editions

Because the promise of quantum computing is enormous but the reality is still a long way off, low-intensity programs – like Wells Fargo’s work with IBM – enable experimentation and skills-building without monopolizing resources.

Wells Fargo began diving into quantum computing in 2019 and is working with an MIT-IBM research group to test use cases like rapid re-calculation pricing for a large book of trades, CIO for digital technology and innovation, Chintan Mehta, told CIO Magazine. 

While quantum could dramatically increase the bank’s efficiency, Mehta is clear-eyed about how it could take years – if ever – for Wells Fargo’s research investment to pay off: “With quantum, the probability of failing is higher because you haven’t proven anything and there’s no common baseline against which to measure.” 

Quantum computing could be a game-changer for risk analysis, forecasting, and fraud detection, among other applications, and financial services firms are betting on the technology in different ways: JPMorgan Chase, Barclays, and Goldman Sachs are also working with IBM, while BBVA has partnered with startup Multiverse Computing, and Goldman and Citi have invested in QC Ware.   Read more about the challenges of quantum computing, and how startups and major tech firms are approaching it, here and the full interview with Mehta on CIO.com. 

As banks face a rash of fines (or firings) for unauthorized employee communication, they are choosing to shell out for tech tools to monitor popular chat apps like WhatsApp instead of stopping workers from using them.  

Deutsche Bank started using Movius, a US mobile app that lets compliance staff monitor employee communication with clients, amid an uptick in regulatory probes, according to The Financial Times.  

Both Credit Suisse and HSBC have recently dismissed employees following investigations into workers using unapproved messaging apps with clients, and the SEC fined JPMorgan Chase $200 million for bookkeeping failures around personal devices. Tools like Movius promise to keep regulated firms compliant while allowing employees to chat with clients on their preferred channels.

Movius also counts JPMorgan, UBS, Jefferies, and Shanghai Pudong Bank as customers (and the latter went from realizing its need to deploying the tool in just 15 days). Meanwhile, a firm called Txtsmarter claims to be the only communications surveillance firm that can seamlessly monitor Apple’s iMessage. 

By letting consumers repay up to $10,000 over 24 months, PayPal’s launch fills the void between long-term bank loans and short-term BNPL offerings and moves it one step closer to its “super app” vision.

PayPal is charting new ground in the BNPL world with larger, longer loans: Its Pay Monthly offering, issued by WebBank, covers purchases between $199 and $10,000 over up to two years, with risk-based APR ranging from zero to 29.99%. It’s already available with millions of merchants and is attracting positive attention at a time when BNPL startups are suffering from missed payments, higher interest rates, and regulatory scrutiny.    

“How consumers look to pay for larger purchases is evolving and there is a growing demand for flexible payment options,” VP Greg Lisiewski said in its press release, noting that 22 million customers used PayPal’s pay later products in the past year.  

PayPal is closer than any other US company to achieving the promise of a super app that combines shopping, payments, and most of the functions of a traditional bank.

Citi wants to let its clients securely store and settle digital assets like tokenized bonds and equities and deploying Metaco’s custody platform will let it do so faster, at scale.   

Citi’s focus on tokenized securities allows it to work with digital assets and the blockchain without diving into cryptocurrencies, which are still a regulatory gray area for banks.   

Citi plans to fully integrate Metaco’s custody platform, Harmonize, into its current infrastructure, as part of its focus on “developing new capabilities to support digital asset classes that are becoming increasingly relevant to our clients,” global head of securities services, Okan Pekin, said in a press release. 

BBVA and DBS also work with Metaco, while State Street has a partnership with infrastructure provider Copper.

Truist joins a handful of banks that have launched designated office spaces meant to juice creativity, agility, and ambitious projects – though it remains to be seen whether state-of-the-art digs will succeed at attracting top talent used to working from home.   

Royal Bank of Canada opened its own innovation hub in Calgary last September (and is currently looking to more than triple its workforce there to 300 by the end of next year), while TD Bank just launched a new tech research center in Philadelphia called Workshop.   

Truist chose to put the tech center in its headquarters because it wanted its spirit of creativity and experimentation “to be part of our DNA,” exec Dontá Wilson told American Banker during the center’s construction.

Truist is betting that the hub – which has customer meeting rooms, a virtual reality lab, and a designated call center – will help it design better digital products. Increased effort is warranted: Truist recently ranked last among its peers in customer satisfaction with its mobile app and online banking, according to a JD Power study.

