I started as a technologist, so I graduated college with a CS degree, kind of in the 90s. You know, worked at a number of digital agencies, including one that I was kind of part of the founding team. And so quickly, kind of became interested in the creative side of the of and the design side of the process of thinking about new solutions and capabilities, and moved to a strategy role, a product role. And now I would say I’m kind of more in a futurist role where, you know, my job is really to kind of look forward and kind of understand where things are headed. How do we leverage new technologies and services to digitize experiences, create new platforms and disrupt businesses? So again, I’m a little bit, I kind of you like the term unicorn, because it’s kind of this forward looking term as we think about things. So the other part of your question was about Broadridge. And so, you know, Broadridge is a, you know, depending on the day, 23 $24 billion public company. And there really are, you know, two aspects to our business on, you know, on one side of our business, we provide services to the financial services industry to help them run their businesses. And so, to give you an idea, on any given day, we clear about ten trillion in fixed income and equity securities through our platforms globally, we’re obviously not a broker dealer, but our clients are broker dealers and asset managers. And you know, all different participants in the financial ecosystem. The other side of our business, which represents about 70% of our business, is our communications business. And you know, within our communications business, we help organizations communicate with their customers, with their shareholders, with their clients through a variety of different type of mechanisms. There’s marketing communications, there’s communications about your account, there’s regulatory communications. And you know, we’re not just someone that simply distributes content, but really what we are is we, we’ve become a big data company where information flows into our systems, and we work to take that information and deliver personalized, relevant experiences to individuals, which facilitate actions and facilitate engagement on behalf of our clients.

Whitney McDonald 08:13:05
Thank you. And again, thank you so much for joining us now. You talked us through a little bit of your background. You have the technology side, and now you’re serving as the Chief Digital Officer. Maybe you can tell us a little bit more about that role, what your day to day looks like, some of your responsibilities as the Chief Digital Officer?

Speaker 1 08:13:23
Sure. Yeah. So Chief Digital Officer is kind of this weird title, because it concludes a lot of different things and mean different things, depending upon what organization you work for. So you know, in my role, it really is two pieces. The first part is, if you think about the word digital, it’s digital transformation. And in here’s my view of what the word digital means, right? Digital and digital transformation is, how do we take technology and information, wrap that around a newly reimagined experience from the perspective of the user, we’re trying to solve need for and deliver something new, right? So it’s that technology, content, data, experience, to create something better than what was there before. So that’s part. And I work with the different business units, and I speak to our clients about how do we actually think about digital transformation? How do we leverage these new technologies to reimagine the way we deliver services and the way that that we deliver the services that we have today. The second part is around innovation. And you know, I am responsible for kind of our innovation capabilities. We have an innovation lab. And when I use the word innovation again, I think about it in two ways. There’s what I refer to as sustainable innovation, which is the work that product teams do, where it’s around, creating roadmaps and thinking directionally, where do we want to take these products, and maybe, how do we integrate AI into a particular solution? And then there’s disruptive innovation, right? And so my innovation lab specifically focuses on the disruptive innovation side. How do we think about these emerging technologies, AI, Blockchain? All different types of transformational things for our industry. And how do they create new opportunities? How do they potentially create new businesses? And how do we think they potentially could disrupt our clients, as well as Broadridge? And how do we actually solve for that? And a big part of innovation is not just doing what we think is right, but it’s also working very closely with our clients and creating solutions together. So we can, you know, reimagine financial services together.

Whitney McDonald 08:15:21
So speaking of that approach to innovation, of course, you have the internal team that determines what to focus on, but also what you were just mentioning the client, the client experience, or the client feedback. Also helps with that innovation. So you guys do this annual Broadridge customer experience and communications consumer insight survey. I’d love if you could tell me a little bit about the survey itself, and we can talk through some of the findings of the most recent survey, and what you think the highlights are. Sure,

Speaker 1 08:15:51
sure I listen. I think the the most important perspective of this communication survey and user experience. Customer Experience is the word customer. It’s the word user. It’s how do we actually capture information from the users that we serve, and potentially, even more importantly, from the customers that they serve? To use that as the driving factor of how we develop solutions, right? If you think about experience, experience is not something that the two of us sit in a room and say we’ve got a great idea. It should work exactly like this. We may have an idea, but to validate and ensure that that’s the right idea, we have to go speak to people who are going to use it and how they’re going to leverage it, and we have to understand what they’re about. So from my perspective, experience is kind of synonymous with design thinking. How do we create solutions from the perspective of those that are actually going to be using those solutions and work backwards? Because when we do it the other way, we could be lucky and be right, but when we do it from the perspective of the end user, the likelihood of success is much greater because we’re actually solving problems for the people that we’re trying to solve problems for. And a funny thing happens when you do that, when you solve those problems, you end up solving your own problems. So what the survey provides is, it provides us insights into the way people are thinking about new technologies, thinking about experience, thinking about directionally, that the way that they should be doing things. And we’re able to package that to begin to say, Okay, what other questions are necessary? How does this impact the solutions we deliver, and how do we work with our clients to more effectively deliver what they’re trying to do?

Whitney McDonald 08:17:23
So some of the highlights that I kind of picked out from the survey were AI, implementation, personalization, so we’ll talk through some of those. But first, based on the survey, maybe we can talk about AI. Of course, we can’t ignore AI, right? But what? What banks are doing? What are banks doing? Well, when it comes to implementing AI, what are you guys seeing on that front?

Speaker 1 08:17:46
So I think you know, the first thing that they’re doing is they’re experimenting, and that’s actually the most important thing, right? So what one of the things we notice is that when it comes to AI, a lot of the efforts are internally focused. How do we provide efficiencies making it easier to use our platforms enable financial advisors to do their job better, right? And maybe some customer service capabilities where we can make it easier for clients to actually service and get self service, and then eventually go to the right folks. That’s a great place to start, because the risk level with that type of experimentation is controlled. And you know, so one of the challenges, and one of the things that came out of the survey is that, you know, consumers feel that AI lacks a sense of empathy, right? Right? That’s really good feedback, right? One of the things we also know is that if we look at the technology every single day, AI gets better. I was at a conference recently and someone spoke about that AI is as bad as it’s ever going to be today, right? And you can basically repeat that every single day. And so as we think about the future, how do we leverage AI to more effectively communicate with our customers and to facilitate empathy and understand who they are? Becomes increasingly important. So the other side of this is personalization, right? You hit on personalization as a component of this. You know personalization is really important, right? Specifically, when it comes to communication, we actually have a stat that says 45% of consumers have stopped doing business with companies who did a bad job of customizing experiences to their specific needs. That’s it. That’s a staggering number, 45% so if you take that number, and then you think about AI and think where we could be headed, right? I was in a another session just the other day, and someone was talking about real time experiences, right? This kind of hurt my head a little bit as I was starting to think through the ramifications of it. Because if we think about the way we personalize content, and even the way that we use AI today is to give us signals related to personas, well, what if we’d have to do that anymore? What if we could actually use data and information feed that into a real time experience engine that creates an experience specifically for you. That’s where things are headed. Now, are we there yet? No, right? There’s challenges that need to be overcome. There’s challenges around hallucinations that exist within AI and how do we actually tune the llms properly? That stuff is all coming. I think. The other aspect of this, and this was another finding, is around data, security and privacy, right? How do you you know, one of the really interesting things about AI is all the stuff that we can do. One of the questions we have to ask ourselves is, how much stuff we actually should do, right? So security and privacy become really important because we’re able to gain insights at a level that we haven’t been able to. To before, because the technology can actually identify those and then it becomes a question is, when do we get to that ickiness, right? Like we have to be really careful, in particular in communications, that we don’t scare people away, and that’s where empathy starts to come in. So I think the combination of these things start to work together, and the end result is much better experiences. And if you ask me where I think it’s going to head, I think we’re going to eventually get to a place where we’re able to communicate with individuals as individuals. Yeah,

Whitney McDonald 08:20:59
and you’re starting to see, I it really resonates what you said about AI is as bad as it’s going to be today, it’s so true that it’s constantly changing and and adapting and getting better at what it’s supposed to be doing. I kind of wanted to go back to one of the points that you made about personalization, and it is one of those components of leveraging AI that gets you to a place where you are having these customized experiences. You mentioned a statistic that you’re you’re you’re seeing consumers leave companies or stopping being a client or patron of certain businesses that don’t have that customized experience. Maybe we can break down a little bit what role data really plays in that, and maybe a step further, not just how important it is, but how do you make sure that you are tapping your data as a financial institution? How do you have meaningful data that you can really use to your benefit,

Speaker 1 08:21:56
sure, and I actually think what’s interesting about this, the question you just asked is, let’s also tie AI into that, because I think there’s a role it can play. So you know, if we think about the types of communications organizations send to their customers, I tend to think about it in several different buckets. There’s Marketing Communications, which tend to be the mess the best communications that people send. They’re very, very experience driven. They’re really focused on facilitating conversions, right? It’s about generating new business. So not surprisingly, there’s a huge amount of time spent on them. The Other Side, though, is when someone becomes a customer, all right? So let’s think about financial services. I become a customer of a brokerage firm or an insurance firm or a bank, right? There’s communications that need to be sent to me. Some of them are regulatory communications. Some of them are account communications, like monthly statement, could be trade con firms or other different types of letters and notices that I get from the institution I have a relationship with, by and large, those communications have no empathy. They’re not personalized whatsoever. They’re the same thing that everybody gets. And there’s such a lost opportunity here, right? So one of the interesting things we’ll go back to the survey for a second Gen Z and millennials. 45% of people we said, will stop a relationship because of the lack of personalization. As you get some younger generations, it goes up to 55% so why is that important? What can we do about it? You mentioned data. Data is the number one driver here. If we think about it, we know a lot about the people we’re trying to communicate it with, but what’s happened? And I don’t want to use the word lazy, because that’s not what it is. It’s that we view a lot of communications as checkboxes. We need to send out this content, we need to send out a bill, we need to send out a statement, we usually need to send out a regulatory disclosure document, but we don’t think about the impact on the relationship when we send those things. What if instead we thought of personalization and the opportunities to say every time that we communicate, it’s a touch point with our client, a true touch point. This is a meeting. This is an opportunity sit in a room reinforce the value proposition that we bring and explain information in a contextually relevant way that the customer understand what it means. Right? That would be a huge step in the right direction. So kind of, what are some of the areas we can look at when we want to do that. So one of the more interesting things is, over the last two or three months, a great place to look is LinkedIn, right? So LinkedIn updated their entire platform to integrate AI, so every single post has prompts integrated, where you can get information about what was just said in that particular post. That’s a really powerful thing. So if you think about that in financial services, let’s go to brokerage, for example, instead of simply sending a statement that said, Whitney, you’re up 3% for the month. Here are your holdings, and here’s the return. The reality is that means nothing to you. What would be much more effective if it had said, Whitney, you’re up 3% for the month. Here’s how you compare to other people that look like you. Here are some of the drivers of that performance. Here is, let’s have a conversation, because I think we could change a few things to actually drive better performance. That became an engaging communication and there’s so many opportunities to do that across this content, regulatory materials. I you know, people are not jumping up and down when a regulatory document comes to them, but the reality is, those regulatory documents potentially have really important information, but it gets lost because there’s so much of it. So how do we pull out information and say, hey, the RE. And you’re getting this is because you actually own this stock, right? This is what it means to you. This is what you’re being asked to do, and this is why it’s important. We need to provide that context, that empathy in all types of communications. That’s kind of like bucket number one, pocket number two around personalization is recognizing that, in particular in financial services, people have multiple relationships. I may have a wealth account, I may have a bank account, I may have an insurance account, and they may all be with the same organization. When we get different pieces of information from all of those parts, we’re inundated, right? It actually becomes noise. And so one of the fascinating things that we have found is that in many cases, people prefer the physical experience versus the digital experience, because in the physical experience I know what’s important and what’s not in a few seconds, but in the digital experience, I receive cryptic emails that don’t include empathy, don’t include information, and so I don’t know what’s important, so I ignore them. And that’s a problem for everyone, right? It doesn’t mean we shouldn’t be sending these things. We should, but we should make it part of the story, and that story should really be focused on the needs of that particular person. And here’s the funny thing, people are scared to do this because of regulations. If you actually look at regulations, you understand them, you’ll start to realize that all this stuff can work together, right? We can be regulatory compliant while facilitating empathy and providing a story. And actually, we can do it a lot better digitally than we can physically. And so it gives the opportunity to drive that digital transformation and that digital adoption.

