Hello and welcome to Insights Distilled, a weekly email briefing that curates tactical technology news for financial services execs. Every Tuesday morning, we send you the top five stories you need to know – and explain why they matter. Our tech news roundup helps you stay on top of the innovations driving business agility in your industry. To get next week’s edition in your inbox, sign up here.
This week’s edition highlights several examples of FinServs pushing forward on a promising new technology, despite uncertainty, to avoid being left behind.
Afterall, it’s easier to execute experiments and build knowledge early, before you’re sprinting for results.
Citi’s CEO succinctly summed the idea up when describing the bank’s approach to this year’s hottest technology: “Overall, the risks of not embracing generative AI far outweigh the risks of engaging with it.”
Let’s dive in:
Citi’s CEO outlined the bank’s principles for generative AI, including that it could help increase empathy.
Citi CEO Jane Fraser has publicly planted a flag for how the bank is proactively approaching GenAI to shape its transformation efforts, while putting people and compliance at the forefront.
Everyone is talking about generative AI, including Citi’s CEO.
While Fraser’s assertion that generative AI “has the potential to revolutionize all functions across our bank” isn’t surprising, per se, her article is an interesting way for Citi to show investors, regulators, and customers where it stands.
While the post generally outlines Citi’s priorities, one interesting nugget was Fraser’s assertion that generative AI could help build greater empathy.
“It may sound counterintuitive, but large language models communicate clearly with their users and never get frustrated,” she wrote. “I believe this has wide applicability for many businesses and industries more broadly.”
For example, AI-powered chatbots could be integrated into processes where they can prompt customer service agents or inexperienced managers.
Read Fraser’s full article here.
Top FinServs – including Allianz and Citi – are pouring money into a startup that’s taking on index-linked investments.
As investors ride the wave of index-linked funds and increasingly demand more sophisticated and customizable investment indices, MerQube’s technology is gaining attention.
Indexing technology firm MerQube just raised a $22 million Series B funding round led by Intel Capital, with participation from Allianz Life Ventures, Citi, JPMorgan, and UBS.
The company’s data processing abilities allow it to deliver rules-based investment products – based on strategies like defined outcome, risk control, or themes like ESG – more quickly and cost-effectively than traditional players.
“Today’s legacy systems struggle to keep up,” MerQube’s chief commercial officer, Roby Muntoni, told Insights Distilled. The firm “fills that fintech gap with a building block-based architecture and cloud-based platform that enables these next generation indices,” she added.
The new investment from and partnership with Allianz will help MerQube tailor its solutions for the insurance space (for example, by launching financial products to help manage retirement risk).
Ultimately, having FinServ investors helps MerQube align with the necessary requirements to woo investment banks, according to Muntoni: “The MerQube team is grateful that the majority of its investors are also clients.”
Barclays is launching a “hackathon” to get banks, fintechs, and market infrastructure firms to come together to rethink an outdated and inefficient sector.
Repurchase agreement (repo) post-trade services are currently fragmented, complex, and inefficient. Barclays wants to push the industry to come together on better tech solutions for all.
Barclays is hosting a “RepoHack” event in London this fall to prod the industry to collaborate on better data and technology architecture for repurchase agreement (repo) post-trade services.
Right now, market participants each build, operate, and maintain their own individual repo trade management infrastructure, but Barclays is pushing adoption of the Fintech Open Source Foundation’s common domain model (CDM) standards.
The hackathon will bring banks, fintechs, and infrastructure firms together to prototype solutions for consistent, accurate data exchange. Applications are now open, and the event will take place at Barclays’ London office in September.
“This will be an opportunity to transform the industry by using and improving standards that the entire industry can get behind,” Barclays executive Lee Braine told Finextra. “Something like this enables participants to experiment and discuss with peers what is happening at the cutting edge of the space.”
Truist teams up with IBM to build quantum computing skills and run experiments.
Not engaging is not an option: Financial institutions have realized that the best way to approach a still-developing technology like quantum computing is through lightweight tests and building internal expertise.
Another week, another quantum computing announcement: Truist and IBM just launched a new partnership to help the bank prepare for the future of quantum computing.
The accelerator program will help Truist train internal experts and start running tests that will eventually help it “leverage these new technologies to the fullest potential,” according to bank CIO Scott Case.
This announcement comes hot on the heels of a similar initiative from HSBC. While quantum technology is still at least several years away from being ready for primetime, the overarching strategy for banks is simple: Prepare now or suffer the consequences later.
The biggest risk of ignoring quantum computing is the security threat. Experts expect bad actors to wield quantum to break existing encryption, so FinServs will need to use the same tech to defend themselves. Meanwhile, banks are also eyeing the benefits it could bring for risk assessments, portfolio optimization, or rewards programs.
As JPMorgan executive Marco Pistoia put it to American Banker last year: “We realize that if a company doesn’t do anything about the market right now, and just waits for quantum advantage to become a reality, when quantum advantage becomes real, it might be too late.”
Read more of Insight Partners’ perspectives on the challenges of quantum computing and how firms are approaching it.
Bank of America uses virtual reality to help employees absorb training info faster – and 97% of participants said they felt more comfortable performing tasks after using a simulation.
Creating teachable moments in virtual reality can lead to immersive, focused, and memorable training programs for bank employees, which are ultimately more effective than the status quo of boring instructionals.
Bank of America has ditched written guidelines and online videos for some of its most crucial employee trainings.
Instead, the bank uses virtual reality technology to immerse employees in 3D environments where they can practice skills and build knowledge in real-time. A new Bloomberg feature highlights how the trainings are more effective and memorable for workers.
For example, one of the bank’s training modules mimics a bank robbery, where employees must respond to having a gun pointed at them or being passed a threatening note demanding money. They’re coached and then given the opportunity to act out the scenario in VR.
“When you’re in VR and you’ve got someone pointing a weapon at you or screaming at you, asking you to do something, it’s somewhat duplicating that feeling that you would have in real life, because of the level of immersion,” Bank of America SVP Mike Wynn previously told Insights Distilled. “I want someone to feel a little anxious or a little nervous in a fake environment, because I don’t want them to feel that way for the first time if it ever happens to them. That’s why VR is so powerful as a modality, because it gets you to feel as if you’re in that moment, so that you can develop some level of muscle memory.”
Other banks have crafted their own experiments with VR and the metaverse, too: Sociéte Générale and Deutsche Bank host client presentations in virtual reality, while BNP Paribas lets its users check their account activity and transaction records in VR.