editions

Instead of forming a designated innovation lab like many of its peers, Bank of America focuses on “citizen innovation,” which it credits with driving its patent supremacy: It says it has more US patents than any other financial services firm and has consistently broken its own quarterly records.

In total, Bank of America has 5,556 patents pending or granted from 6,500 inventors based in 43 states and 14 countries, across all eight lines of its business, it said.  

Bank of America’s patents aim to either solve for an immediate need or position the company to meet the future needs of its clients, a spokesperson told Insights Distilled. For example, a recently granted and currently in-use patent allows its clients to quickly provision a new card number to their digital wallet and identify transactions from the card during the authorization process. Its blockchain-related patents, meanwhile, largely aren’t engaged due to the regulatory uncertainty around banks and crypto. 

Historically, Bank of America’s patents have been cited more than 43,000 times (you can see a list of the its patent IDs here).  

Here’s the make-up of BofA’s patents in the first half of 2022 and overall: 

Data via Bank of America. Charts via Insights Distilled.

As financial regulators increase their scrutiny (and fines), regtech tools can help firms keep themselves compliant at a lower cost.

As US regulators hammer the likes of JPMorgan, Citigroup, and Bank of America with a combined $1 billion in fines for failing to properly monitor all employee messaging, comprehensive communications-surveillance tools are in high demand. That’s part of the reason that London-based SteelEye just raised $21 million, with participation from Fidelity International’s venture arm.  

Fidelity International currently uses SteelEye for communications and trade surveillance, while Fidelity Clearing Canada is working on a proof-of-concept to implement the tech for trade surveillance, FISV’s James Devlin told Insights Distilled. 

SteelEye’s surveillance platforms give Fidelity a holistic view that would previously have required several disparate systems and, according to FISV, “helps Fidelity connect the dots.” That single-lens approach means that users’ “data storage requirements are optimized and costs are kept as low as possible” while freeing up time otherwise spent managing multiple systems, vendors, and manual processes, according to SteelEye president of Americas, Brian Lynch.  

SteelEye says it has several other major financial services customers – and 50% of its inbound inquiries over the last six months have included a “secure messaging / WhatsApp component,” Lynch told Insights Distilled  – while JPMorgan, UBS, and Jefferies use Movius for communications monitoring. 

As bad actors use realistic-looking fake websites to dupe customers into giving up their login credentials, financial institutions can protect their users by monitoring the places where criminals hang out for threats.

“In our cybersecurity unit, there is a whole command center where, at all times, there are people monitoring, even activities in the dark web. And we actually take down a lot of false sites,” the Singapore head of Asian financial giant DBS, Shee Tse Koon, told American Banker in a wide-ranging interview. When DBS finds “dark players out there” it will “counterattack” to remove them, he added.  

DBS isn’t the only big firm contending with fakers: A recent report from IronNet found that criminals were buying “phishing-as-a-service” kits on the dark web for as little as $50 a month to imitate the likes of Wells Fargo, and Citi – and had stolen at least $500,000 from victims.  

There are a host of tools that promise to help customers scan the dark web for these kinds of threats (and more), including ZeroFox, CyberSixGill, and Insight Partners’ portfolio company Recorded Future.  

You can read the rest of Tse Koon’s interview on American Banker. 

While big banks that process card payments for businesses have greater market share and bigger budgets than fintech upstarts, they’re slower to roll out new features and capabilities than rivals like Stripe and Block – and JPMorgan’s betting that an acquisition can kick its payments roadmap into overdrive. 

JPMorgan’s payments unit is acquiring cloud-native Renovite to help modernize its infrastructure and expand its merchant acquiring capabilities, the firm announced Monday.  

The head of retail banking at financial advisory firm Celent describes the purchase as an “interesting deal” that should benefit JPMorgan’s business: “The rapid growth of firms like Stripe, Adyen, and Worldpay indicates that merchant services is a highly competitive business where technology capabilities can truly differentiate the providers,” Zil Bareisis, told Insights Distilled. 