Whitney McDonald 08:27:04
No, it’s such a great way to connect those dots and to provide the example of LinkedIn, and it takes away like the futuristic what can ai do? You’re already seeing a lot of AI application, and this is LinkedIn. Isn’t necessarily financial services, but it is a positive experience that you can gain a little bit more knowledge about who’s interacting with the post. Okay? So can a financial institution gain a little bit more knowledge about how their clients are interacting, or, like you mentioned, you get different things in your inbox or a text, and you’re like, I don’t know. I already know that, or that doesn’t mean anything to me. So seeing AI implemented in that way and saying, Actually, we could apply this to financial services and have much more meaningful like you said, it’s a missed opportunity. You’re already making contact with a client, but you didn’t get anything out of it. They didn’t get anything out of it. So I love that example, and it kind of takes away the what ifs around AI, because you’re seeing it in action in different realms and different industries, and it is working. It

Speaker 1 08:28:11
also can start, you know, with just context, right? Like you don’t. We don’t need to go all the way to kind of creating this uber personalized experience, completely developed by AI. We can actually start with small pieces, and it could be as simple as this doesn’t even take into account AI, think about a trade confirm, right? If you have a financial advisor periodically throughout the year, they’re going to make trades on your behalf, and you may receive, you know, tomorrow in the mail or through email, five trade confirms, and it says, You bought this, you sold this, you sold this, you bought this, right? That’s all it says. And you’re kind of left asking the question, Why? Why did this happen like and there’s no context. Think about the power if it simply said, You know what your portfolio was out of balance against your goals. I wanted to make some changes, so we changed the position, and you now rebalanced against those positions. If you have any questions, give me a call, right? That’s not even AI. That’s just providing a description of actually what happens, and you think about that financial services cases. My favorite example is the explanation of benefits for healthcare, right? I know it’s not finance, but everyone gets this. You get these EOBs in the mail and it says, This is not a bill. You owe $200 and you’re like, What do I do with this? Like, is this? Do I actually owe someone money or not? It’s because context is missing, right? And that’s where personalization becomes so important. I think if it you know, we can personalize the experience and what it looks like. Personalizing the content by providing context is so important for people to understand what it means to me, because if not, it’s just a generic piece of information that really has no strong benefit to me. Yeah.

Whitney McDonald 08:29:53
Now we talked bigger picture. We talked a little bit about the survey. You gave some data there. We talked AI and personalization, but more specifically, I’d like to hear a little bit more about what Broadridge clients are really asking of your team, and kind of how that innovation fits in what you’re working on today to really fit some of those speeds. Yeah.

Speaker 1 08:30:14
So I would say the four primary areas that we’re thinking about when it comes to innovation, the first is experience, right? So, and it’s not just communications experience, it’s experience of everything that we do. How do we make sure that we’re focused on empathy in everything that we build so that. That our communications are more effective, that we distribute on behalf of our clients, that the interfaces that we provide take into account the people who are going to use them, so it makes their jobs easier, right? Just as an example, I was recently, and I’m not going to say which bank it was, but it was recently at my ATM machine, and they rolled out an entire new experience. And what used to take maybe four clicks on the screen on the ATM machine. Now, it takes about 15 and I was like, What in the world did they do? And I was, I was I was visibly frustrated at the machine. I was like, they didn’t do strong usability testing here. I’m not sure what they were thinking. It looks pretty, but doesn’t make my life easier. So that becomes really important. So experience is really important. Ai, I don’t think you can be an organization today if you’re not paying attention to what’s going on with AI, right? And so that comes really from from two perspectives, right? We have teams that are focused on, how do we think about integrating AI into the solutions that we already provide to make it easier for people to use those tools to identify efficiencies and enable those efficiencies to happen. What my team really is focused on, though, is, how do we leverage AI to facilitate more interactive communications, make it easier for people to get answers to their questions, to provide copilots that allow us to kind of dig deeper into information and where it’s going and where I really get excited about AI is the future. How can machine learning plus AI make it easier for people to make decisions, right? So if machine learning is being used to identify anomalies that exist in the data that automatically becomes exhausted as we’re running through and providing processes for clients, can AI actually be trained to actually make decisions, and then when the decision is a priority enough, it goes up to an individual to help them to do their jobs. That’s kind of, you know, one of the things that I look at the third bucket, and this really isn’t communications related, though, I think in the future it will be, is around tokenization, right? So we’re spending a lot of time thinking about not just tokenization in the world of crypto, and we’re doing a lot of work in that space, but also, what does tokenization of real world assets mean, and how is that going to affect and what type of new products and services are going to be made available? Right? We’re seeing a lot of this where banks are experimenting with token ace and asset managers are focusing tokenization. And I think where that eventually comes to is the effect that blockchain and DLT in particular, tokenization is going to have on traditional finance? Right? Are we going to see an eventual move where funds and equities are tokenized assets that trade in a real time manner, and simplify the back office processing and efficiencies to a level that we probably never thought was even remotely possible. So those are kind of like three of the big areas. The fourth, which is kind of more of a an area that I’ve been thinking about for a long time, and it speaks specifically to personalization and communications and everything that we try to do is identity. So you know, one of the the big things that our industry has had to solve for since it’s become a digital industry is identity. How do we do and what do we do with information about our customers? How do we protect it? How do we use it? How do we make sure that it’s not part of a cyber attack or vulnerable, right? And the risk associated with that, and the technology associated cost organizations billions of dollars a year, right? So recently, there’s been some major changes. The the CFPB in November issued a new set of rules, which is kind of GDPR plus for the financial services industry. The White House in February issued an executive order. We’re seeing the same thing in healthcare. And essentially, what it’s saying is that consumer information is owned by the consumer, right? Let’s not question where we might store information. It’s owned by the consumer. And so what we’ve been experimenting with is we experiment with AI and we experiment with tokenization and web three technologies are there opportunities to give consumers control over that information and make it easier for them to engage frictionless with the organizations they work with? Right? Can I have a digital wallet that’s my that’s me, it’s my name, it’s my address, it’s my social security number, it’s the other pieces of information about me, and can I use that to facilitate connections with various service providers? Because when you do that, it eliminates friction, it actually increases security and does other things as well. But the biggest value proposition to organizations is going to be the elimination of friction in the digital world, because friction right now, right we kind of hit on it before 45% of consumers decide to stop doing business with an organization when there’s not a personalized experience. What I can tell you, and it’s not captured in these numbers, but what I do know is that when friction happens, I get an email and I have to click on something and I have to remember username and password I don’t know, or I point my phone at a QR code and it asks me to do something, and I don’t know how to get in. I. That’s kills convergence, right? And so identity is such a central portion of that is, can we simplify that and we can break the barriers to make it easier to flow between the two?

Whitney McDonald 08:35:46
Well, even your ATM example, it’s a little bit different, but you’re like, why is this so challenging? I’ve done this when it was easier, so yeah, the in and the frustration that comes with that, or, like you said, you’re just like, forget it. I don’t want to do this. I don’t want to go through

Speaker 1 08:36:01
this just, just the other day, we had an issue where we’re trying to send money through Zelle, and it got locked up for some reason, and we had to get on the phone at 1130 at night to speak to, like, like, this is crazy to like, ask me questions. You’re like, Is this even the bank I’m talking to? I’m concerned I’m speaking to someone that’s trying to someone that’s trying to steal my information. And you’re like, This is crazy, right? So, like, there’s, I think it goes back to this idea of if we lead with experience and we focus on empathy, and what I mean by that is, how do we put ourselves in the shoes of the people we are trying to communicate with, service, facilitate actions with and make it easier for them to do that in a way that is secure, that they don’t. They don’t necessarily see the security, but it’s there. That’s that’s January law. That’s what we’re all trying to do. Yeah, yeah,

Whitney McDonald 08:36:45
absolutely. And all of those buckets that you mentioned are super important right now, the AI tokenization, and then, of course, the security as well, which kind of all goes into this whole idea of investing in digital and frictionless experiences that consumers it’s very clear that that’s that’s what they want, that’s what they need. And so meeting up with that customer demand through all of those buckets is really important.

Speaker 1 08:37:13
What’s really interesting though, just I didn’t know one point there that you just said. The good news is there’s plenty of places where we can steal ideas from it. I don’t mean that negatively, right? The retail industry, the non financial services industry, is really good at this stuff, like you want to see great customer experiences. Go, look at what Apple does. Go, look at what Amazon does. Go, look at what Google does, right? Go, look at what retail shopper sites do. It’s pretty amazing. And you could say, we’re not competing against the other bank, we’re not competing against the other broker. I’m competing against Amazon. I’m conceding against Apple. How do I actually deliver experiences that are at that level? Because if you do, that’s how you get people excited, and that’s they talk about it like. You want people to become net promoters. Make sure the way that you communicate and the way that you deliver experiences is not viewed against the old bank that they used to work with or the old wealth management firm they used to work with, have them view that against. Wow, this looks like something that Apple would deliver, right? That gives you bonus points.

Whitney McDonald 08:38:13
You’ve been listening to the buzz a bank automation news podcast, please follow us on LinkedIn, and as a reminder, you can rate this podcast on your platform of choice. Thank you for your time, and be sure to visit us at bankautomation news.com for more automation news. You.

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June 17, 2024
Podcast: How FIs can tackle cloud migration cost increases | Bank Automation News

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Financial institutions can look to financial operations strategies to manage costs when moving their operations to the cloud.

“We all know that financial institutions really operate on relatively thin margins, so having really strong governance, good controls, a good handle on your cloud costs is super important,” Donny Cross, vice president of strategy at scalable technology provider Rackspace, tells Bank Automation News on this episode of “The Buzz” podcast.

FinOps is “a management practice that promotes joint responsibility for governing, managing organizations’ cloud infrastructure and its costs,” Cross says. FinOps can play a role in helping manage cloud migration costs by leveraging AI, building budgets and identifying cost increases, he says.

Rackspace offers a FinOps assessment, which includes a two-month overview of a company’s cloud environment, according to the Rackspace website. Following the assessment, Rackspace can identify “low-effort, high-impact adjustments” to the cloud to promote savings.

Listen as Rackspace’s Cross discusses cloud migration, cost management and FinOps.

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

Whitney McDonald 13:05:32
Hello and welcome to the buzz of bank automation news podcast. My name is Wendy McDonald and I’m the editor of bank automation News. Today is June 11 2020, for joining me as Donnie Krause, Vice President of Strategy for Rackspace, he will discuss how fin ops can help financial institutions approach cloud migration, and the cost and budgeting associated with it. Hi, Dani, welcome to The Buzz.

Donny Cross 13:05:53
Thank you. And thanks so much for having me today. Donnie cross, I act as the CFO for the Rackspace, public cloud division for the Americas. I also oversee our fin ops practice, which is one of the largest in the world, we have over 1.3 billion under management, and then Rackspace. As a whole, we are a very large, multi cloud and hybrid cloud provider, both from a private cloud on prem standpoint, but also in the public cloud and one of the largest providers in this services.

Whitney McDonald 13:06:29
Now, tell our listeners a little bit about finaps. That’s a big part of your role. So if you could tell us about the process of maximizing value through the cloud and what that can bring to financial institutions. Those folks that might be listening today.

Donny Cross 13:06:43
I think, for folks not familiar with phenomics. It really is. It’s a management practice that promotes joint responsibility for governing, managing organizations, cloud infrastructure and its costs.

Whitney McDonald 13:06:58
And how would a financial institution really approach they’re fun ops operations? I guess?

Donny Cross 13:07:05
I think for a financial institution, it’s especially relevant, right for a couple of reasons. One is we all know that financial institutions really operated on relatively thin margins. So having really strong governance, good controls, a good handle on your cloud costs is super important. And number two, from a regulatory and compliance standpoint, if you have a good finance practice in place, you really understand the details of your cloud costs and how it relates to your business volumes. Right. So from a regulatory standpoint, being able to be super transparent about your controls, and the components of your cloud costs, I think, are really

Whitney McDonald 13:07:45
important. So we know and we kind of just alluded to that here. But Cloud migration is a hot topic. And it’s a huge investment. But it’s kind of unnecessary investment, we can take a step back here and just talk about the importance of having this cloud migration strategy. Why FIS need to be tapping into that and investing and then we can kind of take it a step further in a second. But let’s talk through the importance of having this cloud strategy and getting your operations to the cloud.

Donny Cross 13:08:12
Yeah, this is this is such an important topic. And I will tell you that it is such a common story for us to come into a client environment, and they’re experiencing cost overruns, and cost increases post cloud migration. And the reason is, right, we see so many customers go through what we call a lift and shift migration, essentially just pick up their applications or workloads and move them to the public cloud. But what they see is they they kind of have their their data center now in the cloud, right? And because the cloud, really that pent up demand issued goes away, everything becomes on demand, then they see themselves consuming much higher volumes and the subsequent cost increase. That’s off all the alarm bells, right. So that that whole issue and drama is easily preventable, right? By getting fit ops practices and disciplines in place during your migration planning. So that’s what we promote. And it’s something that’s, again, not overly complex or difficult to do. Maybe

Whitney McDonald 13:09:22
we can talk through what that migration planning might look like what those conversations by look like the considerations, benefits and how you really consider the cost versus what you’re trying to achieve. What are those conversations with your clients look like?

Donny Cross 13:09:37
So again, when you have kind of this, this Phillips function or discipline in place, and I’m talking about, you’re hiring Philips experts, actually, I’m talking about a joint responsibility where you’re bringing to that migration planning function, technical stakeholders, financial stakeholders, and the business stakeholders. And these three in conjunction then can align on the migration schedule, the sequence, the expected costs, once you land in the cloud, and the ramp of those costs over time, but you must also agree on the ramp down or elimination of the cost from the on prem side, right, I mean, hardware software maintenance labor, data center util. At least you kind of go down the list right? See your it’s so important that you have joint agreement and ownership on that plan as you begin to execute, and therefore kind of avoiding the surprises afterwards.

