JJ Hornblass
Hi, everyone. I’m JJ Hornblass and welcome to the Buzz from Bank Automation News, where we cover what’s happening in banking automation technology. This is our weekly wrap for what’s happening in our industry as of April 32,021. Before we get into it, I want to thank Bank Automation News advertisers, Narmi and MX for their support. So thank you to both of those sponsors. pleased to be joined by Loraine Lawson and Jaspreet Kalra. From the Bank Automation News team. Welcome to both of you. We’re going to start with some general technology news. Combined revenue at Amazon, Apple, Alphabet, excuse me, Microsoft and Facebook. I guess what used to be called the Fang group hit 1.2 trillion this year, up 25%. From March 2020, that’s in the first quarter alone, and they benefited from what has been described as a perfect positive storm for those technology companies. Robin Hood the prop the popular stock trading app is now using JP Morgan Chase to handle money transfers into customers accounts. Previously it had used Sutton bank, a community lender in North Central Ohio with eight branches. For that for those transactions. Jeff Bezos said yesterday that Prime video streaming hours are up more than 70% on a year-over-year basis, with more than 175 million Prime members having streamed TV shows and movies in the past year. And in banking automation industry news data shows that 58% of banks are currently using automation on a wide scale, a rate that’s lower than the 67% across all industries. And that’s according to a new study that was released this weekend that we reported on. Lorraine, why is it that banks are not at par with other industries when it comes to automation at a wide scale?
Loraine Lawson
Well, it’s interesting, you know, this study was by Accenture. They said there are a number of reasons including a shortage of talent, a lack of clear automation strategy, legacy applications that lack necessary computing power, for instance, and data silos.JJ Hornblass
Which of those do you think is the greatest cause of this deficiency?Loraine Lawson
Good question. I would guess that it’s a little bit legacy applications and a little bit shortage of talent. And those things probably go together. I do see smaller banks and community banks, for instance, doing small automations digitalization using digitalization platforms. And they’re only able to go so far. And one of the reasons I was talking to an analyst today, he said, you know, how far they go depends on how modern their core system is, and how well they’re able to integrate with it to automate. I mean, you leave seeing more technologyJJ Hornblass
being introduced that allows financial institutions to deal with legacy core systems in various ways. So I’m not sure that I wonder, I guess I’m asking the both of you. I wonder whether that will be less of an issue as we go forward over the next couple years. Do either of you have a sense for that? Agree or disagree with that, that sentiment?Loraine Lawson
I do hear of a lot of banks now ripping out their cores and replacing them with new API enabled cores. And recently, five serve, you know, had their earnings report and they talked about that they had sold roughly half, which they only sold 10. But roughly half or half were DNA servers or platforms. I mean, and that is an API enabled platform. So it’s definitely something I think banks are moving towards.JJ Hornblass
Just free to view on This,Jaspreet Kalra
I mean, so from whatever I’ve read about it and sort of reported on, I would say that it’s a moment of transition for those core banking systems. But it’s not happening as fast as perhaps some people would like for it to happen. So I think that is going to move forward. But yet again, at the same time, implementing automation and being excited by it are two very different things. So once you get excited about the technology, you sometimes realize that it doesn’t work as well as we expected it to. So I think that’s also why we’re seeing some of those gaps were in people sort of wanted to jump on the train, but the champion too soon. Now they want to sort of pull back and see what works best.JJ Hornblass
Yeah, I wonder whether that will kick, you know, maintain a less steep trajectory for adoption going forward because of these hiccups? I mean, we saw that in at our conference just this month, how, you know, the how some of the implementations have fallen short. Citibank was a was one example of a of an institution where maybe some of the automation initiatives didn’t exactly meet their expectations. I guess you could look at the 58% to 67% in two ways, you know, maybe that it’s close, maybe that it’s not. And I guess that that the the reason why I it strikes me is that as compared to other industries, not every industry has the same volume of opportunities for automation. If you’re, if you’re selling ice cream, use, you know, maybe you don’t, you still have to hand the ice cream cone to the customer, it’s hard to automate that as it were. It’s a bad example, but you get the point I’m trying to make. But in banking, there is ample opportunity, ample opportunity. And so I these factors, I guess, if we had to, if we were if the three of us were forced to make a decisive prediction, do we think that when we’re sitting together in a year that banking will match the industry wide automation rates? Or no, Lorraine, you could start with that incredibly impossible question.Loraine Lawson
So I think there are a couple of things to know, one is, you know, banks are starting out behind, and they’re playing catch up. So will they be on par? I doubt it because the other companies are advancing even as the banks are catching up. But another thing to consider is the technology in general does go through a hype cycle, you know, that they’re, they’re sort of starts out, and they’re early adopters. And then it has a peak of inflated expectations. And right after that, it takes a deep dive into what’s called the trough of disillusionment, where people are like, this does not deliver on all the marketing hype, then slowly, they pick back up and eventually sort of plateau into a level of productivity that’s somewhere between the trigger event and the peak inflammation inflated expectations peak. So that’s something to consider too, that that there’s going to be a period where you’re being sort of disappointed with automation. And they may not, you know, invested in as much, but eventually, it’ll level back out. JustJaspreet Kalra
sort of the way I look at it. And I’m going to reference a book I was recently reading by firsthand respect, in which he talks about the future of work at automation centric enterprises will be much like what a centaur looks like. So half man, half horse, whereas the half horse part is easier to do. It’s just rules based tasks that RPA can do. And then you have the half man, which is the customer experience side, the emotional side and the trust side, which is going to remain human focused. And the exciting part is where the human meets the horse. That midriff where AI is being implemented, where intelligent automations are being implemented, I think we’ll see, banks use a lot more of that as compared to say, manufacturing enterprises, that I figured out how to successfully automate much of how to make a car, you’ll still need human inspectors on site, but the machine knows how to move things around now. So there isn’t a lot more left to do there. So I think you might see sort of a convergence going forward, but I totally agree with the rain on that as well that this beam might just be something that’s part of a technology hype cycle, that sometimes your expectations so just higher because you think the technology works better than it does.

