editions

Writing your will isn’t typically an easy, cheap, or uplifting exercise, which could be why more than two-thirds of Americans have no estate plan. A handful of big FinServs are strategically funding a startup that wants to change that by making estate planning a more accessible aspect of financial management.

With the “great wealth transfer” upon us, there’s an increased need for simple, affordable estate planning.  

Accordingly, startup Trust & Will has wooed a whole host of financial services firms in its latest funding round. All told, the startup has raised $48 million from investors including Amex Ventures, Fifth Third Capital Holdings, Northwestern Mutual Future Ventures, AARP, UBS Next, and USAA. 

“Estate planning is an essential pillar of sound consumer financial wellness,” according to Amex Venture’s Margaret Lim. “Yet today, the process is complex, antiquated, and expensive.” 

That’s where Trust & Will comes in: It provides an easy and fast way to build and settle estate plans online.  

In addition to connecting with people directly, the firm has partnered with a handful of banks and credit unions to offer its services to their customers and Lim told TechCrunch that Amex is exploring ways to deepen its relationship with Trust & Will beyond its funding.   

Wells Fargo wants to boost engagement between its financial advisors and clients, in more convenient ways, to foster connection and loyalty.

Wells Fargo wants its wealth management clients and their advisors to stay more closely connected. 

The bank is rolling out LifeSync, a digital platform that lets users create and track financial goals while notifying advisors of changes and making it easy to interact or schedule conversations.  

“It gives clients a real-time platform to share information about what’s on their mind and send that to their advisor in-between more traditional monthly, quarterly or annual review meetings,” Michael Liersch, head of advice and planning for Wells Fargo wealth management, told Insights Distilled. 

For example, the app aggregates information so that people can track their portfolios, net worth, credit card reward balances, relevant news and content, and specific savings goals in a “hyper-personalized” way (including uploading personal photos tied to their aspirations). Advisors get pinged on updates and this additional “listening post” allows them to weigh in or update plans more dynamically.  

Ultimately, Wells Fargo wants LifeSync to increase client satisfaction, trust, and loyalty. Deposit growth would be helpful, too: It has 12,027 financial advisors assisting 2.6 million wealth management clients with $1.9 billion in assets, as of its last earnings report, but its total pot of clients assets has been stagnant since the end of 2019.  

LifeSync’s launch aligns with a similar trend around the shift away from robo-advising to a “true hybrid advice model” from likes of Truist, JPMorgan, and Ally Financial, where automated portfolio management is paired with phone or video consultations with advisors.

Open source software can bring a variety of benefits to financial institutions, including increased engineering speed and improved code quality, while helping attract tech workers. Discover expects its new site and partnerships to help it stand out in the space.

Discover just launched a new website dedicated to open source software development and building community in tech.  

“Like all organizations, we use a huge amount of open source in our products,” Discover’s VP of technology capabilities and innovation, Angel Diaz, told Insights Distilled. “It allows our technology folks to express themselves, to build on their skills, to partner with others, and to improve the technology that we use.” 

The public-facing Discover Technology Experience website is meant for knowledge sharing and inspiration and coincides with the firm joining the Linux Foundation and the Fintech Open Source Foundation (FINOS), and committing to sending its engineers to more than 50 events and meetups around the world this year.  

All these actions play into Discover’s plan to recruit and retain tech workers, who view open source contributions as a way to make an industry-wide impact, build community, and earn cachet. 

“You cannot hire a great engineer who doesn’t want to be learning and collaborating: If you’re not giving them an outlet to do that, you’re not going to be able to retain talent,” Diaz said. The site provides the “connective tissue” for “creating better conversations across the workforce,” he added, and will also help attract people to the firm.  

Generally, open source software continues to gain steam among big FinServs: A survey from FINOS late last year found that 20 financial institutions rolled out Open Source Program Offices in 2022 and that 56% of respondents said they got more value from open source last year than in the year before. 

Artificial intelligence can inject efficiency and increased success into outdated and shockingly ineffective know-your-customer and anti-money laundering processes. 

Mizuho International just picked a new partner to help it fight back against financial crime.  

The investment bank aims to improve its anti-money laundering efforts by working with SymphonyAI’s Sensa platform, which tracks changes in customer behavior, identifies risk hotspots, and flags fishy activity.  

Mizuho believes the platform will allow its financial crime team to “be empowered and more effective,” according to chief compliance officer for EMEA, Dinesh Joshi. For example, analysts can complete its risk review process in minutes, even for highly complex cases. 

