editions

Many financial institutions have banned widespread employee use of GenAI tools like ChatGPT, but Mizuho’s strategy is to dive in headfirst. 

Mizuho is bullish on generative AI’s ability to disrupt workflows and processes throughout its business –and it’s letting employees take the lead of discovering how.  

The banking giant will allow 45,000 workers at its Japanese lending unit to test out Microsoft Azure’s OpenAI service, which offers tools like ChatGPT.  

The goal is to let employees experiment with use cases and pitch ideas for how to use GenAI to help them work more efficiently or unlock new value. While many other financial institutions are experimenting with GenAI, they tend to do so through limited tests and initiatives – sometimes while blocking ChatGPT from corporate computers in general. 

A Mizuho exec told Bloomberg that the bank does have guidelines and safeguards for employee use, but that it sees widespread ideation as a way to ensure it reaps the biggest benefits from the technology and avoids stagnation: “This is something we have to do, otherwise we get left behind.” 

Regulators have indicated that financial firms should be able to monitor and flag potentially problematic emojis in workers’ business communications. 

Wall Street was hammered with fines by US regulators over the past year over employee use of unmonitored chat apps like WhatsApp, prompting many to extend their communication surveillance software to new platforms. In the wake of that crackdown, FinServs should also make sure they’re properly tracking emoji use, based on recent comments from a Financial Industry Regulatory Authority (FINRA) leader at a conference. 

Banks’ communication surveillance technology should be able to interpret and flag suspicious emoji use, the leader implied.  

“Let’s face it, emojis are not going anywhere: In fact, they are becoming more deeply woven into our cultural fabric every day,” Ananth Siva, CEO of mobile communication software firm Movius, told Insights Distilled. FinServs need to ensure their communication monitoring ecosystems “empower users to communicate the way they choose, but in a secure, compliant fashion,” he added.  

However, emoji monitoring is challenging given the sheer number and the vast subtext for their use. To help FinServs appropriately flag suspicious chats, vendors will have to make sure they integrate more contextual understanding of emojis into their technology.  

As business travel ramps back up, making expense reports seamless can be a competitive differentiator for card issuers.  

US Bank is putting its 2021 acquisition of fintech TravelBank to good use.  

The firm just launched a new middle market-focused commercial card with a travel management platform that automates expense control and reporting. The TravelBank-powered tools use artificial intelligence to provide customizable card controls, insights into spend, and automated reporting and analysis.  

For example, business users don’t need to upload receipts or manually label purchases. And TravelBank has ambitions to find ways to make the process even easier for customers through the burgeoning application of generative AI.  

“Maybe one day you won’t even have to think about an expense report,” founder Duke Chung mused to American Banker. “Eventually the expenses could all be done behind the scenes. The overall goal is to give companies greater control over spending.”   

For US Bank, the platform provides an incentive for businesses to choose its commercial cards over the competition. We’ve seen a similar focus on tech-driven travel resources as a differentiator in consumer banking, as Insights Distilled has extensively covered. 

Buying a payments infrastructure firm with clients across South America lets Visa expand its footprint and relationship with customers. 

Visa announced plans to buy Pismo for $1 billion, marking the largest fintech M&A news this year.  

Pismo’s cloud-based infrastructure provides the core banking platform through which financial institutions can issue credit or debit cards or operate digital wallets and marketplaces. The firm counts Citi, Itau, and neobank N26 among its customers and although its main customer base is in Latin America, it also operates in Europe and Asia Pacific.  

The acquisition allows Visa to expand its relationship with customers: It can now offer core banking and card issuing services to banks and financial institutions that it previously only worked with through its payment rails.  

Mastercard was reportedly eying an acquisition as well, but Visa won out. In other fintech acquisition news, Ramp just bought AI-powered customer service startup Cohere. 

Nine British banks are betting on Mastercard’s new Consumer Fraud Risk platform, which flags risky transactions to prevent authorized push payment scams in real-time.  

As the UK prepares to roll out regulation to require banks to reimburse victims of authorized push payment (APP) scams, Mastercard is stepping up to the plate with new fraud fighting technology.  

APP scams, where victims get swindled into willingly sending money to bad actors under false pretenses, is particularly hard to police and accounts for 40% of UK bank fraud losses, according to Mastercard. Its algorithm – trained on years of account-to-account transaction data – flags and blocks suspicious transactions before money leaves a potential victim’s account.  

