editions

By combining automation and personalization, banks can increase customer satisfaction – and wealth.

Ally Financial knew many of its customers struggled to save money, so it became laser-focused on creating ways to make it easier: Its Smart Savings tools provide customized prompts and automated transfers to help users grow their account balances. The tools are working: Customers who have used them have saved twice as much as those who haven’t, Ally’s data shows.

While fintech upstarts previously dominated this arena, simple, set-it-and-forget-it tools for building wealth are becoming non-negotiable for traditional banks: Roughly a third of top banks offer some kind of automated savings feature, according to a Javelin Research survey from 2021.

Ally and its Smart Savings tools were recently recognized in the CIO 100 awards alongside six other financial services firms – you can read about all their projects here.

As everyday consumers put an onus on sustainability, it’s a competitive differentiator to help users to track their own environmental impact.

A whopping 83% of consumers think companies should be actively shaping environmental, social, and governance (ESG) best practices, according to PwC research, and, in alignment with that majority, Dutch bank ING is offering a subset of its clients access to carbon-tracking tools from fintech Cogo.

Cogo estimates the carbon emissions of all a user’s transactions, and then pairs that carbon data with behavioral science to nudge them on ways they can reduce their personal carbon footprints. Users will also be able to see how their footprint compares with the Dutch national average.

“We want to make it easier for our customers to make the right choices for their own financial health and for our planet,” an ING spokesperson told Insights Distilled. “Limiting our own footprint is essential, but as a bank we are ambitious, and we realize that we make the biggest impact together with all our customers.” NatWest, TSB, and Commonwealth Bank have also worked with Cogo.

Banks and other financial institutions continue to invest heavily in blockchain tools and services to support (and gain experience in) the crypto ecosystem without needing to engage directly.

Financial institutions are among the top public companies investing in blockchain firms in the past year, according to an analysis by BlockData, collectively participating in more than 30 funding rounds between September 2021 and mid-June.

Custody solutions and technology providers (like NYDIG, Fireblocks, Gemini, and Anchorage Digital) were popular among banks, as their client demand for digital assets has increased, as were blockchain infrastructure companies like Figment, Talos, and BlockDaemon.

See the chart from BlockData, which is owned by market intelligence platform CBInsights:

*Certik and FTX are Insight Partners portfolio companies.

Rigorously tracking diversity, equity, and inclusion data is necessary to both monitor progress and find insights in that data that may highlight weak points and influence future strategies.

Big financial institutions need to be better at tracking, forecasting, and reporting on their own diversity statistics, according to Dr. Hood in the same way “we’re presenting data on deposits and things like that.” And it needs to be more specific than just following overall workforce numbers: For example, a bank should know the percentage of people across different races and genders that are progressing through specific parts of its pipeline at any given time, he said. An ability to measure progress is crucial to accountability and ultimately to a firm’s ability to hire, onboard, and retain diverse talent long term. Read the rest of Dr. Hood’s interview on Insider.

By tailoring offers and opportunities to people based on their history, preferences, context, and intent, banks can strengthen customer relationships and satisfaction while winning increased business.

The CIO for JPMorgan Chase’s consumer and community banking business, Gill Haus, is laser-focused on using technology to enhance personalization, and he laid out his vision in a recent interview with MIT Technology Review’s Business Lab.

“We know that you just booked a trip: We can make other recommendations while you’re making that booking. If we see a flight is delayed, we can act immediately,” Haus said. “If we identify that you have a big inflow of money, we can help you, in real time, tell you where you could be spending that money more effectively, what you should be saving.”

This kind of real-time, proactive targeting requires cross-ecosystem data sharing, multiple customer touchpoints, and supplemental features. For example, JPMorgan is investing heavily in its travel-related services (and similarly, Citi just announced a partnership with Booking.com to help customers plan trips).

“We could tie it all together to a truly personalized experience where you’re a customer of one,” Haus said, “And that’s a really incredible future, I think.”

Listen to the whole podcast episode here.

Promissory notes – a way of enabling large transactions using creditworthiness instead of cash – have traditionally required a physical document, and Lloyds’ transaction highlights both the friction between historical regulation and today’s digital capabilities and the massive potential to provide quicker, less-expensive, and more-secure trade finance through modernization.

On August 17, Lloyds Bank settled the sale and purchase of land worth £48 million among  several UK businesses, revolutionizing a process that would have previously taken a week or more for a physical paper note to transfer between banks and notaries.