Whitney McDonald 13:10:46
Yes, avoiding surprises is usually a good thing. That’s usually a positive for financial institutions when you can avoid problems down the road. And that kind of goes toward the strategy, right? You want to have what all your steps are in place, what are you trying to achieve? How much do you want to cost? You don’t want to come across those surprises when you’ve already started implementing a process. So I know that step one is probably having that strategy in place having those conversations, but what would really the implementation of a finished solution look like? So you’ve you’ve come across your or you’ve come up with your strategy, and you have your plan? So you’re ready to implement? What does that look like?

Donny Cross 13:11:25
Yeah, I would say really, step one is getting, you’ve got to have proper visibility. So we call this observability, right, and I would tell you that the hyperscalers, and we’re talking about AWS, Azure and GCP, they’ve done a great job in improving the native observability of their platforms over time. But we still see that there’s a gap. And there’s a number of third party tools, observability tools that provide that additional visibility later. Because you really want to have, you know, a best practice tagging strategy. So you can align costs to the actual workloads and functions. And so getting that in place really is step one, and then having that joint ownership of that thin ops function in place to govern and manage goes along with that.

Whitney McDonald 13:12:18
So when you talk about cost, I mean, we follow pretty closely tech spend, and what all of these types of cloud migration, for example, might cost you. And sometimes it’s hard to quantify. So when you have like a finance solution in place, it’s easier to kind of pinpoint where your savings are, where you’re spending.

Donny Cross 13:12:37
Oh, absolutely, absolutely. And I’ll tell you that there’s a number of steps you go through as you’re optimizing those costs, right? Remember that, and this, this is a key takeaway. We’ve spent decades getting really good at governing and managing our IT costs on prem. Doing this in the cloud is completely different. For going from a CapEx model to a completely APICs model. It is completely demand based, right, volume driven. And so managing those costs is completely different. And so again, having that structure in place, we often advocate that organizations put together a finaps charter, let’s outline the objectives, the responsibilities, the stakeholders, the ownership, that we’re going to then kind of enforce and abide by going forward. But having that in place is so important. When you combine that then with the the visibility or observability I’m speaking of, you can then like No kidding, really understand and govern and optimize those costs. On the optimization front, it’s so common for our customers to over provision in the cloud. The cloud is an elastic resource, it gives us the opportunity to, to right size, the environment, according to our workload demands, right. And then on top of that, we’re able to eliminate waste, we’re able to put financial instruments or reservations in place that dramatically drive that cost down. So it really is a fantastic, I would say environment, right to optimize and align costs to workloads or business function. Yeah,

Whitney McDonald 13:14:26
I mean, that’s essential right now, like you can’t you can’t have a conversation with a financial institution without hearing about cost savings or added efficiencies and being able to pinpoint how much something is costing you or where efficiencies are coming in. That’s, that’s key and almost priceless right now. So let’s say you have this strategy in place you’re ready to implement, what kind of technology do you have to have in place in order to benefit from a solution like this?

Donny Cross 13:14:53
Yeah, I mentioned before, right, the native tooling, native flush, that has gotten much better. But I also really do advocate for third party tooling. We still see a gap in really what customers need in terms of detail, and flexibility to govern and optimize their costs. So getting the proper third party tool in place, and yeah, I’m not going to recommend a specific tool. But I would tell you that if you look at Gartner, Forrester, any of the big analysts they have reviews of we call them CMPs cloud management platforms, right and Though you can quickly see who the top 345 are, that you might look at. Or if you’re using a partner, you know, they’re going to have a tool of choice. So we really do see that being essential to get the proper visibility to really jumpstart your your Phillips discipline.

Whitney McDonald 13:15:50
Now, speaking of technology, and it’s hard to have a conversation right now with talk without talking about AI, what role can AI play in assisting finaps? Yeah,

Donny Cross 13:16:00
thank you so much, right? We can’t have an IT discussion today without also talking about AI. Right? I know, it’s on everyone’s mind. And I’ll tell you that there are actually there are a number of automation features and functions available that are AI light, right without being true generative AI, but let me touch on a few. So in the cloud, we have the ability to set up real time alerting, and anomaly detection. Super important, right. So we had a customer just a few weeks ago, that spun up a generative AI program in test over the weekend. And because they had anomaly detection in place, they were able to shut it down within 48 hours, because it was taking off kind of some runaway costs, right. So if they had let that run until month end, it would have been a disaster, right? So you must take advantage of cost alerting anomaly detection. Secondly, I would point to resource optimization. So the cloud offers us a number of functions that can utilize auto scaling. This allows us to ramp up or ramp down, you know, resource consumption based on the workloads needs or demands, right. So super important. And lastly, I would point to predictive analytics, the forecasting functionality that’s available now is so much better than it was historically so we can look back at do trending analysis, we can easily pick out you know, the the anomalies or the one time events, and really get a very good picture of how to forecast our future spending consumption before we begin to layer on. Okay, now, we’re also going to do these optimizations are these new workloads are coming in? So the forecasting function has gotten much more advanced?

Whitney McDonald 13:18:01
Yeah, the forecasting is really interesting. And it kind of gets me into this, this next question about tech spend, and budgeting and how this can really be a tool for those folks that are on the decision making side when it does come to what goes into tech spend. So how can this be used for budgeting?

Donny Cross 13:18:20
Yeah, so this that, that’s a really good question, I will tell you that we have the most success with our customers who are willing to set up dashboards, right. So we’re, we’re showing budget, are showing forecast, and we’re showing actuals against those measures, right. And when you can do that aligned to business units, you begin to get traction, because people pay attention, they can see that what they’re doing has a direct impact on these results and how they’re being measured. The old management as you know, what gets measured gets done. Right. So this actually does apply. And again, you have proper tagging, we have proper visibility and proper reporting. We see that affecting behavior, which is what we want.

Whitney McDonald 13:19:10
Yeah, I mean, it takes the guessing out of it, it’s right there in front of you. That’s great. Um, now let’s say you’re a listener, here, you’re thinking about or you’re in the process of cloud migration. Of course, you have cost savings on your mind, you’re prioritizing where you should spend and making those decisions. What’s an immediate takeaway, that they could go back to their team and say, this is something that we should be doing or an area that we could prioritize in the short term? Yeah,

Donny Cross 13:19:39
I would say the takeaways are really twofold. One is it’s so important, you must recognize that managing governing your costs in the cloud is completely different. So you cannot rely on past practices as you plan your journey to the cloud number one, number two is from a fin ops perspective, you have to get started. You must acknowledge this is a new and different function or discipline that you want to embed into your overall governance structure for the cloud going forward. So number one is different. Number two, get started.

Whitney McDonald 13:20:21
You been listening to the buzz, a bank automation news podcast, please follow us on LinkedIn. And as a reminder, you can rate this podcast on your platform of choice. Thank you for your time and Be sure to visit us at Bank automation news.com For more automation news

Transcribed by https://otter.ai
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Whitney McDonald

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June 11, 2024
Podcast: AI prescription for banks | Bank Automation News

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Financial institutions look to their tech providers to help them embrace new technologies, including AI.

At cloud-based fintech nCino, Chief Industry Innovation Officer Anthony Morris works to identify technologies that banks need to implement to keep up with the “industry ahead of them,” he tells Bank Automation News on this episode of “The Buzz” podcast.

Many banks want a “prescription” for AI, Morris says.

“My role is to really help our organization craft that prescription, craft how the technology applies in the right part of the customer life cycle, in the right use case, with the right data,” he says.

The Wilmington, N.C.-based tech provider’s bank clients include M&T Bank and Wells Fargo.

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

Whitney McDonald 08:34:15
Hello and welcome to the buzz of bank automation news podcast. My name is Whitney McDonald and I’m the editor of bank automation News. Today is June 3 2024. Joining me is Anthony Morris, Chief industry innovation officer at Encino. He will discuss how AI is unlocking a new value stream for banking in the Tech Trends he has his eye on. Hi, Anthony, welcome to The Buzz.

Anthony Morris 08:34:35
Awesome, thank you so much. I have been in the banking tech space for gosh, over 25 years. And that actually came from a number of years working for a couple of banks where I live and after spending probably the seven, eight years working frontlines working back office working sort of the bridge between technology and business, I was sort of convinced that this industry needed to be changed. I mean, we’re going back into the 90s to give you a bit of a bit of a footprint on my age. And I just was sort of inspired at the time as the internet was sort of being burst around the potential for what technology could actually do for the banking experience for automation for operations for everything and, and I really was spurned into not sparring, but spurred into an opportunity for a tech vendor or what we would call a FinTech before they were called that in the in the mid 90s. And as soon as I worked, started working for a software vendor, I got so enthused about how problems can be solved using technology and not just built on the vendors I worked for the customers I probably engaged with, I think the number is well over 400 banks across the globe and 25 some odd years. And all of that is informed and inspired and excited me in this industry, which is a bit bizarre because you don’t think banking technology is such an exciting thing. But for somebody who comes from the trenches of living it, it I don’t know, the spark hit. So I leverage all of that experience across every domain, in a product line of business line, a tech stack a geography and especially with the craziness of technology in the last you know, decade to help point the way of what can be done. And in my role at Encino. It’s exactly that it’s it’s this is where the world is going. This is where tech is going. This is what customers expect from their bank. This is what the executive need. These are what regulators want, and how you bring all of those sorts of elements of a Rubik’s Cube together to try to use technology to to execute, you know, a bank strategy. So my role is to help point that way for the company. I work for Encino. And help them get ahead of the curve. I’m a Canadian. So we all love hockey and the greatest hockey player of all time, Wayne Gretzky, you know, his motto was a skate to where the puck is going, not where it is. So my role is to help navigate our organization to where the market is going, not where it is today and I on today, but a trajectory for tomorrow. So I love playing that role with customers as well. So that’s a bit about me. Great.

Whitney McDonald 08:37:18
Well, thank you again, for being here. A couple of things to unpack there. I’m from Detroit. So that’s hockey town. So I definitely heard that one before. And being technology is so exciting, Anthony,

Speaker 1 08:37:31
if you’re if you’re in the community, if if you’re at a bank, it is because at the end of the day, banks don’t have physical products, it’s the tech that makes everything real. It’s their DNA, it’s their bones, it’s their flesh, it’s everything. So there’s only a, you know, a handful of people who get it, obviously all of your listeners listeners do. So I think it’d be a fun conversation. Well,

Whitney McDonald 08:37:55
you kind of started talking a little bit about your role, which is Chief industry innovation officer, maybe you could break that down a little bit on what that actually entails a little bit further, so that we can have a better understanding of, of what you do kind of day to day.

Speaker 1 08:38:09
You know, it’s it’s probably similar to those banks that have people who are trying to plot, you know, a two to five year strategy in an ever changing environment, right? So I am very lucky, I get to touch a lot of our customers, a lot of our partners and sort of the bridge between how we think and what we develop and what the market is saying and what they need. And and I try to marry that, like my role is very much Mehreen where the macro economic environment where the financial marketplace and the regulatory and the central banks are headed, and how does that translate down into the bank’s competitive models and business strategies and the tech that they need? Right? So I’m sort of this translator, if you will, of all of these market forces and helping to not help him but sort of trying to lead the way in terms of these are the technologies we need to embrace for the industry ahead of them. And AI is a per For example, right, like a lot of banks, you know, except for the really big ones that are, you know, figure everything out on their own, everybody else sort of wants a prescription they want to be led, how should we do this? What’s the best way? And, and my role is to really help our organization craft that prescription craft the tick how the technology applies, in the right part of the customer lifecycle in the right use case, you know, with the right data, you know, what does that sort of orchestration of different components look like? And what do we need to think about and modeler our product strategy around various elements to deliver so that ultimately, as a bank, you know, except again, for the really ultra big ones who tend to take what software suppliers provide, and then, you know, rework it on their own, provide a prescriptive approach to how to embrace new technologies, technologies have moved into the main stage or the mainstream. And, again, translate from where the puck is going to where do we need to skate today, to put us on the path to the future, and that, sometimes that means new products, new solutions, re tweaking old things, it’s really been a champion. So innovation is an overused buzzword for the last decade. I like to think in terms of practical investments that allow our organization and customers to continue the journey to skate to where the industry is going in a very controlled and responsible way. That’s a very long job description. But it’s a lot of fun. Because you get to do so many things.

Whitney McDonald 08:40:53
Yes, and I know that you mentioned AI, which of course, you can’t get away from Ai right now, in India finished in any industry, but especially, especially with what we do. So with that, that prescription that that idea behind that we have conversations all the time with, okay, where do we start with AI? Where’s AI headed? What’s step one, and I know that you just mentioned, it’s not necessarily where where you’re getting, but how, where you’re going, but how you get there. And so when you talk about that prescription or that journey, maybe you could break down what some of those conversations might look like, with institutions.