SymphonyAI says its tools improve risk discovery and decrease false positives by more than 60%, which can save clients time and money. For example, it cites its platform as generating a 200% rise in risk discovery and a 500% increase in operational productivity, with $6 million in annual savings from recovered fraud dollars.  

Thanks to AI’s specialty in pattern matching and anomaly detection, a swathe of startups has emerged that use machine learning to fight fraud – including Chekk and Insight Partner’s portfolio company FeatureSpace. SymphonyAI’s Sensa also counts Citi among its customers.  

Customer obsession needs to come from the top. Digital strategy execs should marry data with a person-first mindset, rigorously monitoring feedback to keep a constant pulse on how clients feel, according to BofA’s David Tyrie.  

Bank of America’s chief digital and marketing officer, David Tyrie, pairs his morning coffee with customer feedback.  

The exec uses BofA’s “client imperative” dashboard every day to dig into an overview of customer activities, interaction ratings, and any complaints. 

“My first morning coffee goes with looking at what’s happening,” he told The Financial Brand. “Are people happy with the experience they’ve had over the last 24 hours? What things are customers saying need to be improved? What things are missing that they wish they had from us?” 

Tyrie’s routine illustrates his focus not only on the bank’s digital IQ, which encompasses its tools for online and mobile banking, but its EQ (or emotional quotient), which represents how those tools make customers feel.  

He posits that this often-overlooked aspect of digital transformation is ultimately more important than the nuts-and-bolts of how a bank’s technology works. Executives should have an easy way to understand EQ – both general trends and hyper-specific issues – on a regular basis. By starting his day with the imperative dashboard, Tyrie makes client experience his north star.  

“Customers put a much greater premium on how your bank, as an organization, makes them feel. It’s almost like how a doctor with a good bedside manner makes a difference,” Tyrie said. “I don’t think you can over index on how customers are feeling.” 

While cloud computing lets big financial firms quickly scale their IT capabilities, its costs can spiral out of control. Tech leaders need best practices for monitoring and optimizing their budgets.

The cloud frenzy is starting to wear off as companies ogle their bills amid ongoing budget tightening.  

For the first time in over a decade, spend management ranked above cybersecurity as the top challenge enterprises face with the cloud. So how can big financial firms keep costs under control?  

While there’s no one answer, execs at major financial institutions have weighed in on their own tactics.  

For example, Jack Henry CIO Rob Zelinka told The Wall Street Journal that his team scores discounted rates with multiple cloud providers by committing to a certain amount of usage, which requires it to hyper-accurately forecast its compute, so it doesn’t go over (or too far under) its commitments. 

“The last thing we want to do is leave money on the table,” he said. 

Wells Fargo holds daily meetings to review a detailed dashboard that showcases expense trends and identifies anomalies, which helps the team determine if there are workloads that can be paused during off-hours.  

Meanwhile, Capital One told Insider that it uses a tool that automatically moves less-used data into cheaper tiers of storage, which helped it decrease its AWS storage costs by 35%. 

Recent IDC research predicted that 70% of enterprises will become more adept at managing their cloud spend by next year. How is your firm reducing cloud costs? Let us know your tactics by replying to this email.  

Washington Federal wants to help other banks partner with fintechs, so they can better compete with larger rivals – and it’s the latest financial firm to bet that its homegrown tech tools will reel in external customers. 

Washington Federal – known as WaFd Bank – launched a separate firm to help other regional and community institutions create more consumer-friendly digital experiences.  

Washington Federal originally created the unit, now dubbed Archway, to advance its own tech goals, but realized that its learnings and tools could have a wider industry impact. Archway’s platform makes it easier for banks to consolidate data from disparate systems and build or integrate other apps, like budgeting tools, voice chat, or AI.  

Ultimately, this service helps smaller regional banks more easily up their tech chops, so they can offer the experiences that customers expect from national competitors with bigger innovation budgets.  

“Archway provides a platform that hooks into the services these banks are looking for, and the team has the experience to know the roadblocks – technological and cultural – that need to be overcome,” president Dustin Hubbard told Insights Distilled. “Other solutions are agnostic of industry and most community and regional banks don’t have the inhouse development expertise to effectively deploy them.”   

Archway just announced $15 million in funding from WaFd, as well as venture capital firm Madrona.   

There are two trends at play here:  First, the need for abstraction layers to help banks take advantage of cutting-edge tech (similarly, a firm called Sandbox Banking just raised seed funding to be the Stripe of fintech integrations). Second, financial firms’ growing realization that the highly specialized nature of their software means they can successfully sell it to other banks.  

