Name: Fintech Insights - What's Hot & What's Not at FinovateSpring 2024
Uploaded: 2024-06-07T12:54:39.703Z
Duration: 750.88
Description: Fintech Insights finds out whats hot and whats not in the fintech industry at FinovateSpring 2024 from speakers Alenka Grealish Co-Lead Generative AI Research at Celent, Charles Elkan Professor of Computer Science at University of California and Jason Henrichs CEO at Alloy Labs .

Fintech Inaights - Whats Hot & Whats Not at Finovate Spring.mp4

Fintech Inaights - Whats Hot & Whats Not at Finovate Spring.vtt

ENGLISH

{{00:00:13}}
I would say this is the difficult question
because what at first glance appears

{{00:00:17}}
exceedingly attractive but once you get
to know it, it's a little more complex.

{{00:00:22}}
In the short term, there's so much focus
on generative AI being able to generate

{{00:00:28}}
cost savings, which is interesting
and efficiencies are interesting.

{{00:00:33}}
But I think the bigger challenge, the
big unknown that makes Gen AI so hot

{{00:00:37}}
is the part we don't understand yet.

{{00:00:39}}
It's going to fundamentally shift the
way so much of how we work in the way

{{00:00:44}}
we will approach businesses, how we
interact with our customers, how we

{{00:00:47}}
interact with the very nature of work,
and that's really difficult to forecast.

{{00:00:51}}
So I'd love to say we can see very
clearly that it is going to be

{{00:00:54}}
transformative, which I think it will
be, we just don't understand how.

{{00:00:59}}
How could one not say hot, right?

{{00:01:01}}
It's a catapult technology that was
released directly to consumers as

{{00:01:05}}
consumers were increasingly using it.

{{00:01:08}}
I use it.

{{00:01:09}}
I use several, times a day.

{{00:01:11}}
It's a technology that has profound
implications across industries, careers,

{{00:01:17}}
and hence the size of the prize is huge.

{{00:01:19}}
So you've got game on, hyperscalers,
model builders, third party solution

{{00:01:25}}
providers that are incorporating
Gen AI into their solution.

{{00:01:29}}
Within banking, the area I cover, we
did a global survey of banks and asked

{{00:01:33}}
them, are you in production with Gen AI?

{{00:01:35}}
And 18 percent said yes.

{{00:01:37}}
said yes, that's a striking number.

{{00:01:40}}
So already in the early, if you think
about the bell curve of adoption, we're

{{00:01:44}}
already in the early adopter phase.

{{00:01:46}}
When I asked what I would consider
innovation frontrunner banks, 48

{{00:01:52}}
percent said they were in production.

{{00:01:54}}
So we've crossed the chasm between
the early adopters and early

{{00:01:58}}
followers already and are tipping
towards half of that population.

{{00:02:03}}
Pretty striking numbers, pretty hot.

{{00:02:06}}
Oh, Gen AI, Genitive
AI, I think is very hot.

{{00:02:09}}
I think it'd be hard to find
somebody who said it's not.

{{00:02:12}}
Has so many applications across
so many areas of business.

{{00:02:23}}
I'd say Tepid, that's been
a decades long journey.

{{00:02:28}}
And while banks have done well
with incremental improvements,

{{00:02:31}}
that doesn't translate into
sustainable competitive advantage.

{{00:02:36}}
There's still challenges with unhappy
customer journeys handled not so

{{00:02:42}}
well digitally chatbots that fail,
leading to customer frustration.

{{00:02:47}}
So I think there's room, there's quite
a bit of room runway for, improvements.

{{00:02:53}}
Having, said that, I think that GenAI
could, again, drive some step change.

{{00:02:59}}
So go from incremental step change
where there is differentiation in

{{00:03:04}}
the areas of, if I'm a customer, I
think about tell me something, GenAI

{{00:03:09}}
can retrieve and summarize something.

{{00:03:12}}
A do it for me, an AI assistant
could potentially walk me through

{{00:03:16}}
a mortgage application, help me
get data, help me deliver data.

{{00:03:21}}
and respond if the banker needs
more data or help understand some

{{00:03:25}}
of the rather complex language
around certain mortgage types.

{{00:03:29}}
So I think there's
potential for it to warm up.

{{00:03:33}}
Oh, very hot.

{{00:03:35}}
I think customers, consumers nowadays
are expecting the experience from

{{00:03:39}}
banking to be as convenient as the
experience when they're shopping online.

{{00:03:44}}
Digital transformation
has been such a buzzword.

{{00:03:48}}
The problem is, what
does it actually mean?

{{00:03:51}}
It's a catch all of, I need to
do some things that are mundane.