Speaker 1 08:41:32
You know, it’s it’s obviously the biggest topic of the last year. And you know, so many predictions of AI is going to be more fundamental to our industry in many industries than even the internet was 20 years ago, as as, you know, all of our society runs on the internet today, right. And the predictions are even more grandiose for AI. I mean, at the end of the day, as I said, like banking is a data business, and of story. And every conversation, you know, for the last 100 years, and, you know, banks in the 1920s to up until 20 years ago, it’s how do they use the information, they have to make a right decision, from a risk perspective, from a price perspective, and from a customer satisfaction perspective. So those fundamentals have not changed, right? It’s, it’s and, you know, even for 30, some odd years using risk modeling and statistical modeling to make decisions, you know, you can say, as a form of intelligence, because it really is the chat GPT moment almost a year ago. Now, if you can believe it really sparked an accelerator, or was a spark plug in the engine of our industry that, you know, once again, things are rapidly accelerating from an idea and a reality perspective than the industry can actually consume. Right? So it sort of caused a moment of major reflection, because every organization that we deal with, has a keen eye on this, you know, obviously, the very big organizations think that they can, and I’m not saying that they can’t, but you know, stand up 1000 people, their own AI innovation shops, and you know, go to town and build things. Well, typically, the larger organizations below that really need to partner with different vendors. And the starting point is actually really clear. And many banks have been on this journey for several years now, we have as well, is to leverage different forms of artificial intelligence. It’s not it’s an umbrella term, right, which includes many different technologies underneath it, is to start in those areas that will have the most immediate impact. And we’ll make the most of the data that they have access to, and is well orchestrated, and sort of clean because at the end of the day, all of your listeners know that, you know, banking data is a it’s a horrific landscape, right? The larger the bank, the more crazy the data is and how it sits and where it is. So those scenarios where the data is organized and clean and what I like to call healthy and accessible For those organizations will win more or get more ahead than others? Where are you start? Or where are you sort of embrace what’s going on today? It’s absolutely clear, there’s zero question, at least within the North American market, that it’s around, how do I drive? You know, new levels of efficiency that just have not been possible before? Period? End of story? It’s not necessarily the whiz bang, how do I make my mobile app suddenly come alive? to who I am? We’ll get there over time. It’s how do I get rid of redundant processes? How do I you know, if a small business or commercial loan is scheduled for renewal renewal? Why must a team of people comb over their financial statements and compare their covenants and, and all of these things, you know, to put a tick in the box to make sure that yeah, they’re good to go, that can be automated with AI, right? And seen as doing a lot of those things today. Shameless plug there. So it’s, it’s the front line, it’s how do I, you know, take the traditional mounds of manuals, and just ask a question, and I get the answer. I don’t, you know, smartest bankers know, the questions. The turnover rate, obviously, is, you know, we’re in this shift of migration of resources, right. So, removing redundancy, things like hyper automation, the intersection of, you know, robotic process automation, machine learning, bots, process, workflow, those things coming together. You know, it’s been the Nirvana banks for many years straight through processing, right, I want an account, I get it in real time, I’ve got a dispute. You know, the system can adjudicate it in real time, it doesn’t need to go back office, I got to do an investigation, I got a complaint, how do I compress that from two weeks, and five people to one day and two people and a bunch of tech? Right? Because all of that means that we’re not really touching, you know, the risk conversation of AI of AI making decisions around is somebody worthy for a loan, or is there you know, it’s not it’s got bias built into the data or whatever it may be. So, without a doubt, we actually did a survey, leading up to our annual user conference, which is, which was in May, you know, the number one issue on your plate for your institution on the next year? And so far, we’ve had, I believe the number is the initial respondents 80% indicated, efficiency, operational productivity, and as much automation as they can get out of technology, right? I mean, it is a direct reflection of the macro economic times the financial realities, given the rate changes and things of that nature, so that it’s common sense to start in that area. And many banks are right, and we are, you know, we are doing things to make that easier, and quicker, and more prescriptive, the cool things, the things that the regulators are gonna have to put frameworks around, you know, the, my banking app is meant for me, and no one else because it’s as human as calling the bank, those will come. There’s no stopping it. But right now, it’s sort of what’s the low hanging fruit that’s going to help my bottom line and not upset the regulators? Let’s go now. And it’s exciting because that’s the singular message I hear from everybody. Yes,

Whitney McDonald 08:47:39
efficiency continues to be a trend, you can’t really get through an earnings call or anything like that, without hearing that word. We’re leaning into efficiencies, and AI in order to do that, I know that you mentioned the low hanging fruit. Maybe we could talk a little bit, take that a little bit further and know that you mentioned redundancies and communication using AI. What other low hanging fruit is, is Encino hearing a need for from clients.

Speaker 1 08:48:12
So it sort of focuses on two or three areas. One is compressed the upfront processes around alone. Right meaning, you know, nobody wants to spend, obviously the effort and the resource and the cost relative to originate the loan. Because, you know, obviously, it’s the most costly effort, right? So how do I use these technologies to qualify a customer upfront before that, quote, you know, you apply for credit, right? How do you put them through and smart bankers do this? They’ve been doing this for hundreds of years. Right now we’re doing the technology do it digitally in real time, right. So the first part is sort of compress the time and the inputs and leverage what we know to sort of make a soft approval, if you will, but within a compliant framework, right. And do so in a way that ensures when I say the compliance framework that it adheres to, not just regulatory guidelines around disclosure and data capture and and and consent, but bias as well. Right. The second part of that is one. So once you sort of, yeah, we want to move forward with this request this opportunity this lead, whatever you want to call it, how do we make sure that the maximum level of automation for the most simplest of loans goes through? Right, it’s sort of the 8020 rule, right, we, you know, 80% of our loans, we want to be automated, we want to take automation to the next level, we want AI to ensure that the right documents are prefilled, that the right you know, AI has a great role to play in extracting information from documents, placing it in the right way and making sort of those low hanging decisions, right. So compressing the decision time, and the complexities around the automation. But we call human in the loop so that for credit decisions that aren’t simple, but still fall within a complexity sort of spectrum, that a user doesn’t have to go through five days, five people 20 documents, the system brings everything to them with the right intelligence. So the human is acting on that. And it’s sort of the proof point around making a decision and not seeing the technology did it all right. So there’s that bucket. The other one, which is probably about good half of our customers have said is, if you think of the whole portfolio management side, and a credit book of business, you know, whether it’s small business, commercial, even corporate, we had about a dozen corporate banking clients together in London last year, and they were really clear, which is, they have all of the data, they have all of the financial statements, you know, whether it’s monthly reporting, quarterly reporting, you know, based on the complexity of the facilities that have been extended, the data will say whether the customer is on side, how they’re performing against their cash flow with receivables and payments, the state of the industry, the state of their collateral, everything, right, we we just want automated renewals, we want automated reviews, you know, it’s so much time spent between relationship teams and the mid office to support those processes. Let’s just have those people focused on those customers, or those segments where there, those variables aren’t eight or nine out of 10. So those are sort of the three buckets and they all speak to efficiency and productivity, they don’t speak to AI is doing the decision so that the renewal of a $50 million operating line is happening without touch. Right, we will likely get closer there and several years. But we’re not there yet. So those are sort of the three key buckets. And everybody is, again, except for the large ones. They’re trying to understand the how the prescription from the organization of the data to how does this actually work from a data risk perspective? To how do I have total audit ability of all of all of the actions that are happening so that I can demonstrate to my audit team, and to my regulators? You know, how we proceeded with a certain activity? Which that tends to slow down the process, obviously, but that’s the world we live in.

Whitney McDonald 08:52:27
Yes, absolutely. And it’s definitely compliance is definitely top of mind when it comes to approaching AI. And you want to be able to cross your t’s and dot your i’s and show exactly how you are doing a process. And that’s why it’s not so like, okay, we’re just gonna implement AI and hope for the best. But yes, it’s definitely a slower process. And everyone kind of has their, their eye on regulators for whatever

Speaker 1 08:52:53
I have to tell you the, the angst of that is, you know, every customer, ie the bank’s customer. You know, you and I as consumers, small businesses, you know, larger b2b entities, everybody is wired to say, well, it’s 2024, I can track my pizza and my food to the guys one second outside my home. But you know, I have most of the most basic understanding of my loan in terms of where it is in the pipe. And I hear it from executives all the time, I was just with the CEO of a bank in Seattle the other day, and absolutely incredible organization and CEO, and he’s like, we want to get there, we will get there because but we can’t do it at the sacrifice of our regulators, you know, and customers don’t they sort of get that, but they don’t understand the complexities involved unless you work for a bank. You know, and every bank box is incredible journeys and using these texts, and as soon as the compliance teams comes into the room, you know, it’s it’s scaled right back. Right. So that’s just the reality of our world and that that has to be navigated.

Whitney McDonald 08:53:58
Yes, absolutely. And it is it is the case and I know that oftentimes my conversations end up being about Amazon and everyone has once the the most instant experiences that you see all the time with with Amazon Then but you’re right, it is a little bit slower of a rollout with with banking and the consumers might not know exactly why. But you do just have that that regulation and sensitive data and you have to do it all the right way. Right. Exactly,

Speaker 1 08:54:25
exactly. Mind you. I mean, different jurisdictions around the world have a different take on this, right? Like the things that the Nordics have been doing with technology, in banking, as well as a decade well ahead of the United States, right. But that’s a reflection of their society, their regulators, what consumers are willing to share from a data perspective in order, the experience or the value they get back. So, you know, it’s not the same in every country, obviously, your listeners are our US base, but it’s very fascinating to look at other markets around the world and how they have addressed some of these things that maybe are a bit more challenging the States because of the concern over privacy and control being sort of a bedrock of of US culture.

Whitney McDonald 08:55:11
What would you have US and Europe readership? There we go, there we go. Yes, I know, we spent a lot of time on AI, which, of course, but I wanted to ask you a little bit more just based on what you see every day? And, and what role that you are in? What other new technology, you’ve got your eye on what’s emerging? And similarly, what financial institutions should have their eye on as well?

Speaker 1 08:55:35
I would, you know, there are so many. And the interesting thing is that technology goes through hype cycles, right? Where, you know, in the initial phase is everyone’s like, Oh, my God, look what we can do and what have you. But you know, the hype hits the reality of the industry, in the business world, it very much hits, not just a bump in the road, but like a mountain in the road, right. And certain ones sort of trend away, and others sort of really start to take hold. And you know, that was the case with cloud in the early 2000 10s. I think I would put my eye on biometrics, right, which is not new. I mean, it’s not new, but has the banking industry really embraced it to the point of like, wow, right? I mean, the government has, because, you know, anybody who uses the Global Entry Program, or any, you know, electronic gate at any airport, right? It’s all it’s all biometric, right. And it’s only been in what the last three, four or five years where banks start using it for authentication purposes. But the the biometrics with natural language processing, and generative AI can dramatically redefine and experience probably surpassing what you might get at an Amazon. And I’ll give you a perfect example. Again, I was at this incredible customer in Seattle the other day, and he showed me a smaller bank, but 40 billion in assets. But he shows me how their customers use their mobile banking app. So this is obviously from a consumer lens. And he basically launched the app, and he had a conversation with it. He used his voice to authenticate it, which a lot of you know, IVR is due this day. But their digital assistant was talking to him. Right? He was talking back, it was, once it authenticated him, the whole interaction was totally it was like it was talking to Siri more or less the transactions, the money movements, the requests he had. It was so human, that it was sort of scary, in a good way. Right. And I had a chuckle moment, because, you know, the smaller banks, which you know, form, even though the large banks control, you know, a fair degree of the market, there’s such a proliferation, at least in the US, a smaller organizations, their size in this particular case, allows them to embrace these technologies, right, in a prescriptive way, partnering with the right vendors to achieve these wow moments, without again, sacrificing compliance or any risk related decisions. So I think the biometrics despite being around for a while has yet to actually get into the DNA of banking operations from an external or digital self service point of view. And I think that’s an incredibly fun opportunity. But again, you merge that with aspects of AI, you merge that with process, orchestration, and you very much get closer to the Nirvana which most banks want, which is as close to straight through processing, as close to human digital as you can, as close to the lowest price point to deliver extraordinary service and experiences, right? And use all that information to funnel sort of The next conversation whether it’s a banker lead or a human lead type of conversation. So that I love I mean, if this were three years ago ever would have been like blockchain is going to disrupt the industry to the point of the hype cycle I said earlier, right, like a tight, tight, tight, tight, right. And then we had an implosion and you know, despite many organizations, embracing aspects of digital currencies and things of that nature, from a connectivity perspective, right, we’re nowhere near the promise of what an open ledger system can do. Digital contracts, tidal movement, you know, real time transposition of value across a transaction cycle, right. So, you know, be interesting to see how that evolves. And I’ve been blathering on but there’s just, there’s just so much that it’s hard to focus as a bank as to where should we be embracing technology? Right. And the scenario I gave was just an example of customer experience. Right? Whereas anything that that drives to the bottom line these days, will get the money, you know, from a tech investment. So no,

Whitney McDonald 09:00:32
absolutely. And I mean, that’s something that I mean, tech spend quarter over quarter continues to be high, the investment is there, the the banks are looking to technology, there’s not much pullback there. But determining kind of based on your institution or based on your capital, what you can invest, it all kind of depends on where you prioritize that spending. And if if one bank is, is on the low hanging fruit side, we kind of discussed that if another is, here’s this example of biometric solutions. Hey, we could maybe explore that. But yeah, it’s definitely not to sound cliche, but it’s not a one size fits all approach. And we see that often

Speaker 1 09:01:14
works. Of course, of course, I mean, the other sort of key element to this conversation is that, you know, banks are very conservative in nature, right? Especially now, nobody’s going to project out five years in terms of, you know, our technology spend is going to be this we’re going to invest there, et cetera, et cetera, especially with the acceleration and the rapidity, not the rapidity, the velocity of the emergence and application of new technology. So it begs the question from a tech spending and a tech strategy perspective, in terms of, you know, you’ve heard the term run the bank changed the bank, right? And typically run the bank has been what 80 90% of the tech budget and 10% is innovation. Well, that is shifting and has to shift, right these new tax establish a new foundation and a data infrastructure, you know, external access, I like to say the industry is going from a closed model to an open model to a networked model, sort of like an evolution over time. And as tall as technology and infrastructure get get right sized or you know, configured for the modern era, that equation will shift and more money can either be saved for the bottom line, or invested in speed to turn around ideas into actions and less on just keeping, you know, 3040 50 year old technology going because nobody can figure out how to remove their core banking system.

