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Konstitucijos Prospektas 21B – 201

IB-IA Group UAB, Konstitucijos Prospektas 21B

31/10/2023

The Importance of Continuous AI Innovation in Banking 🤖

Continuous AI innovation offers a multitude of benefits that are critical for financial institutions to remain competitive, satisfy customers, maximize efficiency, and optimize revenue. Building AI maturity needs to be a strategic priority to ensure future success.

AI innovation also enables leading banks and credit unions to envision the future of financial services, and take the necessary steps to remain dominant players going forward.

Establishing centralized AI research teams is a hallmark of the most advanced financial organizations, tasked with both pure and applied research.

Overall, the top five US banks – Wells Fargo, Goldman Sachs, First Citizens, Citi and JPMorgan Chase – account for over 50% of all AI startup investments. Wells Fargo leads, having made 157 deals. Goldman Sachs has broad exposure through over 100 deals across various subsidiaries. (First Citizens entered the top ranks after acquiring Silicon Valley Bank.)

We have eight years of experience in helping high-risk businesses to get payment services across Europe. Reserve a personalised consultation now and start growing your business in Europe.

28/10/2023

3 Ways Generative AI Will Transform Banking 🏦

One year after ChatGPT’s 🤖 public launch, generative AI is probably still the hottest topic in the world of business—and with good reason. Research suggests gen AI could add almost $7 trillion to global GDP.

So what, exactly, will gen AI mean for banks?

We trace this wave of generative AI change across three major areas of impact. Gen AI will allow banks to:

1️⃣Innovate and differentiate

Generative AI creates many new ways for banks to boost revenue with insight-driven decisions and better customer experiences.

Another comes from a large North American bank, which is using gen AI to scrutinize customer data and financial history to assess credit exposure. This helps its analysts make better lending decisions and reduce the risk of loan defaults.

2️⃣Transform mid- and back-office operations

Generative AI is going to significantly contribute to how banks manage their mid- and back-office operations. This will both lower operational costs, as in the email routing example mentioned earlier, and free up intellectual capital for innovation by automating repetitive tasks like reporting, data entry and transaction processing. This will allow bank staff to spend more time on creative tasks and personalized customer care.

3️⃣Embed gen AI into operations and tools to supercharge productivity

The ecosystem of software partners that power banking today are incorporating gen AI into every aspect of what they do. This will radically boost productivity for employees across the bank.

For example, Microsoft began integrating LLMs into its Microsoft 365 suite of apps back in March 2023 with the launch of Copilot.

If you’re not sure where your bank’s generative AI journey should begin, our top piece of advice is to form a generative AI SWAT team today. This should include leaders from both the business and tech sides of the bank, and its mandate should touch on strategy, policy, talent, technology and data.

20/10/2023

ChatGPT 🤖 in Banking: Balancing Its Promise and Its Risks ⤵️

ChatGPT and other large language artificial intelligence models have extensive implications both good and bad for the future of banking.

The banking industry is in the very early days of exploring how generative AI models like ChatGPT can be applied to transform financial services. Many institutions are beginning to run small-scale pilot projects or proofs of concept to evaluate potential use cases in customer experience enhancements, back-office automation, risk assessment and fraud detection as well as product innovation.

🔄Banking is absolutely ripe for conversational interfaces and what we’re seeing with some of these large language models is the ability to really create conversational experiences between consumers, small businesses and financial institutions.

🔄Banks training individual AI models for each customer using their personal financial data and transaction history. Over time, these “personal banker bots” could gain deep insights into every customer’s unique circumstances to offer tailored recommendations on budgeting, investing, retirement planning and other financial challenges.

🔁The power of this technology is that the more the AI interacts with a specific customer over time, the more personalized it can become at understanding their preferences and tailoring recommendations. This stands in contrast to the often rigid and repetitive scripted conversations with current non-AI chatbots.

🔁An added benefit of conversational AI is that, when customers do need help, AI agents can provide rapid answers by quickly parsing questions and referencing vast knowledge bases rather than making customers wait on hold for the next available human agent.

🔁Finally, by continuously analyzing previous interactions, AI chatbots can assess customer sentiment, identify pain points, and loop in human agents as required.

13/10/2023

Unleashing the power of Gen AI in Specialty Finance

Generative AI: what’s in it for me? Everyone, including auto and equipment finance providers, wants to know. The way we see it, it’s a technology that will have far-reaching impacts on the lending and leasing business, bringing efficiencies and better experiences for those organizations that incorporate it across the value chain.

To answer this question, let’s look at four areas of the auto and equipment finance value chain where my colleagues and I see generative AI being invaluable.

