editions

By creating a true destination for mortgage customers, Santander UK wants to set itself apart from competitors (and win incremental business).

Santander wants to help its mortgage customers manage all aspects of their home, from finding a handyman to picking an internet provider. 

While most banks provide mortgage dashboards that include equity summaries, neighborhood trends, or refinancing offers, Santander aims to go above-and-beyond to give customers a more holistic view of their home and finances. Homes are typically people’s biggest financial investments and this platform-approach ultimately serves as a selling point for mortgage reps trying to differentiate Santander and as a way for the bank to deeply enmesh itself in its customers’ lives, which creates stronger relationships and greater usage.  

Its new in-app dashboard features a smorgasbord of add-ons, including valuation updates, tips on improving energy ratings, estimated costs (and funding options) for home improvements, deal comparisons, and articles about interior design.  

“We think My Home Manager provides a unique service for homeowners,” chief customer officer Tracie Pearce, said, “And its development has been driven by what our customers have told us they’d like to see.” 

As financial institutions seek to stand out in the small-business market and avoid losing business to fintechs, quick-and-simple cash advances are a draw. Machine learning makes it easier to provide this revenue-based financing fairly and safely.  

Barclays is partnering with UK fintech Liberis to offer revenue-based financing to its small business customers, wherein merchants receive a cash advance that they can pay back on a flexible schedule, plus a pre-agreed fee. Liberis uses machine learning to understand customers’ risk profiles and maximum funding options, allowing it to offer faster turnaround times for underwriting than what legacy banks can traditionally provide.  

By helping assess risk more accurately and quickly, Liberis allows partners like Barclays to make faster, better decisions, leading to higher origination volumes.  

Barclays has invested tens of millions in Liberis, including a new infusion at the end of September. Liberis is a veteran in the revenue-based financing space: Newer entrants include Booste, Karmen, and Clearco, which provide financing to businesses directly. Using AI for underwriting in general is also a hot market: Insight portfolio company Zest.AI has signed on clients like Fifth Third Bank, FNBO, and a slew of credit unions. 

By moving threat modeling into the initial phases of software development, organizations can save time and ultimately reduce risk. 

When Netherlands-based ABN Amro embarked on its journey to move from private data centers to the cloud, it realized that it needed to revamp its ad-hoc and manual threat modeling system so that it wasn’t relying on security teams to identify software risks after-the-fact.  

Enter IriusRisk.  

The bank rolled out the platform – which embeds automated threat modeling into existing development workflows – to over 200 teams. This helped put individual projects into the context of big-picture risk and security. 

“It’s granular: It tells the engineer that by changing this part of an application, these are the threats you need to address, and this is how to address it,” ABN Amro’s global head of security engineering said. “It’s a valuable toolkit for teams to use before, during, and after a build.”  

ABN Amro estimates that using IriusRisk versus manual threat modeling saved its hundreds of engineers at least 11 months. IriusRisk just raised $29 million and said that six of the 30 globally systemically important banks are its customers. 

Automation makes workers more efficient, but it can also help them feel fulfilled and create better products.

Capital One leans on automation to help its engineers enjoy their jobs.  

Uninteresting, manual, and repetitive work that doesn’t add value can be a major source of burnout for engineers, Marty Andolino, a VP of engineering at Capital One, said in a recent podcast interview. That’s why he spends time thinking about how to integrate automation into the bank’s processes, enabling employees to focus on impactful work. 

For example, Capital One uses automation for detecting, diagnosing, and fixing app issues, as well as for standardizing governance, security, and compliance. 

By reducing the amount of “keep the lights on” activities that devs spend time on, automation also allows them to “work on the most customer-focused areas,” Andolino said. That’s a boon for both employees and the bank overall, which benefits from being able to put more resources towards building differentiating features. 

“We see automation as such a key to unlock our associates’ talents,” Andolino said. 

Capital One employs around 12,000 technologists, 85% of whom are developers and Andolino’s comments come at a time when competition for engineers in the financial world is fierce: JPMorgan just announced plans to hire 2,000 engineers by the end of the year, while AmEx is searching for 1,500 new tech workers.  