Whitney McDonald 09:02:50
You been listening to the buzz, a bank automation news podcast, please follow us on LinkedIn. And as a reminder, you can rate this podcast on your platform of choice. Thank you for your time and be sure to visit us at Bank automation news.com For more automation news,

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June 4, 2024
Podcast: 35% of banks using AI, Hapax COO says | Bank Automation News

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“Thirty-five percent of banks are already utilizing AI in some way, shape or form, and that’s expected to double before the end of 2024,” Kevin Green, chief operating officer for AI-driven financial service platform Hapax, tells Bank Automation News on this episode of “The Buzz” podcast.

To tap into AI, more than 30 financial institutions, including $305 million Capra Bank and $1.4 billion American Bank of Commerce, are using Hapax’s web-based data source to answer questions regarding:

Hapax’s data set, which has more than 20,000 documents, 10,000 hours of video and 230,000 conversations between bankers, can offer insights and answers to specific questions from within financial institutions, according to a Hapax release.

“What AI is bringing to businesses today is the ability for people to have access to information at a speed … traditionally unheard of,” Green says.

The solution, which launched in April, recently raised $2.6 million in funding led by RHS Investments, according to company insight provider Crunchbase.

Listen to this episode of “The Buzz’ to hear Hapax’s Green discuss how FIs are streamlining internal operations with AI and replacing time-consuming tasks with the technology.

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

Whitney McDonald 11:53:30
Hello, and welcome to the buzz of bank automation news podcast. My name is Whitney McDonald and I’m the editor of bank automation News. Today is May 21 2024. Joining me is Kevin green. He’s the chief operating officer of haptics. He is here to discuss how AI will unlock the availability of knowledge for financial institutions. Thanks for joining us, Kevin. Great.

Kevin Green 11:53:49
Yeah. I’m Kevin green. I’m the Chief Operating Officer of haptics. I’m a 20 year marketing veteran, both at startups and enterprise global organizations. I’m a 10 year veteran around artificial intelligence, specifically artificial intelligence utilization inside enterprise organizations. So I’ve been around the space for a very long time, and really kind of watched it evolve, and excited to share a little bit about haptics and kind of where AI is today.

Whitney McDonald 11:54:19
So haptics is a new company, you guys just recently launched? Maybe tell me a little bit about why now, what was the need behind this innovation?

Kevin Green 11:54:29
Yeah, great question. You know, knowledge is power. It levels the playing field. And that’s really what AI is bringing to to businesses today, is the ability for people to have access to information at a speed with which was traditionally unheard of. So for us, one of the things that we believe in strongly is that community banks and credit unions provide a tremendous amount of value to the communities they serve. But as time has gone on, it’s become increasingly difficult for them to compete as they don’t have the resources or the budgets to compete against larger multinationals. And that’s really what we felt like, you know, our mission has always been to solve is how do you bring parity into the industry so that every credit union and every community bank can compete on the same level as these largest organizations. And haptics is designed specifically, to bring that information to a bank have, you know, 100 million in assets to 20 billion in assets, we believe that everybody should be able to operate with the same speed and efficiency to bring customers basically the level of support that they expect today. And that’s really why we felt now it was a critical time to do it, because the technology has evolved so significantly, but the benefits are just too immense to wait for. So

Whitney McDonald 11:55:51
let’s talk about the technology that’s available today. We can’t have a conversation like this without talking about AI. Right. So let’s talk through the evolution of AI and banking. What are faiz really tapping into with AI? And how is AI? Or how is haptics accomplishing that.

Kevin Green 11:56:10
So banks have actually embraced AI, I think at a speed much faster than traditional, traditionally, we see with within the industry. So a lot of technology, you know, banks are hesitant, they have to go through very long due diligence processes. I think that after we had gone through the pandemic, banks felt like they were a little bit behind the curve. And with AI, they just do not want to risk being behind. So they have really kind of embraced the technology and jumped headlong into thinking about what are the different use cases. And so the early adoption really has been around that kind of customer service chatbot, you know, how do I provide AI to my customers in order to better serve their needs, provide them with immediate insights and information to solve whatever challenges they may be faced with? And that’s the initial traction? How do we reduce call center volume, but everything is really that relationship between the bank and the customer. But the technology is far more superior than that, you know, it actually can impact every functional area of the bank. So what we’re seeing now is as use cases are starting to emerge, banks are realizing that the true value is really what’s happening behind the scenes, how do I better enable my employees? How do I make sure that my employees are efficient and effective as possible? And that’s really what kind of what we’ve focused on. So we’re finding that I think the last that I saw was something that 35% of banks are already utilizing AI in some way, shape or form. And that is expected to double, you know, before the end of 2024. So we’re seeing just an immense amount of interest in it. The technology is accessible now, it’s, you know, does it require significant amounts of resources in order to implement? So because we’ve seen such advancement, and, you know, affordability, it’s creating more opportunity for banks to experiment and then identify the specific use cases that you know, it’ll have the most value for their institution.

Whitney McDonald 11:58:16
Yes, so many things that you just mentioned that we can break into a little bit further. One thing that really stands out is this idea of community banks and credit unions having the same opportunity as as larger financial institutions. And it’s I don’t necessarily want to say an even playing field, but it does help even the playing field because you have access to more affordable technology, you have access to AI. And I think that that’s really important to talk through the affordability, we cover tech spend really closely who’s investing in what and of course, when you follow a major financial institution, the tech spend, obviously outweighs what a community bank or regional bank might be spending. So maybe we can talk about that a little bit further this opportunity that AI brings to smaller institutions to be able to implement technology that may not have been accessible before.

Kevin Green 11:59:12
Yeah, you know, it’s, you know, when you think about just FinTech in general, FinTech was supposed to be the great equalizer, you know, it was supposed to everybody’s gonna be able to be digital. But that really didn’t play out the way I think everybody was hoping it would, you know, a lot of these cores and technology platforms are prohibitively expensive. So FinTech itself hasn’t been able to kind of solve those challenges. But with AI, the cost to implement is significantly lower. Just because there are so many different sources and so many different solutions that you can start to experiment, I think the big issue is that you have to look at the resource costs. So you know, larger institutions can go and build their own custom large language models, they can iterate and they can kind of deploy their army of 500 to 1000 IT resources to develop something internal. But 96% of the banks in this country do not have those resources, they need an off the shelf solution that is user ready, friendly, Low risk, low maintenance, and the total cost of ownership needs to be needs to be reasonable. And I think that’s what we’re going to see people gravitate towards is, you know, as you look at kind of the generalized AI solutions that are out there, those are easily to easily, easily accessible. But they’re very difficult to customize or to fine tune to your specific institution, your policies, your procedures, how you want your employees to respond or react, your brand. All of those specific customizations require additional resources to implement and manage. What we’ve done with habit X is remove all of that, you know, our goal was how do we create an AI solution that is unique for every single financial institution, but doesn’t require those overhead costs. And that’s really where it becomes an affordable mentor for every employee that one of our customers described. It’s like having a banking Professor available to you 24 hours a day. And that’s really kind of what we’re focused on. So the cost is going to come down. But there’s, you know, obviously, with all technology, there’s no custom solutions, build it yourself. But like I said, 96% of banks are, they can’t invest more in resources, they need to look for solutions that are easy to implement, and deliver value instantly. Yeah,

Whitney McDonald 12:01:45
I mean, all you see during the the latest earnings is we need to save time, and we need to save money. So those are two things that are not necessarily that we don’t necessarily have access to right now extra time and extra money. So I know that you’ve talked a little bit, what happens is solving for maybe we can talk through how adoption is going and really how FIS are using the platform. I know that you just mentioned it’s like having having access to it to a bank Professor right there. So how, how really is adoption going? How’s it being used? Maybe you can talk to talk us through some examples.

Kevin Green 12:02:20
Sure. So right now we have over 30 unique financial institutions that are utilizing haptics on a daily basis. Those financial institutions range from assets sizes of 100 million to 20 billion. So it’s a broad scale of users. And they are using it every single day to help with daily tasks. You know, really just to solve those common challenges that come up. More often than not, we’re seeing compliance being the initial driver, just because of the sheer amount of questions that come in from a compliance standpoint. So they are the early adopters. But we are seeing marketers, we’re seeing risk tellers, everybody you can think of inside and inside a bank is absolutely using it to to solve the daily challenges. Some of the use cases that we see that are most common are specifically around policy creation. So I’ll give you a small example. We had one bank that was utilizing haptics at the time that they had examiner’s in their branch. And one of the challenges This are one of the questions the examiner asked was, Do you have a digital banking policy and this is a small rural community bank. And they didn’t they didn’t have a digital banking policy. So she went back to haptics and she said, Hey, can you create a digital banking policy for my bank, in just a matter of seconds, topics created or a digital banking policy, and she printed it out, handed it to the regulator and said, you know, hey, here you go. And he said, Hey, this looks great. You’re just missing these two things. So she left the room again, went back and said, Can you add these two things to my digital banking policy, it added those two things, she walked back to the examiner handed in the new version, he said, perfect, this is great, good to go. So, you know, those types of things. Specifically, when you think about some of these smaller banks that are missing these resources, or, you know, in an instant like that, you would have to say, you know, oh, no, we don’t have that. And then you might get dinged for it, it might take a couple of weeks, you might have to pay a consultant to create it for you, you might have to pay additional lawyers to review it, you know, she was able to solve all of that in less than five minutes. So that’s one use case. Others are really around, we have one user who brings it with him to every single meeting. He says, you know, there are so many different regulatory updates and changes, it’s impossible to keep track of everything that happens. I think last year, there were over 5000 pages of updates, related to one regulation issued in normally smaller banks, it takes them two weeks to read through that document, you know, if lucky, another two weeks to figure out what is the impact on their operations, another two weeks to figure out how they’re going to train their staff. Before you know it, it’s two months, Bank of America rolls out those changes in you know, three days. So that type of speed and being able to ask those questions and and know what those changes are in real time. And that’s the beauty of it is haptics is updated every day. So if there’s a proposed rule change, or an actual, you know, rule goes into effect, you know, haptics knows about it instantly, and you’re able to very quickly react and respond to those changes.

Whitney McDonald 12:05:37
Those examples are awesome, thank you so much for for sharing, and you can already kind of see, and you can already quantify some of those savings and the times and when you put the dates to it, or, or the amount of time that it would take to whatever read a new regulation or create a digital banking policy and being able to have it and adjust it right to kind of fit your I know that you were talking about customization a little bit earlier during our talk, but being able to, you can customize it a little bit to to meet this need, or we don’t really need that here. But we do need this and kind of being able to work with the technology in that way. Maybe we can get into a little bit of the house. So if you’re a financial institution that wanted to leverage this, what technology do you need to have in place? How much time do you need to a lot in order to start tapping into it? Yeah, it’s

Kevin Green 12:06:30
instant. So it’s a web based solution. And anybody can go to as haptics.ai. And we actually offer a free version. We believe strongly that it’s important that people be exposed to this technology and start to utilize it educate themselves. But we also believe that it’s important that they’re using tools that are purpose built for this industry. So haptics is built off of an enormous amount of data. So you know, we partner with C Bank, which is the largest online community for verified banking professionals. And through that, we were able to identify 230,000 conversations between verified bankers. And they represent 96% of all financial institutions in the country. So basically, for the last 13 years, 96% of banks in this country have been sharing their biggest challenges, what they struggle with, you know, all of the issues that they face. And we utilize that information, as well as the 20,000 unique documents they’ve uploaded from proposals to policies, to procedures to risk assessments, all the things that they’ve been sharing for 13 years, in an effort to help them compete. You know, these banks and credit unions don’t necessarily compete against each other. So C bank was designed to help them collaborate. And now we’ve taken all of that information along with all this table stakes data from the FDIC, FCC FinCEN. But we’ve brought that into this customized solution that really is unparalleled in the industry, and would be very difficult for anybody to replicate, you know, and probably more impossible than anything.

Whitney McDonald 12:08:14
So now that you have users live on the platform, how often will it be updated? Or how do you kind of build off of those new users and what questions they’re asked screen. So

Kevin Green 12:08:28
it’s, like I said, it’s updated daily. So it pulls in about 100 Different sources every day. So it is always, always has the latest information. So there’s really no single source that is going to have the latest information for the entire industry. So that’s pretty much how it’s updated. In terms of customization, you know, there are ways where you can, you know, when you add new documents to it, and you ask for edits and adjustments, that information is all taken into account, you know, it continues to make it smarter and refine it based on what trends we’re seeing in inside the free version. So if somebody comes into a free version, and is asking you about a specific document or regulation, what happens can do if somebody else asked that same question, they say, Hey, what what other banks are doing this, so you start to get that peer element inside it as well. So it’ll give you a recommendation on how to solve that problem. But it’ll also tell you what other banks are doing as a point of validation. So it all gets smarter continues to pull in, you know, everything from seed bank, and all of those other resources. And that’s really kind of the entire model on the kind of the open version.