1️⃣ Pre-originations and originations

In Michael Abbott, Jess Murray and Keri Smith’s recent post on the Accenture Banking Blog, Breaking Barriers: Exploring How Banks Scale Generative AI for Growth, they noted that early adopters are already exploring the use of generative AI for marketing. The idea is to use it to scale hyper-personalized marketing content, so that every customer communication is more relevant.

Scroll through the carousel for more information ➡️

11/10/2023

Agile and DevOps in banking today 🏦

Benefits of Agile, DevOps in banking

Implementing Agile and DevOps in the banking sector yields numerous benefits ⤵️

✔️Operational efficiency is improved significantly through continuous integration and automation, enabling faster and more frequent software releases. This leads to a reduced time to market for new products and services, helping banks gain a competitive edge.

✔️Customer satisfaction is another area that benefits from Agile and DevOps. These methodologies allow banks to deliver products that align closely with customer needs, preferences and feedback. This customer-centric approach results in enhanced customer experiences and fosters customer retention.

✔️Additionally, the focus on iterative development and continuous improvement promotes innovation. By encouraging experimentation and risk-taking, Agile and DevOps practices enable banks to explore new ideas and technologies, paving the way for groundbreaking innovations in the financial sector.

Overcoming implementation challenges

🔘Banks may have traditionally operated in a hierarchical and risk-averse manner, which can hinder the adoption of Agile and DevOps principles. It is important for leadership to drive the cultural change by promoting collaboration, experimentation and a learning-oriented environment.

🔘Skill gaps and talent shortages are also potential roadblocks to implementation. Banks may need to upskill or hire personnel with expertise in Agile, DevOps and modern software development practices to ensure a smooth transition.

🔘Another pain point for banking and financial institutions is the complexity of legacy systems. Many financial institutions have extensive and intricate legacy IT infrastructures that were not designed to work with Agile and DevOps methodologies.

We have eight years of experience in helping high-risk businesses to get payment services across Europe. Reserve a personalised consultation now and start growing your business in Europe 📩

06/10/2023

What Bankers Still Need to Learn from Their Fintech Competitors❓

Consumers have been voting with their feet — literally by the millions — in favor of innovative fintechs. And yet, there's no reason traditional banks can't deliver the same experiences that fintechs do. It's just that more than a decade into the fintech revolution, most bankers have yet to learn the important lessons that these highly effective competitors have been teaching the industry by example every day.

So, what does this mean for traditional banks and what could they learn from others’ successes? Here are 5 key takeaways.

1️⃣Put customers’ needs at the forefront to show that you’re in the business of their success.

💡Idea: One simple way to start moving in this direction is by matching the bank’s human support hours to the ones when customers are actually engaging with the bank, including mobile and online banking interaction times. Many have found that digital users do their “banking” outside of historical business hours.

2️⃣Embrace the digital shift.

Consumers have flocked to fintechs because of their seamless, intuitive experiences. Banks can create these same experiences. The products and tools to achieve this are out there.

💡Idea: Hire a fintech designer at the bank to help improve the user experience.

Scroll through the carousel to see more 👉🏻

03/10/2023

How banks can reimagine a winning loyalty strategy ❓

By taking steps to transform product offerings and reward loyalty, and establishing early loyalty onramps for the younger generation, banks can embrace new opportunities for growth while transforming the customer experience. Infusing loyalty at the core requires redefining customer lifetime value, evolving the approach to relationship management and shifting the product strategy 👇🏻

1️⃣ Address the customer as a whole. Banks will need to continue to innovate on both sides of the balance sheet and look for ways to reward customers for borrowing as well as depositing money. Break down internal silos to avoid competing on price or submitting to rate maximization apps.

2️⃣ Explore new value propositions and reduce barriers to entry. Banks must be ready and well positioned to welcome new customers. Easy onboarding will be essential, as this experience sets the tone for the entire relationship.

3️⃣ Create a deliberate strategy for younger banking customers. As the next generation seeks authentic experiences, they will be quick to move on if not satisfied. Banks need to adapt and develop a strategy for building a two-way relationship based on trust and loyalty.

Banks that reward loyalty and focus on long-lasting, holistic relationships will find new growth paths. But time is ticking. And “every bank today has the choice either to help shape the future of its industry, or to find some way of thriving in a world designed by its competitors.

26/09/2023

Cloud migration vital for banking industry

Cloud migration for banks presents myriad challenges that demand meticulous attention and strategic planning. One significant hurdle is the initial reluctance to move to the cloud, which stems from data security and compliance concerns. Banks handle vast amounts of sensitive customer data and ensuring its protection during migration is paramount to maintaining trust and confidence 👇🏻

Migrating complex legacy systems poses another obstacle. These systems often have intricate interdependencies, making their integration with cloud infrastructure a delicate process 👇🏻

Banks can overcome these challenges by collaborating with experienced cloud service providers and employing best practices. A comprehensive risk assessment, thorough security frameworks, and continuous monitoring are vital to effectively address data security and compliance concerns.