Listen to the rest of Andolino’s thoughts on productivity here.

Another earnings cycle, another opportunity to peek behind the curtain and see how the biggest US financial institutions are thinking about their technology strategies. While Q3 has been a mixed bag for bank earnings overall so far, execs touted their tech progress and investments as bright spots – and hinted that the economic climate might provide opportunity for acquisitions.

Big banks love to snap up technology firms to help them launch new features or become more efficient, and there could be a buying spree on the horizon, according to Morgan Stanley: 

The $1.4 trillion-asset bank expects a “washout” of fintech valuations followed by a wave of consolidation, CEO James Gorman said during the Q3 earnings call. Answering an analyst question about potential M&A, he commented on tech’s valuation crash and highlighted the bank’s areas of interest: “We have enormous technology requirements to support cyber and stop client fraud, and data control and management, and so on. Consolidation is the key word.”

Tech spend is “the fastest-growing part of this firm,” he added, “But that’s good because it’s displacing things we would be doing manually, which we shouldn’t be doing manually – so I’m perfectly happy to see our tech spend go up.”   

JPMorgan and Bank of America are in the same boat: Chase CEO Jamie Dimon said that the $3.8 trillion-asset bank wasn’t slowing down its hiring or tech spend, even as he warns of a potential recession. The bank’s tech expenses increased 4% year-over-year to $2.3 billion in Q3. Brian Moynihan, CEO of $3.1 trillion-asset BofA, also lauded how his bank’s tech progress has helped it invest in its people, marketing, financial centers, and more technology: “What allows us to help pay for these investments are the operational process improvements we’ve talked about and the increased digital adoption rates by our customers.” 

But it’s not just internal tech driving growth: $591 billion-asset US Bank inked 2.5 times the number of “tech-led partnerships” so far in 2022 than it did in all of 2019, according to CFO Terry Dolan during the bank’s earnings call. These partnerships are driving revenue and “continuing to grow,” he added, while the bank’s other digital initiatives are “both deepening our core competencies and expanding our competitive advantage, which we believe will drive meaningful profit.” 

Authorized push payment scams – where victims are tricked into sending money to criminals under false pretenses but of their own accord – are a growing problem. Banks are testing biometric technology to help flag unusual customer behavior.

A new report from the Global Anti-Scam Alliance found that scams increased by 10.2% globally in the past year, reaching 293 million reports and leading to a record amount of money lost by victims. (The study also notes that this underestimates the total problem, because scam reporting remains low.)  

Much of this fraud involves authorized push payments (APPs) – where victims get swindled into willingly sending money – which are notoriously difficult for banks to deter. But as regulators in the US ramp up pressure to add protections and grant reimbursement to victims, there’s a growing push to use biometric technology to slow down these scams.  

While biometrics in banking usually involves face or fingerprint scans, several tech firms are deploying machine learning to spot customer behavior that could be a sign of potential coercion. Suspicious traits like hesitation or choppy typing can prompt banks to inject additional warnings to customers or even delay or prevent payment. 

“Behavioral clues that are out of the norm – such as fumbling and hesitating while entering unusual amounts to be sent to unfamiliar recipients’ phones or accounts – are some of the red flags biometrics spotlight,” an exec at tech firm Callsign told American Banker. Several banks in the US, Canada, and the UK are testing Callsign’s technology, while a similar firm called BioCatch has had an uptick in interest too. 

Customer education is currently the main tool banks use to mitigate APP fraud and biometric intervention offers a promising additional option.

Financial firms crave the many benefits of moving to the cloud, but it’s a difficult, slow, and expensive process. Google Cloud and Santander are betting that big institutions will buy battle-tested software that makes the transition easier.  

Nine in 10 financial institutions are working on their digital transformation, but the process of migrating applications to the cloud in a systematic, secure way can be daunting.  