Whitney McDonald 12:09:44
Yeah, and being able to see best practices who else had success with, okay, this was a response that this institution received, and here’s how they implemented it, or whatever it may be, but kind of seeing those in real time those those uses of responses. So that’s exciting. Now, you’re seeing more and more, and it kind of goes back to what you were mentioning earlier, about 35% of a Pfizer already investing in AI that’s likely to double, which is not surprising. I mean, everyone’s talking about AI, we’ve seen the conversations shift, or over the past couple of years, as we’re keeping this at an arm’s length, or we’re waiting for this regulation. But now it’s kind of like you have to hop on the AI train everyone’s doing it, you have to have these capabilities. And this is just kind of one example of what could be at the fingertips of financial institutions that are interested in tapping into AI. I’m going to ask you kind of a forward looking question of what’s next for AI? What are you keeping a close eye on? Whether specific to haptics or even just industry? Industry wide? What are you watching? For the tech?

Kevin Green 12:10:55
Yeah, I mean, it’s obviously evolving so rapidly, you know, even when you think you’re ahead of the curve, more often than not, you’re, you’re behind it. So, so much is changing. For habits, our focus really is understanding what the nuances of this industry, so you know, while other people, you know, certainly are embracing voice and video and things like that, and you know, we have that capability as well, our bigger focus is on security. So how do we create secure AI solutions that will meet the needs of today’s financial institutions, we don’t know yet how you know, regulations are going to impact specifically for banking. So we have gone over above, to really make sure that we’re creating secure environment. So haptics, in the near future will be deployed individually for every single financial institution. And that will allow them to upload all of their own documents information. And essentially, it’s their own custom large language model without having to do any of the work, that’s really going to be the big kind of next evolution of this is, you’ve got to be able to protect that data, you’ve got to be able to operate ethically, that’s really important, I think we’re going to see even more of a movement towards ethical AI. To eliminate kind of hallucinations and things that come from some of these generalized models, banks need to know that the information that they’re getting from Ai they can trust. And the way to do that is by not putting a significant amount of data into the large language model. It’s about putting the right information into the large language model, and allowing them to see the sources of that information. So habits actually will cite the sources it used uses to develop its answers. So if you’re asking about a specific customer, so let’s say you have a customer who comes in and says, you know, hey, you know, my spouse passed away. I’m the beneficiary, but I’m not listed on their account, I need access. Well, the teller may not understand know exactly how to solve that problem. They can ask haptics, haptics will give them the answer on how what they should do in that scenario. But right there, it’ll tell you it’s referencing this regulation. It’s referencing this internal policy and these are the internal procedures. So you it’s validating and citing its work because bankers don’t want magic. You know, it’s not about you know, nobody’s looking for you know, that magically just appeared, now they need to have confidence in the information they’re getting. And that’s really what we’ve seen. So I think you’ll see even more of this specialized MLMs. Specifically on the enterprise side, not just for banking, we’ve already seeing it and legal, we’ll see it in several other industries, as well as specialized custom solutions are going to be more beneficial and impactful on the b2b side than then, you know, the generic versions that are out there today. Yeah, I mean, you know, the only other thing I would say is the challenge, I think, or where we’re at now, if I were to kind of identify the timeline of what we’re, where we are right now is really those use cases. And, you know, the promise of AI is, is obvious. And everyone knows that. And to your point, banks everywhere are saying, How are we going to use this. And the interesting thing for us is that, you know, when we come in, and we kind of share, what happens is capable of it’s a very practical implementation, it’s very easy to see the countless number of use cases, you know, so we’ll go in, and somebody will say, hey, you know, this is essentially replacing my knowledge management solution. This is replacing my policy management solution. This is replacing how I train my tellers. So you know, one of the biggest challenges that banking is faced with, and we don’t see going away anytime soon, is the talent shortage. So, you know, there’s high turnover, it’s very difficult to find resources, specifically, as you get into some of these smaller communities, it can be tough to find the skill sets that you need. And then to train them on all of the things they need to know the complexity that comes with this industry is very difficult. So we’re hearing a lot of people are saying, hey, you know, just being able to give this to new employees will reduce the amount of time I need to train them, reduce the nervousness, or the concern they have in that moment of interacting with a customer, you know, if they know that they have a resource right there that can give them an answer, they don’t have to worry about, you know, having to you know, tell the customer to wait, leave the room, go try to find an internal expert, ask those questions. You know, they can solve things on their own, it’s very empowering. And we hope that that’s going to enable existing employees to work more effectively. But also, as new employees come on, that confidence will kind of help them be more effective, and ideally, hopefully retain talent longer. But if we can eliminate through AI, the inefficiencies inside banking right now, which is, most of the time, all of those conversations rise up. So you know, if there’s a compliance issue, it starts, you know, on the front, Frontline, then it goes up to the director that goes up to the Chief Compliance Officer, and there’s a bottleneck, as your expertise lives in your most experienced employees. And they struggle with the fact that they need to provide they need to support the entire team, but they spend an exorbitant amount of time answering questions. So we’ll go into these conversations with these banks. And they’ll say, you know, right now, I’m the AI for my bank. Because that’s what it is, those questions are going to one individual, and you can hear it in their voice where they say, it’s so hard for me to get back to him, and I feel guilty when it’s a week before I can answer their question. And, you know, we show them this capability, and they say, you know, oh, my god, the things I’ll be able to do, you know, I’ll now be able to do these projects that you know, we haven’t been able to get to, we’ll be able to take on more, we’ll be able to move faster, we’ll be able to invest more in the customer experience. And for most of these banks and credit unions, those customer relationships are everything. But if all of this internal inefficiency is taking them away from interacting with the customer, they start to lose that competitive edge that’s so valuable. With habitats, we’re restoring that competitive edge, and we’re giving them an opportunity to engage with the communities where they are such a critical component. You know, we cannot afford to lose these banks, you know, to you know, and go into a system where we only have 10, you know, 1020 banks. Knowing the community, the role they play in the community is paramount. And that, again, is another reason why the timing was so critical. We can’t allow, you know, a lot of these smaller banks without the expertise to go in select, you know, inefficient solutions that aren’t purpose built in this industry. We needed to get something in their hands quickly before they invested in something that essentially would turn them off of AI.

Whitney McDonald 12:18:07
You’ve been listening to the buzz, a bank automation news podcast, please follow us on LinkedIn. And as a reminder, you can rate this podcast on your platform of choice. Thank you for your time and be sure to visit us at Bank automation news.com For more automation news,

Transcribed by https://otter.ai

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Whitney McDonald

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May 21, 2024
Podcast: 95% of data is unstructured | Bank Automation News

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Financial institutions are looking to AI to help organize and tap into their structured and unstructured data. Data is “really the operational lifeblood of how FIs operate in modern time,” Abrar Huq, co-founder and chief revenue officer of AI-driven digital documentation tool Arteria AI, tells Bank Automation News on this episode of “The Buzz” podcast. […]

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Whitney McDonald

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May 14, 2024
Podcast: How Mastercard deploys APIs | Bank Automation News

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Payments behemoth Mastercard uses APIs to develop a wider range of products for business clients.

The company processes roughly 125 billion transactions annually and managing data flow through APIs makes Mastercard’s operations efficient, Chad Wallace, executive vice president of B2B solutions, tells Bank Automation News on this episode of “The Buzz” podcast.

Deploying APIs within its operations helps Mastercard “standardize the way that we design our applications internally,” Wallace says, adding that APIs help tools and products communicate with each other and pass data between each other to complete processes in real time.

“We’d like to deliver real-time customer experiences,” Wallace says. “The use of APIs allows us to be able to manage those internal applications in a way that really helps us deliver a real-time experience.”

Mastercard also integrates its financial products to its clients through APIs which allows greater security and control over workflows, Wallace says.

“Those could be expense management platforms, those could be procure-to-pay platforms, or in a cash platform,” Wallace says. API connections allow Mastercard to provide a better customer experience because “the more that we can integrate the payment into the actual workflow for the finance team,” the more seamless an experience Mastercard can provide.

Listen to “The Buzz” to hear Wallace discuss Mastercard’s API strategy, B2B solutions and virtual card innovations.

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

Vaidik Trivedi 10:40:16
Hello, and welcome to The Buzz bank automation news podcast. My name is where the three the attendee associate editor of bank automation News. Today is May 7 2020. And joining me is Chad Wallace is the executive vice president of b2b Solutions at MasterCard, and is tasked with developing and deploying digital payment solutions for businesses. Chad will talk to us about how MasterCard approaches innovation. What are some major pain points for businesses? How does which we got fit in the ecosystem to solve those problems? And what’s in the pipeline for MasterCard? Welcome to the bus chat. Can you tell our listeners a little bit about yourself? Yeah,

Chad Wallace 10:40:58
absolutely. So first and foremost, thank you for having me on today. So a little bit about myself and what I do i i joined MasterCard roughly about two years ago to lead our corporate payments business. And so I lead our product or engineering and our business development teams around the world. And we designed products that are geared towards corporates, specifically large enterprise corporates. And what we do is we look at opportunities to help finance teams and HR teams better manage their cash flow. We partner with many financial institutions in this space to develop software services. And those software services are designed for things like our corporate card program. We have tools and accounts payable and accounts receivable, sometimes those are financial products that we offer to the financial institutions who then offer them to their corporate clients. And then sometimes they’re more software based products. So we do have a number of products that help on accounts receivable, automation and accounts payable automation. And but ultimately, our end goal is to be able to help those corporates that are using our products better manage their cash flow, better manage their procurement processes and better manage their treasury processes.

Vaidik Trivedi 10:42:10
bill payments is a very complex field. And there are many nuances and many technological developments that happen in this landscape all the time. Let’s pick out one specific thing. I personally want to know what API’s are. And how does MasterCard use it? What are its main benefits in simplifying and modernizing the payments? Landscape? Yeah,

Chad Wallace 10:42:34
absolutely. So in MasterCard, you know, we have a broad range of products and services that are designed for consumers, for businesses and for enterprise customers. And we use API’s for connectivity purposes all over our organization. I think, at last count, we have roughly about 125 billion transactions that we manage on an annual basis just alone. And so a broad broad set of payment capabilities that are available for our customers. When I think about the use of API’s, we certainly think about those in the context of internal use cases, as well as external use cases. And I’ll give you a few examples. And the uses of API’s allows us to standardize the way that we design our applications internally. So that way, various different tools that we have, can communicate with each other and pass data between each other and make our products just more real time. Ultimately, we’d like to deliver real time customer experiences. And the use of API’s allows us to be able to manage those internal applications in a way that really helps us deliver a real time experience. But we also use these externally as well. And so when we think about integrating with financial applications that corporates use, we’re often using API’s to do that integration. So those could be expense management platforms, those could be procure to pay platforms, or going to cash platform. So think of the accounts payable platforms or the accounts receivable platforms. Well, what we’re doing is we’re really integrating our financial products into those tools. So that way, at the point where someone goes in and needs to be able to pay an invoice as an example, they have the optionality to, you know, pay that using, let’s just say a virtual card. And in this respect, and so many of these financial tools, such as ERP systems, or procurement platforms, or expense management platforms that we partner with, are integrating with the set of API’s that we offer, so that way they can deliver those experiences embedded into their solutions. And what that does is it really allows us to create more of a consumer grade experience for our corporates, the more that we can integrate the payment into the actual workflow that the finance team is trying to manage through the closer that we are to be able to provide one seamless experience where payment becomes just part of the workflow itself. And it doesn’t necessarily have to be a separate application where people will need to swivel chair between two different platforms to manage both the ERP. And then the payment itself is, you know, one example. So the use of API’s is really critical for our our success at MasterCard in their commercial space, we’ve offered and launched a number of new tools, I’ll share just a couple of those, just as Recently we launched a new business payment control API. What that does is it allows our financial institution partners fintechs, and some of the financial tools, some of the software tools to be able to integrate to our platform and set card controls at the network level. And so that’s a really incredible way for our partners to integrate deeply into our network, and allows them to give real great security and control on the payments so that way they can manage their their payment workflows very closely. We’ve also done integrations in the ERPs. As I mentioned before, with companies like Oracle, with SAP Talia, we’ve nounce those partnerships. In the past, there’s Republic, and Windows as an example, with Oracle, we’re embedded, you know, deeply into their Oracle Fusion platform, we’re at the point of invoice presentment, we’ll be able to create a virtual card manage the payment of that virtual card directly within their application. Similar with SAP Toyah, the same thing we do there, it is a partnership where at the point where a payment run needs to happen, those, those virtual cards are ready to be used for those invoice payments. And it’s all integrated through our set of API’s that we offer to our customers.

Vaidik Trivedi 10:46:53
They b2b payments are one of the biggest payment blog on the planet. And there is tremendous payment volume that flows through the token, what are some of the biggest pain points that you see in this payments landscape? And how do you approach in innovating and solving those pain points for customers?

