September 6

As know-your-customer (KYC) and know-your-business (KYB) regulations tighten globally in response to a rise in financial crime, digital identity platforms can remove the pain and cost of compliance.

Standard Chartered just joined HSBC in investing in Chekk, a KYC, KYB, and data-management platform that boasts an exhaustive dataset and easy integration.

Standard Chartered is using Chekk for, among other things, real-time risk assessment and anti-money laundering and identity verification for individuals and businesses’ related parties (like directors or ultimate beneficiary owners), a spokesperson told Insights Distilled. It has led to a 30-to-50% reduction in compliance costs for its venture unit, she said. “While several companies claim to optimize customer onboarding in banking, none comes close to them,” the head of Standard Chartered Ventures, Alex Manson, said of Chekk.

Discover joins a handful of banks that have launched designated office spaces meant to juice creativity, agility, and ambitious projects as competition for technologists remains fierce. Notably, Discover said it will support hybrid work for employees in the new center.

“Recruiting top data analysts and technologists is especially competitive these days,” said Discover emerging talent director Simon Kho, as the $114.6 billion-asset bank announced a new Advanced Analytics Resource Center.

The first cohort in the new space and rotation program will include 75 employees, and Discover hopes to add another 75 to 100 in 2023. Discover’s not alone in its strategy to lure talent:

Royal Bank of Canada opened its own innovation hub in Calgary last September (and is currently looking to more than triple its workforce there to 300 by the end of next year), TD Bank just launched a new tech research center in Philadelphia, called Workshop, and Truist credits the innovation center it opened in June with spurring the optimizing the launch of its new automated investment tools.

SWIFT mines its vast data flows to detect and flag the most common cause of cross-border payment delays: Errors in payee information. This capability is made possible thanks to SWIFT’s near-ubiquity as a bank-to-bank messaging platform, underscoring the benefits of analyzing massive datasets.

In its quest to enable real-time international payments, SWIFT has launched a new predictive data intelligence tool that checks impending payments against historical records and prompts customers to fix potential errors or typos before processing begins. The centralized verification system will draw on aggregated and anonymized data from the 9 billion transaction messages between 4 billion accounts that it processes each year.

“Friction in the payments system costs the industry more than $2 billion every year, affecting over 700 million transactions,” a SWIFT spokesperson told Insights Distilled, blaming the kind of typos and formatting errors that would now be flagged.

Representatives from HSBC, Standard Chartered, Commonwealth Bank of Australia, Mexico’s Banca Mifel, and Turkey’s Yapi Kredi Bank have already praised the new capability: It will bring “real cost-savings and efficiency gains,” according to Banca Mifel’s Arturo Rivera Fermoso, while HSBC’s Vijay Lulla said it was “an important step in removing friction from cross-border payments.”

As investment in blockchain, Web3, and crypto startups is surging, banks have one key advantage over smaller, more nimble firms, according to JPMorgan’s top crypto exec: Trust.

JPMorgan is investing heavily in a wide range of blockchain projects – including tokenized stocks and bonds, a payment-information network, and its digital JPM Coin, which is currently handling about $1 billion in transfers a day.

While that’s a tiny amount compared to its total volume, it still complies with regulations like sanctions screening, anti-money laundering, and know-your-customer: “When we are doing that $1 billion, we are complying with all the rules that the $10 trillion complies with, and so all of our regulators across the world are satisfied with the approach,” Umar Farooq said during a panel hosted by the Monetary Authority of Singapore in the last week of August, adding that big banks ultimately have much more customer trust than their startup competitors.

While Farooq is obviously biased, his comments do come at a time of weakened consumer trust in crypto, as token prices have tanked, multiple bankruptcies have screwed small-scale investors, and hackers have stolen billions of dollars.

Separately, two JPMorgan execs with backgrounds outside traditional finance, recently appeared in a company YouTube video espousing the benefits of working there instead of a fintech: “ You get to work in kind of the inner guts of how the financial system works versus kind of scratching the surface and focusing only on the user experience.”

Monitoring and analyzing customers’ digital behavior can spur design tweaks and fresh strategies that drive new business: NatWest made a simple change based on Contentsquare insights that increased completions of its online mortgage agreement tool by 20%.

Contentsquare’s monitoring and analysis tools can reveal how customers are engaging with digital products and highlight popular content, points of friction, and recommendations for change, like how it helped NatWest realize that it needed to emphasize the “Get an Agreement in Principle” button on its mortgage calculator.

“Contentsquare is at the heart of our decision-making process,” a NatWest digital experience manager said in a case study. “It has more than paid its own way, and I’m sure it will continue to do so.” The firm recently raised a $600 million Series F round of funding.

Sophisticated user analytics with AI-driven recommendations are a key way for FIs to boost customer acquisition: BMO and Western Union both rely on Insight Partner’s portfolio company Quantum Metric to understand their users and build better digital products faster.