Cloud data platforms with consumption-based pricing like Snowflake are a critical enabler of advanced analytics, but costs can unexpectedly rack up. Capital One’’s Slingshot saves money by monitoring data warehouse performance, making optimization recommendations, and automating governance, and the bank is betting that other firms will be willing to shell out for its battle-tested software. 

Capital One realized that having its different lines of business individually manage their own Snowflake compute requests and configuration led to unexpected costs, so it built and used Slingshot over the last several years to streamline Snowflake’s provisioning processes. It has decreased its cost-per-query by 43% using the tool. 

Slingshot is the first public release of its new B2B software business, but the bank plans to launch other products in the future.  

“We recognize that many other businesses are facing similar data management needs … so bringing some of the tools we’’ve built and scaled to market as enterprise B2B software solutions is a natural evolution for us,”” said the head of Capital One Software, Ravi Raghu, in a press release.  

$4.2 billion ThoughtSpot has spent the last few months successfully using the tool to “optimize usage and control costs,” it said in the release.  Other tools to help businesses manage, monitor, and optimize their Snowflake use include WhereScape, DataDog, and BryteFlow.

The Royal Bank of Canada is using PIN numbers – combined with biometrics and card authentication – on its mobile app because consumers are less likely to give away PINs online versus other personal information that scammers can take advantage of.

As consumer fraud losses climb, RBC is integrating the traditional safeguard of a personal identification number (PIN) into its mobile app authentication process because people are less likely to share it online. 

“A PIN is a well-known asset and not something that consumers are likely to share as much as other information,”” RBC’s chief digital officer Peter Tilton told American Banker. The IT project of implementing PIN on mobile lasted several years, he added. In addition to their PIN, app users will be prompted for either biometric information (facial recognition or fingerprint) or to tap their debit card to their phone.  

Relying on this classic security measure helps protect against organized crime rings, though it is still susceptible to “friendly fraud” where the attacker knows their victim personally and has their PIN. 

Read the full American Banker story here.

Conversational AI and digital customer service can boost customer acquisition and satisfaction while reducing costs, but lack of sophistication or siloed data can make comprehensive deployment a challenge.  

“There are all kinds of communication tools – chatbots and that type of thing – that help you do more at scale, but not do it really well,” Silicon Valley Bank’s Dan Allred said on stage at the Fintech Nexus conference in New York City, referring to digital customer service tech as “a nut that is not going to crack yet.”  

Indeed, chatbots are often fragmented across lines of business or limited in their scope.  

For example, Westpac, a $965 billion-asset bank in Australia, is working with Kasisto to co-develop an orchestration layer  – a “master bot,” if you will – to pull information from all its existing chatbots. There are a slew of other firms working on conversational AI and digital customer service for financial services, including Clinc and Glia, both of which are Insight portfolio companies.

With its hiring spree, Fidelity plans to expand its abilities for storing and trading cryptocurrencies more broadly, firmly staking its ground despite recent price drops.    

In April, Fidelity announced that it would allow people to put bitcoin in their 401(k) accounts later this year, becoming the first major plan-provider to do so. Now, it’s staffing up to build the infrastructure for the custody and trade of Ether, as well as to add 24-hour trading support and tax-reporting tools.  

The subsidiary has around 400 current clients, though customer acquisition has slowed down with the recent cryptocurrency price drop. Still, Fidelity isn’t deterred. 

“We’re trying not to focus on the downturns and focus on some of the long-term indicators,” including client demand, the unit’’s president, Tom Jessop, told the Wall Street Journal. “We are trying to build infrastructure for the future because we measure success over years and decades, not weeks and months.”

Franklin Templeton Investments’ work with machine- learning- startup Fractal demonstrates the benefits of hyper-personalization and contextualization.

Franklin Templeton Investments used a Fractal product dubbed “Advisor Genomics,” which uses pattern-matching algorithms to predict which financial advisors were likely to interact across a given channel. The program helped FTI associates determine which financial advisors to contact, how to contact them, and what to discuss.    

In one year of working with Fractal, FTI identified 13,200 sales leads, which it closed with a 65% success rate, leading to a 26% increase in sales and $600 million new assets generated. 

Fractal also works with Wells Fargo and Google, and raised $360 million earlier this year.