Chad Wallace 10:47:15
Yeah, so maybe the first thing to cover would be how we how we think about solving those types of customer pain points. And so we spend a lot of times with a lot of time with various different customers. So thinking about not only with the financial institution or FinTech partner that we have, or even the financial application, that we partner with what their needs are, but we actually spend a lot of time directly with chief procurement officers with treasures, with chief financial officers really getting to a point where we know deeply how their accounts payable process or procurement process or accounts receivable process works, listening to customers, and shadowing them in the context of making sure that we really understand what problem we’re solving. And sometimes that problem isn’t necessarily visible or transparent to the customer. It really gets to the point where when you’re shadowing a group of people, and you just start asking various different questions, and some of those questions result in potentially new product ideas, which, you know, we always find fascinating, where we’re looking for new innovation. When, when we see some of those challenges as we shadow some of those customers, as we talk to chief procurement officers as we talk to their teams, we find a lot of people have, you know, various different levels of understanding of how to manage their payables flow as an example, for b2b payments. Some people are using your traditional wire transfer or EFT methods of payment. And they’ve been doing that for a long time, we see a lot of people in the corporate world still using cheque and still using cash. in certain markets, certain markets across the globe are more digitized. And so therefore, you don’t necessarily see much check in cash. And so the variations of what payment schemes exist within various different markets. It does change the behavior and changes the way that people are attempting to make those b2b payments. But in some markets, you’ll see a predominance of cheque and cash, and then some EFT or wire transfers being used. And the one thing that we have been focused on at MasterCard for a while is around our virtual card strategy. We kicked that off roughly about 10 years ago. And what we’ve been doing is initially started off with offering those use cases for people. So people who wanted to create a secondary card number on the fly within a mobile app, we had a we have a tool that does that. And we’ve actually found a number of interesting use cases in the b2b space for virtual cards as well. And you can think of a virtual card to be a product that if you have a credit card line, a corporate card line of credit with your financial institution, we can create an on the fly 16 digit card number that’s used for a very specific purpose. It’s locked down. We can say that it’s for specific merchants for a specific period of time, for a specific amount, we have all these different types of controls that are allowed to be created on the card. So that way, the people using those cards can really pinpoint how they want that transaction to be used. And it gives them a lot of security and control around that. And when we started introducing this, for b2b transactions, it was a great way to pair the payment with the opportunity around working capital as well, because ultimately, this is a credit line, the credit line is available for the customer to use, and then you know, they make those payments, or they can pay their suppliers early, take advantage of early payment discounts, and then at that point, and pay that line of credit off at the appropriate time to financial institution. So it gives them that flexibility of working capital for a period of time, but also manages the payment and an extremely secure way. And we’ve seen the, you know, a number of different use cases here that have come up in this space and b2b. One is you think about a corporate accounts payable process, you often end up having some strategic spin where that strategic spin is large, extremely large payments that need to be made, they could be professional service related, this could be vendors that you need to pay, could be software providers that are providing, you know, large scale stuff, software solutions for you. And then there is more of let’s say, let’s call it the tailspin, essentially, you know, this, the smaller dollar payments were vendors that don’t necessarily get paid on a very frequent basis. And the initial view sige of those virtual cards was really around trying and procurement cards was really around trying to manage that Tailspin process because it’s expensive to be able to input the information into the supplier master the ERP manage the manage that process overall. And so often people were using a procurement card for those smaller transactions. And then we’ve seen the rise and use of virtual cards for b2b payments for that tailspin. But more and more over the last few years, we’ve started to see people use it for strategic spend as well for the working capital reasons, which is a big reason why MasterCards very invested into making sure that our products and services are designed well, and meeting the needs of for a b2b payment perspective, in the virtual card space. We’re constantly looking to innovate in that space. And just, you know, going back to the API comment earlier, being integrated with all of these platforms, like ERP systems and procurement platforms is a key pillar of our strategy. When, when I think about the uses of virtual cards, also, we’ve been, we’ve been very interested in how we can apply mobile virtual cards in the context of being able to use those for petty cash use cases, as well as employees who don’t necessarily travel a lot. But perhaps they need to travel once a year, you don’t necessarily want to issue a physical card to those folks, or have a card man to be managed full time. But I buy those folks. But maybe it’s a trip that one person needs to take in, they only travel maybe once every quarter, once a year, and you don’t need to necessarily create an entirely new card for them. So the use of those virtual card capabilities for mobile use cases in the context of employee travel, candidate travel is on the rise as well. And just last week, we launched our mobile, our proprietary mobile virtual card application. And so that brings just yet another option to the market for MasterCard issuers and MasterCard customers to be able to manage their Vcn spend on a mobile device.

Vaidik Trivedi 10:53:51
So what will actually cards, there are very interesting offering, as you just mentioned that earlier this month, MasterCard launched its own virtual card offering. And you said that you have been working on this technology for nearly a decade. Can you tell our listeners a little bit about the product that you recently launched? And what growth opportunities do you see in virtual card market? Are we gonna see more virtual card transactions in the future compared to physical card transactions?

Chad Wallace 10:54:21
Yeah, so great, interesting couple of items that you bring up there. So yeah, as I mentioned earlier, we do have we’ve been pioneering this information, this technology for about the last decade. We initially started out in the consumer space, we then launched our b2b services which essentially we create a virtual card we send that to a supplier supplier then can take that card. Earlier this month, we launched our mobile virtual car capability. And so that’s great for use cases such as petty cash you usages people that don’t travel much, but I’ll share it another one. Another example that we heard is that we went out and talked to a number of Chief Human Resources officers and the Chief Human Resources officers talked quite a bit to us about the fact that whenever they bring in candidates for interviews, that the process was clunky You know, candidates would have to spend the money on their personal card, they would submit their receipts, those receipts would then be reviewed by their finance teams, they would go through an approval process, and then a truck would be cut to the candidate to pay them back for the travel associated to that interview. And by offering mobile virtual cards, we can create, we essentially now a product that’s designed for someone to digitize that process entirely. And so you can issue a mobile virtual card that can be branded associated to the financial institution that’s offering this this product through through us. And what it allows you to do is to send that to the candidate, the candidate can use it to book their travel, they can go on to their airline site, book, The travel, they can go and pay for their hotel, they can pay for restaurants, they can pay for the transportation to and from the office as an example. And it really allows a lot of control for that camp for the corporate who’s managing that candidates travel in to know exactly, you know, what they’re doing, what they’re spending their, their funds on, and make sure that they’ve got the proper data to be able to reconcile that easily without having to ask for manual receipts. You know, I think that’s one really good example of us thinking outside of the box, and really looking at use cases that are beyond just traditional finance use functions. But you know, as we sit down, and we talk to these various different people within organizations, we’re finding a lot of different interesting use cases come up for the use of virtual cards. And outside of what we launched earlier this month, which is that mobile Vcn product that allows our issuers to be able to manage those through the app that we created. We’ve also been very invested into working with various different industry verticals, to create ecosystems. And so our travel use cases for virtual cards are very strong. You know, we partner with many online travel agencies, financial institutions, airlines, and hotel chains to build capabilities to where when an online travel agency receives a booking, that airline or that hotel chain can be paid using the virtual card product received those funds real time through the network that we’ve created. And and that’s been a, it’s been very interesting product that our customers have been very strongly positively responding to. We’ve seen those use cases as well in areas such as health care, and education. I’ll give you an example for the healthcare use case, we partnered with a company in India. And what they do is they manage claims that are happening between insurance companies and hospitals or medical providers. And it the use case was very interesting, because we, the insurance companies need to be able to pay the medical providers, and the hospitals and medical providers talked about the fact that they really need to focus on the working capital benefit that they’re getting, because they’re getting paid earlier. And they’re able to manage their cash flow better. And so we’re seeing a really interesting use case in the healthcare space in India popping up for the use of virtual card. And on the education side, we partnered with companies to be able to manage where students pay a payment aggregator and those payment aggregators, then pay the universities. And so that’s been a really interesting use case as well in the virtual card space. But we continue to see these different methods of where people want to marry that payment capability with the working capital. And, and that gives a really strong value proposition to why people are starting to use virtual cards more and more. Overall,

Vaidik Trivedi 10:59:04
data is the new goal for many industry verticals are so I’ve been hearing that from a lot of people. Can you tell me how this essential resource is restructuring executive leadership’s across board? And how is MasterCard looking towards this resource? How are you using this for innovation and technology development? We

Chad Wallace 10:59:30
do hear that data is a massively important part of the CFOs function. You know, you see people moving into CFO roles who are very interested in making sure that they’re making qualified decisions around how to run their business and making qualified decisions around how they run their business is predicated on the fact that they have really strong data to support the analytics and support the questions that they need to ask in order to better manage their their capital overall. And the thing that we continue to hear is how managing that data is very important for the CFO. You know, we hear it through our conversations with Accounts Payable teams, we hear it In our conversations with the receivables teams and with the Treasury teams, and overall, you know, it really becomes a cornerstone of what we think is important for those finance teams to manage. Some of that is based on where you know, the amount of data that’s stored in the ERP or the procurement platform, and how that gets integrated across the payment networks. You know, we see that there’s a lot of opportunity there for us to be able to help financial institutions and help our core corporate customers to be able to manage the two of those together, we launched a Accounts Payable analytics platform. And as part of that, what that platform does is it allows us to take a look at a corporates Accounts Payable file, and think and take a look at various different aspects of data that we aggregate to be able to help them make better decisions, some of those decisions around how to pay so we can qualify whether or not the supplier is willing to accept a car transaction, the parameters around how they want to accept that car transaction, so is there up to a certain limit certain types of buyer supplier relationships that they would like to manage the card, or if they should use a EFT or wire transfer in that space. We also look at things such as managing suppliers ESG scoring. So we have tools that are designed to allow a buyer to scan their supplier base and really understand from a sustainability perspective, where their suppliers are. And we’ve seen a lot of really interest in that product, due to the need and the push for more ESG friendly capabilities and making sure that people supply chains are ESG friendly. And then we also have tools that help buyers manage the supplier, the suppliers risk profile as well. We have a product called Risk recon and risk recon allows you to really take a look at the suppliers from various different aspects, including their their health from a cyber perspective as an example. And so we know that the corporates are very interested in making sure that their supplier base is sustainable, that they are protected from cyber events and how they manage that data, it becomes continuously very, very important for them to them to be constantly looking at and making sure that their supplier base is, is working well and working efficiently for them. We think about the integration of the tools and services that we have, we have already announced our partnerships with those various different ERPs that I mentioned in the past, but we continue to embed those data assets within those ERPs. And there’s payment products within those ERP systems as a key point of differentiation, where the combination of the ERP with the power of the network that MasterCard has really allows us to be able to create that that really compelling product that helps our chief financial officers make better decisions around how to manage their capital, how to how to manage their treasury function, and how to manage a payables and receivables products.

Vaidik Trivedi 11:03:30
That’s really interesting. I’m actually looking forward to what you guys come up in the coming time. So looking ahead in 2024, what are some key trends that you’re noticing in b2b payments landscape? And what’s in the pipeline for you?

Chad Wallace 11:03:45
Yeah, so a couple of trends that we have been very focused on, I mentioned the launch of our mobile app, we are strongly we strongly believe that the corporate lifestyle that people has and employees should be equally, the applications that you use should be equally as proficient from a experience perspective as your consumer life. So the more that we can upgrade the digital experiences to be more consumer grade, we are very focused on that. And mobile is one aspect of that. As an example, with our mobile virtual card product, we also have use cases where truck drivers that are managing, you know, moving trucks across the country, will you leverage that product to be able to manage their spend better. And so that centralized reporting and that centralized Spend Management allows our fleet drivers to use the product really efficiency efficiently, and they’re using that through the mobile apps. And we’re also seeing a rise of the adoption of mobile specifically in various different markets and jurisdictions that are more tapped to pay or more contactless friendly. I happen to be traveling to Australia and happen to lose my wallet on the plan, not a great moment for myself. I happen to lose my wallet forgotten on the plane, got to Australia and was able to pay for my hotel pay for all of my transportation pay for all of the restaurants through my mobile device, I never once had to have a physical card. And the more that we see the adoption of those contactless environments, the easier it is for us to create those types of experiences for our customers who were using our corporate card products as well. The other one that we’re seeing quite a bit is really moving to like a touchless expense management environment. We have been partnering with a number of expense management firms and driving innovation to provide as much data to the expense management platform in a real time manner as possible that the moment that transaction is either swiped or tapped, we can provide as much data as possible to the expense management platform so that way, people can reconcile those expenses right then and there. And we have found that the more that people are able to get that notification on their mobile device, that they can take a picture of the receipt, if that’s needed. For that that specific transaction, let’s say they’re sitting at a restaurant, they have dinner with 10 of their clients, there’s a person and they need to be able to take a photo of that, prompting them to do that, at the time where the card is, is tapped or swiped or dipped, it would be able to allow for us to be able to have a much higher adoption. And so that touchless expense management experience is really driving a lot of innovation in the market. So I think it’d be great if we’d never had to manage expenses and or manage receipts ever again. And it was completely digitized. The other thing that we’re seeing a lot is a big focus from our corporates related to managing cyber risks. And there’s certainly a you know, very strong interest from both of our financial financial institution partners, as well as the corporate strap lead to manage cyber risks that can be popping up from various different various different reasons. And you know, that is driving a lot of the work that we’re doing within our b2b team overall.