{{00:03:54}}
If you are doing digital account opening
for the first time, that is not digital

{{00:03:58}}
transformation, that's barely keeping up.

{{00:04:01}}
Even grandmothers know how to
open accounts digitally right now.

{{00:04:05}}
Businesses are moving at
the speed of technology and

{{00:04:08}}
the speed of bits and bytes.

{{00:04:10}}
Within commercial banks, there's
an entire reinvention of how

{{00:04:14}}
finance is going to work.

{{00:04:16}}
Embedded finance is really taking
off within the commercial banks first

{{00:04:21}}
inside their walls, and then how
they work with the external parties,

{{00:04:25}}
whether they be vendors or customers.

{{00:04:27}}
So digital transformation itself
is being transformed into the

{{00:04:31}}
commercial bank of the future,
is going to be the embedded bank.

{{00:04:42}}
I think very hot, but it's
mostly behind the scenes.

{{00:04:45}}
Customers just want it to
be easy and transparent.

{{00:04:49}}
But they also want security, and
so we use AI behind the scenes to

{{00:04:53}}
verify identity without requiring
people to log in every time.

{{00:04:57}}
And we do fraud detection and prevention
on the transactions themselves.

{{00:05:03}}
Fraud is so prevalent.

{{00:05:05}}
And unfortunately, it is
fraudsters who are some of the

{{00:05:08}}
biggest adopters of technology.

{{00:05:11}}
Fraudsters today, which are not just
somebody a hacker in a basement.

{{00:05:16}}
There are so many third party
actors, governments, organized

{{00:05:20}}
crime, making massive investments
into how do we perpetrate scams, how

{{00:05:25}}
do we execute fraud, and so AI is
going to play a very important role.

{{00:05:30}}
Unfortunately, it is the
bad people doing it first.

{{00:05:33}}
But protecting payments, it is going to
be essential for the industry, both writ

{{00:05:38}}
large and at individual execution level,
be able to spot deep fakes, to intercept

{{00:05:43}}
transactions, to be able to intercept
changes in user behavior that show it's an

{{00:05:48}}
anomaly, to be able to protect the system.

{{00:05:52}}
Payments fraud, always on
one of the burners, right?

{{00:05:55}}
It is a perennial problem.

{{00:05:57}}
It moves fast and it's very hard
to keep up with, especially if

{{00:06:01}}
it's business to business payments.

{{00:06:04}}
And now AI is enabling bad actors,
so it's really AI battling AI,

{{00:06:09}}
and that's going to increase with
generative AI, deepfakes, etc.

{{00:06:14}}
I think where energy should be focused
is on prevention, tools helping us

{{00:06:21}}
naive consumers not do something stupid.

{{00:06:24}}
So something that pops up.

{{00:06:26}}
When my mom's about to enter her bank
account, because she's been, her laptop's

{{00:06:31}}
being held hostage, saying, whoa, don't
do this, wait, go call your banker.

{{00:06:39}}
So I think there's preventive,
and that's where energy should

{{00:06:43}}
be focused, and in the future.

{{00:06:52}}
Oh, regulation and customer data.

{{00:06:55}}
Regulation is meant to protect,
especially the consumer.

{{00:06:59}}
It's also meant to protect
the stability of the system.

{{00:07:02}}
Now, the challenge is, AI is
moving faster, and data privacy

{{00:07:07}}
rules are not keeping up.

{{00:07:09}}
Now, on one hand, you can say, let's just
lock it down, let's slow down, until we

{{00:07:14}}
can actually have regulation keep up.

{{00:07:17}}
Unfortunately, we don't
have that opportunity.

{{00:07:20}}
The cat is out of the bag, you cannot
put the genie back into the bottle,

{{00:07:23}}
so industry itself needs to respond.

{{00:07:26}}
And quicken the pace on how we think
about how do we protect both the

{{00:07:29}}
customer interest, the stability of
the system, but not slow down progress.

{{00:07:35}}
Ah, that's another one
that's always on the burner.

{{00:07:40}}
Banks have guardrails, right?

{{00:07:41}}
Regulation has been pretty tough.

{{00:07:44}}
Precise, Prescriptive.

{{00:07:46}}
So there's guardrails.

{{00:07:47}}
So I think where the gear should
shift to is banks building trust

{{00:07:52}}
in how they handle data and
offering fair value data exchange.

{{00:07:58}}
And a great example is
I'm a small business.

{{00:08:02}}
I've got a lot of data
beyond my bank transactions.

{{00:08:06}}
And if I share some of that data,
accounting software data with my bank,

{{00:08:11}}
what will the bank give me in return?