Establishing a well-defined strategy is crucial to a successful cloud migration journey. Banks should thoroughly assess their infrastructure, applications and data to identify suitable candidates for migration.

Even more in the carousel ➡️

22/09/2023

Can cloud help banks solve the tech debt tradeoff?

The tech debt is the interest—the growing cost of working around and patching up the old code—that keeps adding up as you delay the repayment. The longer you wait to pay off your debt, the more you end up paying in the end.

Tech debt occurs when either ⬇️

1️⃣ Software products are launched before they are fully debugged and do everything they were intended to do, with the intention of getting them into operation quickly and fixing the minor problems later; or

2️⃣ Software becomes outdated and doesn’t work well with more advanced systems, so “quick and dirty” workarounds are implemented to avoid starting from scratch with a newer version. Software that isn’t actively managed can quickly accrue this type of debt.

❓What happens when banks accumulate tech debt❓

▪️Inhibited innovation and new product development.
▪️Customer dissatisfaction.
▪️Ballooning costs.
▪️Security risks.
▪️Talent loss.

Scroll through the carousel ➡️

To discuss your bank’s tech debt and how to address it during your cloud migration, contact us 📩

19/09/2023

Top 5 most innovative financial institutions

1️⃣ JPMorgan Chase, a $3.7 trillion bank, worked through acquiring and integrating First Republic Bank and invested in AI to combat fraud through Cleareye.ai.

2️⃣ TD Bank, a $401 billion bank, is looking to AI-driven predictive analytics to enhance personal finance management tools, invested in innovation with a 20% YoY increase in tech spend in Q2, and is leveraging machine learning within its call center to improve client experience.

3️⃣ Regions Bank, a $154 billion bank, selected Temenos as its core provider in April as part of its digital transformation.

4️⃣ Bank of America’s AI-driven chatbot surpassed 1.5 billion client interactions since its launch in 2018 as the $3.2 trillion bank continues to invest in the technology.

5️⃣ KeyBank looks to robotic process automation to block fraudulent bots from carrying out fake transactions.

15/09/2023

Is Bigger Better?

1️⃣ Is bigger better when it comes to banking?

Following the recent collapse of a couple of banks and the government’s response to protect uninsured depositors, Anne Arvia, principal at Cornerstone Advisors, shares her thoughts on why we will always need community banks.

2️⃣ How can my institution differentiate with faster payments?

Getting money to customers and members faster can be a differentiator for financial institutions. Tony DeSanctis, senior director at Cornerstone Advisors, examines the role FedNow can play in bankers’ strategies to offer faster payments.

3️⃣ Why should a financial institution help people improve their financial health?

As consumers experience declining financial health, banks are challenged to compete for their business by disruptors with snazzy offerings and tech.

12/09/2023

Bank Deposit and Liquidity Risks

The historic deposit runs on several niche regional banks have woken up bankers and their investors, regulators and policymakers to the threats that liquidity flows place on the entire industry. Taking a step back and looking into reported financial data for Q1 2023, a few key insights appear 👇🏻

☑️ Spending vs. Savings – The U.S. personal savings rate declined to levels not seen since the Great Recession 15 years ago. When COVID-related financial support stopped, consumers sopped up some of their savings in spending.

☑️ Money Market Funds – With consumers waking up to the differential between bank rates and rates in treasuries, a stunning $469 billion flowed into money market mutual funds in Q1 2023. The average cost of funds at banks in the first quarter of 2023 was 1.38% at a time when the 90-day T Bill hovered between 4.5% and 5.0%.

For the regional banks, a combination of major failures coupled with large businesses moving money for risk management and investment purposes remains the major cause of deposit outflows. Retail and small business deposits do not appear to be major sources of outflow.

For the large banks, the factors of reduced personal savings and flows into higher-yielding treasury investment and bank offerings are likely why funds are flowing out.

In the future, it is expected that banks working overtime to preserve their deposits and essentially manage liquidity risk on a daily basis. Key actions leaders should be taking include 👇🏻

▪️Working on a “white glove” basis with large depositors to increase insurance coverage through IntraFI or sweep some balances into investment accounts
▪️Analyzing data to optimize deposit pricing, gradually closing the gap between bank rates and treasury rates to discrete “indifference pricing” for distinct customer sizes and segments

More information in the carousel ➡️

IB-IA Group UAB

31/10/2023

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