Since early tester TSB started using the system four months ago, it has detected 20% more APP fraud and estimates that the tool could save UK banks about £100 million per year. “It’s a good example of the power of sharing data,” according to head of fraud Paul Davis.  

Eight other big UK banks have signed up, including Lloyds and NatWest, and Mastercard plans to roll out the tool globally in the coming months. Meanwhile, 17 Australian banks launched a similar fraud reporting network earlier this year.  

NatWest’s new partnerships allow it to offer free perks to customers while furthering its own climate-related goals.

UK bank NatWest wants to stand out by helping its corporate clients reduce costs by becoming more sustainable.  

It just debuted new partnerships with tech firms Perse and Absolar to offer free, personalized recommendations on cutting energy usage and exploring solar power, respectively.  

“We look forward to giving businesses the tools they need, both to save money and to decarbonize their operations,” the head of business banking at NatWest, James Holian, said. Offering these services also helps NatWest make progress on its own mission to tackle climate change.  

As sustainability becomes a bigger priority for both consumers and businesses, FinServs have launched a handful of tech-driven tools in the past year, including personal carbon footprint tracking and a carbon credit transaction network.  

To manage the flood of generative AI ideas, execs need to prioritize projects based on ROI and consider building tools in-house.

2023 is all about GenAI.  

“I don’t think I’ve had a partner or vendor meeting this year where I wasn’t pitched a generative AI play,” Rocket Mortgage CIO Brian Woodring told The Wall Street Journal. In some cases, features seem tacked on just to take advantage of the hype, he added, without compelling reasons why GenAI is the right tool for the job.  

He’s also been inundated with vendors selling products that Rocket Mortgage realized it could “confidently and more cheaply build in-house,” like a tool that analyzes data from phone calls, he said.  

To avoid GenAI overwhelm without missing out on the potential benefits, FinServs should ruthlessly prioritize projects, build light-weight experiments that allow them to fail fast, and carefully track ROI.  

For example, JPMorgan is using GenAI to analyze emails for signs of fraud, because it has become such a prevalent type of attack lately, while Goldman Sachs is letting engineers use it to write code, because it calculated that “superhumanizing” high-salaried developers gives it a high ROI yield. 

Experts estimate that quantum computers may one day be able to break current encryption systems in seconds, so banks have a strong incentive to fight fire with fire and find ways to use the technology to keep secrets safe.

Quantum – an emerging computing paradigm that promises to perform calculations at blistering speeds – is one of the biggest cyber threats of the next decade, so HSBC is testing ways to “stay ahead of the curve” in protecting itself.  

The bank is trialing an advanced security system powered by Amazon’s AWS, Toshiba, and telecom giant BT Group that uses a technique called quantum key distribution (QKD) to protect data privacy.  

HSBC’s test involves sending information – like mock financial transactions and video communications – between its HQ and one of its data centers, while maintaining encryption and blocking eavesdroppers through QKD. JPMorgan and Danske Bank have also successfully experimented with the technique. 

As Insights Distilled has previously reported, other FinServs are testing quantum in different areas of their businesses as well, with varying results:  

A former exec said UBS abandoned its experiments because they didn’t provide strategic advantage, while Credit Agricole found it could achieve “faster valuations and more accurate risk assessments” using quantum techniques, and Mastercard is experimenting with ways to use the tech to improve its loyalty and rewards program. 

UBS wants to help Numarics shape its finance and admin software, which pairs machine learning with human auditors, as the bank tries to cozy up to small and medium-sized businesses.

UBS wants to help small businesses reduce the time and money it takes to complete daily tasks, and it’s teaming with a startup to make it happen. 

The bank’s partnership with (and investment in) Numarics will help it offer more digital financial services as part of its aim to “go beyond traditional banking and help [SMBs] manage their day-to-day business efficiently,” according to UBS exec Alain Conte.  

UBS’ partnership with Numarics highlights its current focus on SMBs as a source of growth (earlier this year, the firm pivoted away from catering to a wider swath of wealth clients and cancelled its plan to acquire robo-advisor Wealthfront). 

It’s also just the latest example of FinServs rolling out digital tools and partnerships to win over the SMB market, as Insights Distilled has previously reported. For example, Amex recently released a cashflow management hub based on its Kabbage acquisition, Westpac is working with Rich Data Co on AI-powered business loans, Standard Chartered has partnered with upSWOT on personalized tools for SMBs, and Barclays is partnering with UK fintech Liberis to make cash advances faster and easier. 

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.