“Until now, this industry-side solution is typically slow, expensive, and administratively cumbersome,” Lloyds Bank MD Gwynne Master said in a press release. Lloyds’ successful pilot worked within existing contract law, while creating a more sustainable and affordable process, with Master adding that it “finally opens this form of payment discounting to potentially millions of small businesses.”

Lloyds worked with Enigio for its digital original documents while international law firm Sullivan and Worcester advised it on the International Trade and Forfaiting Association’s Digital Negotiable Instrument initiative.

Traditional players like Barclays, HSBC, and Deutsche Bank that offer short-term loans to businesses need to focus on improving their customer experience to avoid the dynamics that have shaped the consumer buy-now-pay-later (BNPL) space.

A new crop of well-funded fintechs including Billie, Mondu, Insight Partners’ portfolio company Resolve, and Tranch are trying to tackle BNPL for business, encroaching on the territory of banking incumbents. Though each platform is a little different, they generally tout easy applications, greater transparency and flexibility, and faster cash flow as an improvement over typical short-term loans.  

“They just provide a far better end-to-end customer experience,” the leader of Bain’s global fintech business, Jeff Tijssen, told Insights Distilled.  

Traditional players need to focus on evolving their own processes to avoid losing potential customers.  

“Banks should really win in this space, but a lot of them have been asleep at the wheel and allowing these new players to grow their market share across the globe,” Tijssen added. “If you look at how the majority of banks provide short-term loans to their customers today, you typically end up with a ‘one size fits nobody’ approach.”  

The juxtaposition is familiar: Fintechs like Klarna and Affirm relied on sleek interfaces, flexibility, and customer ease to take market share from big banks that were slow to roll out their own consumer BNPL products. To prevent this trend from continuing for business loans, incumbents need to focus on how they can better help businesses with their cash-flow issues and other core needs, Tijssen said.   

As large enterprises increasingly use multiple observability tools to manage their complex IT infrastructures, AI-operations tools can help handle and diagnose outages – and prevent future ones.

BigPanda, which has raised $340 million from investors including Insight Partners, automates the process of analyzing IT infrastructure events, helping discover the root causes of problems and how to fix them.

“Wells Fargo leverages BigPanda AIOps to prioritize alerts and simplify an otherwise costly process,” head of technology infrastructure Mike Brady said in a press release. Similarly, UBS said it uses BigPanda to increase transparency into its IT incidents and to reduce downtime.

Tools that combine behavioral analytics and anomaly detection improve fraud protection and operational efficiency, while reducing the number of “false positives” that block legitimate transactions.

Juniper Research estimates that online payment fraud losses will exceed $343 billion globally between 2023 and 2027, and $202 billion-asset Zurich Cantonal Bank has tapped NetGuardians to help it protect itself and its customers from that growing risk.

NetGuardians builds customer profiles using behavioral analytics and machine learning and then monitors all transactions linked to a given account, in order to root out suspicious spending. It will only flag a transaction as potential fraud if it meets a pre-determined risk level.

“The result is a massive reduction in the number of false positives, thereby maintaining an excellent customer and user experience while cutting the bank’s operational costs,” NetGuardians said in a press release.

NetGuardians’ competitors include Feedzai and Featurespace, an Insight Partners’ portfolio company.

Hyper-specific (and privacy-preserving) customer analytics tools allow financial institutions to better understand their digital users, which can spur product tweaks, faster bug fixes, and better design choices.

FullStory – which just secured $25 million in equity financing – helps customers like KeyBank, Travelers Insurance, Fidelity Payment Services, and Metromile understand how people are using their apps and websites.  

Its platform records a user’s interactions and then allows clients to analyze customer sessions either in aggregate or individually to root out moments of churn or friction (like repeated “rage clicks” if something isn’t working) and improve engineering efficiency (by helping tech workers pinpoint bugs, for example). 

“We have helped clients find anything from millions to tens-of-millions in conversion opportunities, or lost customers through churn, or in costs for engineering and development,” FullStory chief marketing officer Kirsten Newbold-Knipp told Insights Distilled. For example, Finicity, a financial data aggregation firm owned by MasterCard, estimates that it increased its funnel conversions by 15% and reduced its ticket resolution time by 80% using FullStory.  

“The fact that FinServ customers know they’re further behind on digital means that now is the time to leap-frog,” Newbold-Knipp added. With comprehensive, private-by-default customer tracking, FullStory helps clients find all the “unknown unknowns” and “marry the quantitative and the qualitative to get answers faster.”