To that end, Google Cloud just launched a mainframe migration service built on top of technology that Banco Santander created to help it digitize its core banking. The software, which Santander dubbed Gravity, allows parallel processing, where workloads run on both existing mainframes and on the cloud at the same time. This lets Banco Santander perform real-time testing for stability and performance before officially transitioning.  

Through this partnership, other large firms will now be able to buy a version of the software through Google to help them complete their own cloud migrations. 

The alliance gives Banco Santander a way to externalize a product it developed in-house and will also accelerate its digital transformation. Capital One made a similar move earlier this year when it started selling Slingshot, a software product it originally created to manage its own use of the cloud data tool Snowflake.  

This partnership will also help Google appeal to other big financial services customers (it currently counts Wells Fargo and BNY Mellon among its clients). 

Cyber training programs should impart knowledge and skills to all workers, not just technical ones, because individual employees are generally the weakest links in organizational security.

Cybersecurity is all about people, according to Immersive Labs, which offers training software to help global organizations boost their workers’ judgment, skills, and speed in dealing with security risks and attacks.  

The firm just scored fresh funding and has raised $189 million total, including from Insight Partners, Goldman Sachs Asset Management, and Citi Ventures. Immersive’s “cyber workforce resilience” program upskills employees, while also providing industry metrics and internal benchmarks to measure against (which is particularly vital as board members – and regulators – increasingly expect progress reports).  

Financial services firms are prime targets for cybercriminals because of their double whammy of valuable assets and legacy infrastructure, according to Immersive Labs CEO James Hadley. “It’s important to note that the risk of cyberattacks is not just to the individual institution, but rather to the larger financial ecosystem,” he told Insights Distilled.  

To that point, a group of financial services firms recently approached Immersive to test their collective cybersecurity capabilities. Immersive worked with them to run months-long crisis simulation exercises, Hadley said, which allowed them to identify areas to improve and then upskill their teams. 

Immersive Labs counts HSBC, Citi, Moody’s, and Bain Capital among its customers. 

Tech tools that use automation to compile and analyze data allow lenders to make approvals much faster, without increasing risk – which ultimately allows them to serve more businesses (with greater returns).

HSBC has rolled out a digital platform for collateral-based receivables finance lending that it co-created with fintech Trade Ledger to make it simpler, faster, and more secure for business clients to apply for working capital.  

Instead of requiring businesses to manually upload invoices, the online platform uses an application programming interface (API) to let customers automatically transfer data from their accounting software, which it then uses to generate a survey and risk report. The software also provides task orchestration across teams, which allows HSBC’s underwriters to receive each report and application within hours of a customer completing it.  

This new process saves time and effort for customers at the front end and for HSBC at the back end. Trade Ledger’s product optimizes receivables finance and eliminates typical hurdles, a spokesperson told Insights Distilled: “Complex business lending fits across many areas and teams of a commercial bank, all with differing priorities. In contrast, Trade Ledger, as a tech start up, has a blank sheet of paper” to “focus on this problem end-to-end.” 

In general, Trade Ledger’s clients see, on average, a 60% reduction in origination cost, a 97% reduction in manual errors, and a 50% reduction in dropouts, which can boost ROI.

With startups increasingly staying private longer, banks can benefit from expanding their services and bonding with companies early. 

JPMorgan just launched a new platform called Capital Connect to strengthen its connections with young, venture-backed companies that could eventually swell into major enterprises. 

The platform aims to simplify the fundraising process for startups, allowing them to connect with investors and access benchmarking data, as well as sell company shares on the secondary market. It builds on technology from Global Shares, a software firm that JPMorgan bought earlier this year. 

“The recent acquisition of Global Shares further enhances this early-stage offering, allowing JPMorgan to offer cap table management services to companies from inception through to IPO,” a spokesperson told Insights Distilled.  

The team is run by JPMorgan’s head of digital investing banking, Michael Elanjian, who told Reuters that the bank aims to be a “one-stop shop” for private companies and will differentiate itself by pairing this new digital platform “with the expertise, data, and relationships of our investment and private bank.”