Hello and welcome to Insights Distilled, a weekly email briefing that curates useful 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.
Wells Fargo exec explains why the bank is taking a “slow burn” approach to quantum computing: “Not engaging is not an option.”
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.
Deutsche Bank has started using tracking app Movius to monitor employees’ calls, texts, and WhatsApp conversations.
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.
PayPal’s new “Pay Monthly” product finds middle ground between bank loans and typical buy-now-pay-later lenders.
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 is working with infrastructure firm Metaco to develop institutional digital asset custody.
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 Bank wants to lure tech workers and spur big ideas through a just-opened innovation center in its Charlotte, NC headquarters.
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.