While JPMorgan still controls the majority of merchant services by transaction volume, it admitted at a recent conference that its merchant services business has stalled and that it wasn’t currently offering the same caliber of features as upstarts: 

“We don’t have the same breadth of value-added services as some of our fintech competitors, and changing that picture is a big story behind our investments,” global payments chief Takis Georgakopoulos said at an investor conference in May.  

JPMorgan ran trials with Renovite last fall but was so impressed with the technology and talent that it decided to buy the firm outright, global head of payments Mike Blandina told CNBC. Neither JPMorgan nor Renovite disclosed the terms of the deal.  

Meanwhile, JPMorgan’s payments division also just gained a new leader: Former Microsoft exec Tahreem Kampton joined the unit to lead co-innovation with partners in blockchain and digital payments.

Artificial intelligence-enhanced virtual assistants that answer questions via text or voice chat – from Capital One’s Eno to Bank of America’s Erica – are becoming table-stakes for consumers who want quick and easy customer services. 

Truist is the latest big bank to launch an AI-powered virtual assistant on its website and app. The “Truist Assist” service can immediately answer more than 100 customer support inquiries and, crucially, will automatically transfer clients to human support for more in-depth requests. The service is powered by Lex, the conversational AI platform that underpins Amazon’s own Alexa assistant.  

As such digital assistants are becoming the norm, banks are trying to impress customers with advanced or distinguishing features. For example, US Bank already has a Spanish version of its Smart Assistant, and is planning to roll out additional language options in the next several years.

Like Truist, many big financial institutions partner with AI providers to build out their assistants: Kasisto counts WestPac, JPMorgan Chase, Standard Chartered, and TD as customers, while US Bank, Ally, and Santander rely on Personetics, and BNP Paribas and Deutsche Bank use Glia (an Insight Partner’s portfolio company).    

It’s been a busy month for Truist, which also just launched a robo-advisor and acquired strategic assets from data platform Zaloni to help it roll out AI capabilities more quickly. 

So-called “earned-wage access” has been gaining popularity, particularly given recent inflation woes and a tight labor market – and partnering with a fintech allows TD Bank to make this “highly desirable” benefit available quickly. 

TD Bank recently announced a collaboration with fintech DailyPay to let its business clients pay out their workers almost as soon as they finish a shift. DailyPay’s tech connects with clients’ existing payroll systems to convert hours worked into available money. For employers, it’s an attractive benefit to offer workers in a hot job market, while it allows TD to widen its offerings beyond the standard fare.  

“TD has been looking at the Earned Wage Access space for some time,” TD Bank’s head of commercial digital platforms, Paul Margarites, told Insights Distilled. “When we have an opportunity to help our clients and improve the community in which we operate, that’s a space we want to be in. DailyPay is a leader in this space and we engaged with them early this year around how we could collaborate on Earned Wage Access.”

TD is the latest major bank to hook up with a fintech to allow employers to buck traditional two-week pay cycles: PNC also works with DailyPay, US Bank works with Payactiv, JPMorgan works with Even, and Citizens Bank works with an unnamed provider.  

“By partnering with DailyPay, banks and financial institutions can offer an on-demand pay solution to their clients that is compliant, cost-effective and well invested-in,” DailyPay chief innovation and marketing officer Jeanniey Walden told Insights Distilled. “As more and more employers seek to offer this benefit to their employees, banks and financial institutions now see the importance of on-demand pay and its value as an innovative financial product that benefits their customers.” 

Banks are increasingly deploying personalized services to win customer loyalty – and Citizens’ acquisition will help it reel in customers at the start of their first major financial journey.  

Citizens is buying College Raptor, an online service that helps match prospective students with colleges and includes personalized comparisons of estimated financial aid packages.  

The “innovative platform” provides Citizens with “sophisticated capabilities to support high school students and their families in what is often an overwhelming set of decisions for college, among which financing is typically critical,” Citizens’ head of student lending, Chris Ebeling, told Insights Distilled.

“College Raptor is the only college search tool that recommends strong college matches based on customized academic and financial analysis, based on user input,” he added, and “Citizens looks forward to helping continue to scale the platform.” 