{{00:08:13}}
So if I'm a banker, I say, gosh if you
share that, perhaps we can underwrite

{{00:08:18}}
faster, we can price the credit better,
and maybe in addition to a term loan

{{00:08:24}}
or a line of credit, we could offer
you a small business credit card.

{{00:08:28}}
So that fair value data exchange.

{{00:08:31}}
Getting permission data to do
good you could also think of a

{{00:08:35}}
scenario of cash flow forecasting.

{{00:08:38}}
You give me your accounting data, I
see visibility into your payables,

{{00:08:42}}
receivables, and I can forecast out and
say, Oh, you might have a shortfall.

{{00:08:47}}
We can help you prevent that shortfall.

{{00:08:49}}
So financial wellness
is, a big part of that.

{{00:08:52}}
So I think that's where the positive
energy, the heat will be found.

{{00:08:58}}
I think every reputable business,
whether it's a startup or a big

{{00:09:02}}
company, they want to be compliant
with the regulation and they want to

{{00:09:06}}
keep the trust of their customers.

{{00:09:08}}
So certainly AI is something that
regulators need to pay attention to,

{{00:09:13}}
but I don't think it's going to be
ultimately a major obstacle to adoption.

{{00:09:26}}
Both, right?

{{00:09:28}}
Emerging tech always goes through cycles.

{{00:09:31}}
AI has seen many cycles,
there's been AI winters, there's

{{00:09:35}}
been Regulatory freezes etc.

{{00:09:39}}
So it's always going to be cyclical.

{{00:09:41}}
Currently I think around AI, it's
of course hot since I just answered

{{00:09:46}}
that question around Gen AI.

{{00:09:48}}
So there's accelerators, size of
the prize, it's going to drive

{{00:09:51}}
hyperscalers, model builders to
improve accuracy improve pricing, etc.

{{00:09:57}}
But there's always
going to be impediments.

{{00:10:01}}
Some, if I could screw up, and the
regulators will come in, scrutinize,

{{00:10:05}}
and, there will be a break.

{{00:10:07}}
Models can fail.

{{00:10:08}}
Data could become scarce.

{{00:10:11}}
It's always going to be
a tug of war and a cycle.

{{00:10:14}}
We also see that with blockchain.

{{00:10:18}}
Blockchain is now the granddaddy
of emerging tech now, right?

{{00:10:21}}
It started as, ooh, the solution,
Bitcoin, Internet of Value, right?

{{00:10:26}}
And then it became a speculative currency.

{{00:10:30}}
Up and down, we're
always going to see that.

{{00:10:32}}
Bye.

{{00:10:33}}
The good news is there's always
on the margin some positive that

{{00:10:36}}
can come from emerging tech.

{{00:10:39}}
At the end of the day you're
going to get some positive heat.

{{00:10:45}}
Emerging technologies are numerous.

{{00:10:47}}
I think Artificial Intelligence,
Gen AI is very hot.

{{00:10:52}}
We're still talking about blockchain and
maybe there'll be important applications

{{00:10:55}}
in the future and quantum computing.

{{00:10:58}}
Sooner or later, it's going to be valuable
for some very specific applications, but

{{00:11:03}}
artificial intelligence is the emerging
technology that is really hot right now.

{{00:11:08}}
Hot or not, emerging technologies.

{{00:11:10}}
The question becomes, what is emerging?

{{00:11:12}}
What is offense?

{{00:11:13}}
What is defense?

{{00:11:15}}
Defensively, banks need to keep up.

{{00:11:17}}
If you're not doing remote
deposit capture, you're not going

{{00:11:20}}
to be in business much longer.

{{00:11:22}}
If you don't already have a digital
automation strategy for how do I begin to

{{00:11:27}}
manage my back office more efficiently,
you're not much longer for this world.

{{00:11:32}}
I like to think about it as you
need a portfolio of these efforts.

{{00:11:37}}
Just like you wouldn't say I'm going
to put all of my retirement income

{{00:11:40}}
into say Bitcoin or maybe you know
NFTs you want to build a portfolio.

{{00:11:48}}
Banks, credit unions, larger financial
institutions need to think about

{{00:11:52}}
putting the bulk of their innovation
efforts into things that actually

{{00:11:55}}
extend the existing business.

{{00:11:58}}
Call it 80 percent of what you invest in.

{{00:12:00}}
20 percent needs to go into things
that actually are transformative

{{00:12:04}}
to the business, but the last 10
percent of your investment needs

{{00:12:07}}
to go into emerging technologies.