Vaidik Trivedi 11:07:22
Well, I have one more question that I want to know about. Were you able to find your wallet after that?

Chad Wallace 11:07:27
I did not unfortunately. But I did have all my cards reissued to me and most of the cards are digitally reissued to me. So that was, that was great. And then by the time that I got back home from Australia, most of the physical cards are in the mail. So yeah, it worked out pretty well. Luckily, luckily, I went to a country where tap to pay was very widely adopted. Let’s

Vaidik Trivedi 11:07:50
say your innovation is coming in handy for yourself that’s

Chad Wallace 11:07:55
talking about eating my own dog food.

Vaidik Trivedi 11:07:59
Well, thank you so much for joining us today on our podcast. It was lovely having you and hopefully we get to have a chat soon.

Chad Wallace 11:08:06
Absolutely. Great. Thank you for having us and we’re excited to continue the partnership.

Vaidik Trivedi 11:08:14
You have been listening to the buzz, a bank automation news podcast, please follow us on Twitter and LinkedIn. As a reminder, you can rate this podcast on your platform of choice. Thank you for your time. And be sure to visit us at Bank automation news.com For more automation news

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May 7, 2024
Podcast: Cloud migration ‘a must’ for FIs | Bank Automation News

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Financial institutions are prioritizing cloud migration as cost reduction and innovation continue to be top of mind.

“We definitely see cloud migration as a must,” Rodrigo Silva, regional director for the Americas at Temenos, tells Bank Automation News on this episode of “The Buzz” podcast.

According to the tech provider’s annual economics report, set for release on April 15, banks are leaning into the cloud as they expect the following in the coming years:

Temenos is a cloud and core banking software provider based in Switzerland. It’s loan origination solution was selected by $31.8 billion Commerce Bank in February to improve the customer experience for bank clients. Other temenos clients include $521 million Varo Bank, $156 billion Regions Bank and $142 billion Alex Bank. Its economics study, which includes a survey of 300 banking executives, is completed annually, according to the company.

Listen as Temenos’ Silva discusses the future of the cloud in banking, what clients are requesting and how to approach cloud migration.

The following is a transcript generated by AI technology that has been lightly edited but still contains errors.

Whitney McDonald 10:16:53
Hello and welcome to The Buzz, a bank automation news podcast. My name is Winnie McDonald and I’m the editor of bank automation News. Today is April 11 2024. Joining me is Rodrigo Silva. He is the head of North America tech provider terminos. He’s here to discuss cloud migration, including how to select a vendor how to approach moving to the cloud, and some data on what banks are thinking about the future of banking when it comes to the cloud. Welcome to the buzzer. I’d be go.

Rodrigo Silva 10:17:18
Sounds good. Whitney, thank you. It’s great to be here. My name is Rodrigo Silva. I am the Regional Director for 10 minerals for the Americas. I joined Temenos, just about a year and a half ago, and recently got an extended role to lead our region for for the organization. My background, I come from the industry. I was for about 21 years at at Fiserv in multiple different roles primarily around sales and commercial with leading teams around the globe. My last role there was with the posit solutions, which is a large organization primarily focused in the US. And as an organization, Temenos is today the largest provider of core banking applications around the world. We serve as around 3000 clients in about 150 countries. We have a market leading technology platform that caters to different segments of the market for different industries, large, small fine institutions. And, and North America is a very strategic, or region for us, where we’re investing in, in our product, in in technology in our cloud services, on resources, we have a large number of existing clients in this region. And I’m very excited about the opportunity to be here talking to you and be leading organization in this territory.

Whitney McDonald 10:18:49
Great. Well, thank you again for being here. And for sharing a little bit about your background. I’m excited here today we’ll be talking about cloud migration. And of course, with your background and in the role that you’re in today. I’m sure that it’ll be a great conversation. So with that, why don’t we just start here with where we stand today with cloud migration? What are you hearing from bank clients? Is there still this big push for cloud migration? What are what are you kind of following and hearing from your clients? Yeah,

Rodrigo Silva 10:19:18
absolutely. So so with the there’s more confidence than never right? The public clouds has has now a stronger presence in, in everywhere in banking, tons of investment by the hyperscalers. Bank see cost reductions and innovation being key for for the banking world. Nowadays, adopting cloud is a must. We we see future, the future of banking is in the cloud. Our latest economics economist impact study showed that about 51% of bankers believe banks will not own any data center in five years, because they will be moving most of the applications to the public cloud. That is that is more so in North America than anywhere else. We saw out of the respondents that that 36% of banks are prioritizing, moving their domestic core banking to the cloud, compared to 26. Banks. globally. We also saw that the 79% of North America respondents said that multi cloud strategy could become a regulatory prerequisite in the next five years, compared to about 60%. In Europe. So we definitely see cloud migration as as a must. Our clients are, are contacting us clients that are today on on prem solutions, running on their own data centers are looking at moving to the cloud, either their own cloud providers or moving to our SAS operation where we manage the hyperscalers on behalf of our clients a

Whitney McDonald 10:21:09
couple of things to break down there, of course, great stats, so thank you so much for putting some numbers to it, but maybe like a break down a little bit what those conversations look like when a client approaches Temenos and says, You know what, I do want to migrate to the cloud. What’s that step one? Of course, it’s it’s expensive, and it can be a big undertaking. So what are those conversations initially look like?

Rodrigo Silva 10:21:33
It’s all about the benefits, right that our clients will see with the cloud. And first and foremost, what we need to understand is the banking environment as we know has changed. Right? We have demanding customers that are looking for services 24/7 Um, we have the rise of new competitors, right, you’re talking about fintechs, you’re talking about new banks, you’re talking about bass providers, you have regulatory pressures in the market, we have very tough still very tough market conditions with interest rates being high. So all of that put pressures on the banks to become more innovative to change the ways they’re doing things. Also, you’re looking at new performance metrics and performance drivers, right innovation, customer centricity, operational efficiencies, risk, compliance, artificial intelligence, AI, is all over the place. So so there’s a lot of pressures in the banks to do things differently in rethink the way they’re operating today. And cloud brings exactly that with Cloud, they’re going to see cost efficiencies, they’re going to see and be able to provide enhanced customer experience. They’re gonna have scalability advantages, adaptability advantages, you have, you have a lot of automation, within within the cloud world deployment speed, the hyperscalers have invested a lot in security, business agility. So again, the cloud is where the banks will be able to compete and thrive in the digital world. You look at the wave of payment providers and Neo banks out there, and they’re built from scratch on the latest cloud technology. And in the incumbent, that are using still those legacy systems that spaghetti systems as we joke, are, are really not suited to to the demands of this digital era. So so it’s quite frankly, a race against obsolescence. The move to cloud will give the banks the agility, they need to go to market with new products and, and cater to their clients needs, and really future proof their technology stack.

Whitney McDonald 10:23:48
Yeah, you just talked through a few benefits. Of course, the competitive side, you mentioned that fintechs are building on Cloud, they’re not really having to do that lift. So from from the benefit of talking through the benefits, and the need to stay competitive, is definitely key here. So maybe we can talk about what those considerations are. There’s obviously the pros that we just talked through. But it’s not just as easy as okay, we’re going to move to the cloud now. So how do you really consider cost? How do you consider what it’s going to entail a time commitment? What does that sound like when you’re when you’re discussing that with your clients?

Rodrigo Silva 10:24:24
Yeah, you’re absolutely right. Right. It’s it’s a complete shift to a new set of different practices. You’re talking about automated testing, design, a more of a customer centricity model, that the need for accelerated production environments, shorter delivery cycles, higher quality, so So the fine institutions, the banks, they need to be prepared for it, make sure that they have the right resources in place to take on the world of cloud, they also need to make sure that they are working with with vendors with partners, they have a broad and deep set of cloud native banking capabilities. Same same requires that we just talked about for the banks you have internally with their own resources, you should expect that from your vendors and from your partners, right. So having having proven cloud delivery proven is scalability, proven migration credentials experience doing so. So when I look internally at 10, windows, right, we have experience of working with 700 SAS clients today, they have already migrated or started in our SAS environment. So massive scalability, right, we are an organization that has been doing this for for many years now. We have both on premise clients and SAS clients, and in a lot of our on prem clients is X have actually implemented the our applications on their own cloud providers, right, that being AWS, or your or, or what have you, because we are an application that day. That is that is cloud agnostic. So again, deep experience, understanding of the regulatory environment, understanding of the security environment, making sure that you’re compliant, and having many years in our case, 30 years working with with bank IP is critical for, for our clients to to be successful. And they should be considering all of that when they’re making their move to the cloud.

Whitney McDonald 10:26:28
A lot of the conversations that we have is about that vetting process and making sure that the vendors that you do select have those same, whether it’s security or even just values and kind of what you’re trying to accomplish all line up. So yeah, that definitely resonates. I know that you also just mentioned tendonosis cloud agnostic So maybe we can talk a little bit more about where terminos fits in. So if you have a client that as mu is moving toward the cloud, what does that look like for terminos? How do you guys help along that journey? Yeah,

Rodrigo Silva 10:27:01
absolutely. So we’ve been on that journey for for many years, and evolving our cloud. Offering for many years, we were one of the pioneers to move core banking and our clients to the cloud. And what is what is interesting and important about 10 minnows is that we were not only talking about a retail application or corporate application, we are, we are one single platform that works in all around the world for different different types of clients, those being small for institutions, large finished tuitions, credit unions, neobanks, Challenger banks. And we not only, not only we work with multiple types of institutions, but we also work with different segments of the market. So one single platform that caters to retail, small business, corporate private wealth, we have an end to end channel solution that does both the digital piece online banking, but also originations onboarding, we have solutions for fraud monitoring AML. So payments hubs. So we, in all those solutions are cloud native, and in in cloud agnostic, meaning that we can help our clients in that journey into the cloud, not only with their core, but also with those also supporting solutions that revolve around the core. And the composability of our applications is very important, because when a client is testing the waters with the cloud, they may not be willing to move the entire platform at once. So with the way the architecture works, you can move bits and pieces as as you you feel comfortable with. So maybe you have a strategy, you’re going to start with the posits only as MVP one and in the future start moving then your lending and your credit products into the cloud. So you can decide what makes most sense. So you can you can test you can feel comfortable, you can see everything that is working. And then you can start moving according to your your needs and your your risk appetite. So at the end of the day, you have a partner in 10 Windows that allows you to move not only your core banking at your speed and your desire, but also move all the other platforms that support the core and surround the core into into a core environment.

Whitney McDonald 10:29:30
Which makes it less daunting, right? You don’t have to do it all at once you can kind of do it piece by piece and see how it works and then determine okay, what’s the next piece that we should move over? You don’t have to do it all in one fell swoop.

Rodrigo Silva 10:29:45
That is absolutely correct. So you can take your time. And depending on your business strategy and your risk appetite, and how comfortable you are with the move, you can decide which pieces to move first. And again, that is those are the type of conversations that we love to have with clients. I’m very fortunate that in my role, I have a chance to speak with many banking executives and talk to them and with them about, you know, what are their appetite to move to cloud? And we showed some stats earlier on it, everyone’s talking about it. And the question is, how quickly can we move? And what should we move first? And who are we going to be working with and we’re glad to see that there’s a lot of trust in what we have been able to show the market. And, and we’re seeing a lot of interest in, in this move.

Whitney McDonald 10:30:32
So we’ve been seeing or following along this cloud migration journey. For quite some time. We talked through some benefits, we’ve seen the lift and shift. But what do you think is next within this cloud banking model? How is this cloud migration evolution changing? What are you watching for? What’s next in your perspective?

Rodrigo Silva 10:30:56
Yeah, so what we’re seeing is the market is changing. And so is the way the banks consume technology, right? They’re moving to SAS, we end with a SaaS offering, you are basically allocating all those quality, the responsibilities around managing the infrastructure, managing the security, the the monitoring the day to day operations, the close of business, the updates the upgrades, putting that in the hands of a of a vendor, right, an organization like like dominoes on a cloud environment. So we’re seeing them move more and more that is very, it’s a model that has been in place, especially in North America for many years. But we’re seeing that more and more around the world as well. That took a little longer to adapt and to adopt that data. Call it the the SAS model or just putting With all that responsibility in the hands of a vendor, now, what we’re seeing as the next wave is, is really is Cloud Analytics, right the amount of call it what the banks can do with all the data that can be available in the cloud, because cloud allows you to allows the scalability to really move tremendous amount of data in and in with the speed and scalability that you need to, to be able to manage that. And with with Cloud Analytics, banks will be able to to have real time insight into customer behaviors, market trends. And that is super important as they are launching their new products and their next best offer and how they’re managing other aspects of their business such as risk profiling, Fraud Management, so on and so forth. So So with a highly scalable, says model, together with a robust localization and local operations, right, the banks can feel comfortable on moving into into the cloud environment and, and again, with a vendor that has been doing that for a while.

Whitney McDonald 10:33:04
You’ve been listening to the buzz, a bank automation news podcast, please follow us on LinkedIn. And as a reminder, you can rate this podcast on your platform of choice. Thank you for your time, and be sure to visit us at Bank automation news.com For more automation news,

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April 11, 2024