For example, ING recently spun out its homegrown regtech software, Banco Santander is partnering with Google to sell technology it created to help move mainframes to the cloud, and Capital One productized Slingshot, software it originally created to manage its own use of the cloud data tool Snowflake.    

As artificial intelligence usage swells within financial firms, they’re woefully behind on ensuring that the tech is deployed safely. Execs need to be rigorous about maturing their responsible AI strategies.

Financial services firms need to drastically increase their focus on responsible AI, according to a recent survey by industry giant FICO.  

The survey found that 27% of organizations are yet to start developing responsible AI capabilities and only 8% describe their responsible AI strategy as “mature.”   

Responsible AI standards encompass a firm’s commitment to making sure its AI systems are explainable and auditable, which, in turn, reduces reputational or regulatory risks and protects customers.  

“Many AI systems lack a way to trace or explain how they make specific predictions,” according to Insight Partners’ managing director, Lonne Jaffe. “This makes it hard to test these systems and also makes it difficult for these systems to engender trust and meet regulatory requirements.” 

Companies like Insight portfolio firms Fiddler and Zest AI have emerged to manage the process of creating explainable and responsible AI. After all, ethically monitoring and managing these systems should be non-negotiable:

“It’s just part of the cost of doing business,” State Street managing director, Dan Power, told FICO. “If you’re going to have models, you’re going to have to govern them, and monitor them, and manage that evolution.” 

While the study found that financial firms are generally behind on self-regulation, they are treading carefully when it comes to one of the buzziest new AI applications, ChatGPT: A handful of banks have banned employees from using the tool.  

As threats rachet up, banks’ fraud investigation teams need to lean on AI-powered tools to help them more efficiently prioritize high-risk issues. 

Citi Ventures and S&P Global just contributed to the $23 million funding round of Quantifind, a risk management startup that counts four of the world’s largest banks among its customers. Quantifind uses AI to flag anti-money laundering (AML) and know-your-customer (KYC) risk signals and hidden patterns amid an increasing amount of data.  

Tools that automatically detect and triage issues can reduce costs and boost efficiency. For example, one of Canada’s biggest banks said that its investigations experienced upwards of 40% productivity gains using Quantifind’s tools.  

“AML-KYC operational costs continue to increase every year,” Quantifind COO Graham Bailey told Insights Distilled. “A complete automation solution that leverages AI to fully capture the value of external data in detecting, assessing, and investigating risk can help turn the tide.”  

Thanks to AI’s specialty in pattern matching and anomaly detection, a swathe of startups has emerged that use machine learning to fight fraud – including Chekk, Symphony AI, and Insight Partners’ portfolio company FeatureSpace. 

Silicon Valley Bank’s implosion threatened software startups that relied on it, forcing financial services CIOs to take stock of the potential impacts on their partners. The situation highlights how important it is for execs to build backups into their technology supply chains. 

Silicon Valley Bank’s rapid fall will continue to have ripple effects throughout the banking and tech industry.  

Before US regulators announced plans on Sunday to protect SVB’s clients – many of which were tech startups, including some of Insight Partners’ portfolio companies – corporate leaders rushed to assess the stability of their vendors. They needed to understand whether there would be any impact on their firms’ own operations if tech providers in their supply chains needed to shut down because of SVB’s collapse.  

As a result, one key reminder emerged for those CIOs and other tech execs: Expect the best but prepare for the worst. When it comes to critical software, your firm should always have a contingency plan in place should something go wrong.   

For example, Magesh Sarma, CIO and chief strategy officer at AmeriSave Mortgage Corp., told The Wall Street Journal that the firm has back-up plans in case of vendor failures.  

“We have redundancy and fail-over in place for all critical services, because we cannot control what we cannot control,” he said. “It’s better to be prepared.”  

Figuring out a business continuity plan from the outset is key to any new fintech relationship. Even before the SVB fiasco, banks have realized that working with innovative, fast-moving tech startups involves a certain amount of risk. For example, Insights Distilled previously highlighted how Wells Fargo locks down its strategy for managing customer needs if a fintech winds down from the very beginning of a new relationship.  

“We figure out how we’ll ensure that – if something happens – it’s seamless to customers, that they can go on managing their finances,” Wells Fargo’s head of digital Michelle Moore said at the time. The bank obviously hopes that any startup it works with will succeed in the long run, but it still creates a plan for its demise.  

Running through worst-case scenarios is crucial: “My legal, risk, and compliance partners are my best friends,” Moore said.    

SVB’s fall is the second high-profile event this year to underscore the importance of backup plans: When a cyberattack crippled financial software firm ION in February, the disruption forced its banking and broker clients to resort to manual trades to keep markets whirring.