{{00:12:09}}
Not that you're going to roll all
of those out into the mainline

{{00:12:13}}
portion of your FI, right?

{{00:12:14}}
But if you don't begin to experiment with
those and understand, you're not going to

{{00:12:18}}
be ready for how the world is changing.

{{00:12:20}}
There's no such thing as a fast follower
when it comes to transformation.

I would say this is the difficult question
because what at first glance appears

exceedingly attractive but once you get
to know it, it's a little more complex.

In the short term, there's so much focus
on generative AI being able to generate

cost savings, which is interesting
and efficiencies are interesting.

But I think the bigger challenge, the
big unknown that makes Gen AI so hot

It's going to fundamentally shift the
way so much of how we work in the way

we will approach businesses, how we
interact with our customers, how we

interact with the very nature of work,
and that's really difficult to forecast.

So I'd love to say we can see very
clearly that it is going to be

transformative, which I think it will
be, we just don't understand how.

It's a catapult technology that was
released directly to consumers as

It's a technology that has profound
implications across industries, careers,

So you've got game on, hyperscalers,
model builders, third party solution

providers that are incorporating
Gen AI into their solution.

Within banking, the area I cover, we
did a global survey of banks and asked

So already in the early, if you think
about the bell curve of adoption, we're

When I asked what I would consider
innovation frontrunner banks, 48

So we've crossed the chasm between
the early adopters and early

followers already and are tipping
towards half of that population.

Oh, Gen AI, Genitive
AI, I think is very hot.

I think it'd be hard to find
somebody who said it's not.

Has so many applications across
so many areas of business.

I'd say Tepid, that's been
a decades long journey.

And while banks have done well
with incremental improvements,

that doesn't translate into
sustainable competitive advantage.

There's still challenges with unhappy
customer journeys handled not so

well digitally chatbots that fail,
leading to customer frustration.

So I think there's room, there's quite
a bit of room runway for, improvements.

Having, said that, I think that GenAI
could, again, drive some step change.

So go from incremental step change
where there is differentiation in

the areas of, if I'm a customer, I
think about tell me something, GenAI

A do it for me, an AI assistant
could potentially walk me through

a mortgage application, help me
get data, help me deliver data.

and respond if the banker needs
more data or help understand some

of the rather complex language
around certain mortgage types.

So I think there's
potential for it to warm up.

I think customers, consumers nowadays
are expecting the experience from

banking to be as convenient as the
experience when they're shopping online.

Digital transformation
has been such a buzzword.

The problem is, what
does it actually mean?

It's a catch all of, I need to
do some things that are mundane.

If you are doing digital account opening
for the first time, that is not digital

transformation, that's barely keeping up.

Even grandmothers know how to
open accounts digitally right now.

Businesses are moving at
the speed of technology and

Within commercial banks, there's
an entire reinvention of how

Embedded finance is really taking
off within the commercial banks first

inside their walls, and then how
they work with the external parties,

So digital transformation itself
is being transformed into the

commercial bank of the future,
is going to be the embedded bank.

I think very hot, but it's
mostly behind the scenes.

Customers just want it to
be easy and transparent.

But they also want security, and
so we use AI behind the scenes to

verify identity without requiring
people to log in every time.

And we do fraud detection and prevention
on the transactions themselves.

And unfortunately, it is
fraudsters who are some of the

Fraudsters today, which are not just
somebody a hacker in a basement.

There are so many third party
actors, governments, organized

crime, making massive investments
into how do we perpetrate scams, how

do we execute fraud, and so AI is
going to play a very important role.

Unfortunately, it is the
bad people doing it first.

But protecting payments, it is going to
be essential for the industry, both writ

large and at individual execution level,
be able to spot deep fakes, to intercept

transactions, to be able to intercept
changes in user behavior that show it's an

anomaly, to be able to protect the system.

Payments fraud, always on
one of the burners, right?

It moves fast and it's very hard
to keep up with, especially if

And now AI is enabling bad actors,
so it's really AI battling AI,

and that's going to increase with
generative AI, deepfakes, etc.

I think where energy should be focused
is on prevention, tools helping us

When my mom's about to enter her bank
account, because she's been, her laptop's

being held hostage, saying, whoa, don't
do this, wait, go call your banker.

So I think there's preventive,
and that's where energy should

Regulation is meant to protect,
especially the consumer.

It's also meant to protect
the stability of the system.

Fintech Insights

Fintech Insights finds out whats hot and whats not in the fintech industry at FinovateSpring 2024 from speakers Alenka Grealish Co-Lead Generative AI Research at Celent, Charles Elkan Professor of Computer Science at University of California and Jason Henrichs CEO at Alloy Labs .