Citizens has $227 billion in assets and currently offers student loan services. Terms of the deal were not disclosed.  

There’s no magic formula or one-size-fits-all approach to crafting successful technology relationships, but three bank execs and a consultant shared nuggets of wisdom during a panel at the Bank Automation Summit on Monday.

TD Bank’s head of commercial digital platforms, Paul Margarites, sang the praises of quick-and-dirty proof of concepts: “You need well-defined, time-boxed POCs, to figure out, ‘Does the partnership work, not just from a product capability perspective, but from a relationship perspective? Do you work well together with that partner?’ Before you go down a yearlong road of trying to figure out how you’re working together, why not do a six- or 12-week POC to make sure that it makes sense?” 

An executive in Citi’s treasury and trade solutions division, Mohit Narula, pulled from past challenges to highlight an example of when it may make sense to build internally: “A key consideration for a bank like Citi when you think about build-versus-buy, or build-versus-partner, is: ‘What’s the technical debt?’ There are a lot of legacy systems, and the moment you bring in a new partner, the challenge is the number of touch points they must maneuver to get the solution that we want. If you go deeper, it can sometimes be more complex to get a partner to know your systems than to do it yourself. That’s the tricky piece and that’s a large partner of our decision making. For a bank like Citi, sometimes it’s easier to partner when you’re just doing the last mile, versus when you’re transforming from within, because it’s more complex for a partner to come in and understand than to do it yourself.” 

Grasshopper Bank’s director of banking-as-a-service, Lauren McCollom, advised evaluating a potential partner based on its service support, cultural fit, and big picture direction: “We try to double-down on ensuring that our product roadmap and their technology stack align initially, and that we can grow with them into the future, and that we aren’t dragging them to somewhere they weren’t planning on going.” 

Consultant Zoya Lieberman issued a general warning based on her experience observing bank and fintech partnerships: “Don’t make assumptions. I know it seems like common sense, but it’s not. Whatever your definition of something is, do not assume that your partner has the same definition. Double check and triple check.” 

The SEC has disrupted banks’ crypto custody projects, underscoring the current climate of regulatory scrutiny, skepticism, and uncertainty. 

SEC accounting guidance from earlier this year is wreaking chaos on banks’ crypto custody plans, according to a new report from Reuters. By requiring public companies to account for clients’ crypto assets as liabilities on their own balance sheets, the SEC has made it extremely capital-intensive for banks to offer custody services.  

Both State Street and BNY Mellon have had projects disrupted, according to Reuters, with a State Street representative saying that the bank takes “issue with the premise” of the SEC guidance because clients’ crypto holdings are not its assets and “should not be on our balance sheet.” A US Bancorp spokesperson said the bank is “pausing intake of additional clients” for its bitcoin custody service as it evaluates the “evolving regulatory environment.”  

Some banks had previously seen custody services as a safe way to dip their toes into cryptocurrencies and satisfy burgeoning client demand, and the SEC’s move complicates these efforts.  

Read the entire Reuters’ report here.  

By combining vast swathes of data with fine-tuned risk management models, banks can accelerate legitimate transactions and flag suspicious ones, striking a balance between customer ease and safety. 

Deutsche Bank is baking an automated fraud detection system from Visa-owned Cybersource into its ecommerce solution for merchants. The tool automatically calculates a risk value for each individual transaction and will block those that meet a pre-determined risk level as potential fraud.  

The system, called Decision Manager, prevented the equivalent of $22 billion+ in potential fraud in 2021, according to Visa. By adding the tool to its platform, DB aims to make its online retail offering more helpful to existing clients (or more attractive to potential ones).  

“We combined the payment expertise of Deutsche Bank with the data and advanced technologies from Visa’s Cybersource for risk management and reduced the complexity of payment acceptance for our clients,” DB spokesperson Heinrich Froemsdorf told Insights Distilled, adding that it’s an optional value-added service that clients can choose depending on their own in-house fraud-risk management expertise.   

Along with Visa’s Cybersource, a slew of fintechs provide AI for fraud detection, including NetGuardians, Feedzai, and Featurespace, an Insight Partners’ portfolio company.