JJ Hornblass
Yeah, I’m gonna cheat My answer I’m going to say, it’s not going to be in a year. But it’ll be it’ll take about two to three years. And it’s just because things tend to move slower in financial services largely because of the regulatory regime under which it operates. Sorry for cheating to the both of you. Next story. The next news that came out also this week was related to a study. And this is that losses from Digital payments fraud. Or I guess fraud in digital payments in e commerce are expected to exceed $20 billion this year jesperi give us some additional background on this study. And and let’s talk about like where the automation solutions are available in order to maybe stem some of these fraud losses.

Jaspreet Kalra
So what is the study largely explored is that there’s been a absolute boom in e commerce transactions over the last year and a half. And we all know why. But at the same time, the most critical element for any fraudster of any sort of malevolent actor is financial gain, and which is why those payment rewards become so important. And increasingly, what we’re seeing as a trend across the sort of sector is theft of digital identity, because identity has become so central to every transaction you make. So every time you swipe a card, or you pay with your Apple phone each time it links back to you. So all fraudster has to do is either steal your credit card account number, or your social security card, and then just go forward with those transactions. And what gets really fleshed out in this sort of exploration is that these credentials are available for sale as little as for about as little as $15 on the dark web. So you can go to paypal credentials, $15, and make a maritime out of it. Now, what comes to sort of stopping these sort of activities, machine learning and AI are sort of really important in emerging history, the important linchpins for stopping this sort of activity, because if a thing called behavioral biometrics, now not to get too technical, but most people create a digital fingerprint much in the same way we have actual fingerprints. So your keystroke activity will be significantly different than my keystroke activity for your the devices that you use will be significantly different from the devices that I use. So detecting those patterns and processing that sort of large scale data can help flag some patterns. But at the same time, as is always the case, bad guys tend to stay a step ahead of the good guys. So we use also seeing deep fakes, which is basically digitally altered videos and photographs being used to circumvent KYC systems, there is limited data are valuable and what the scale of this problem is. But at the same time, it is possible for people who really want to fake credentials, and get through the systems without triggering any alarms. So I think this is going to be a very sort of important focus area going forward. Because as more and more of our activities become digital, the first frontier is going to be how to protect individual identity for customers. And the second frontier being how to ensure that you can monitor someone’s activity without, you know, over collecting that data or May, or putting into that sort of privacy sphere that the customer enjoys whenever they’re making a purchase on the internet.

JJ Hornblass
The mechanics of the well let’s just say this first 20 billion doesn’t seem actually like a lot considering the volume of e commerce and the growth are we making too much of this? Or is is the issue not the top line dollar number, but more the potential for that number to increase considering, you know, for example, identities available on the dark web.

Jaspreet Kalra
two pronged if you look at say, Western Europe or the us a lot of companies, a lot of banks have moved very extensively to implement anti fraud and AML measures. Whereas China, which is going to be the biggest is the biggest e commerce market has very limited controls in place and a lot of new retailers are joining the online space. A lot of your local restaurants, a lot of your local retailers are now trying to create an online presence for themselves as compared to say an Amazon as compared to say an eBay, they don’t have the resources to invest that much in fraud management. So I think those relationships also and those sort of risks are also proportional. That for someone who has a bottom line or a profit of $5,000, losing $3,000 to start with me Really disastrous consequences? Well, sure, I mean, as compared to the overall commerce, ecommerce value, this might be a limited figure, which I think is a good thing. But it also has the potential to expand going forward. Because we know that it’s not like any sort of malevolent actor would walk away from the feeling of saying, Oh, this is too little money to be made. Or this is not a big enough sort of field. So I think this is this is sort of going to be a developing debate. But if you look at just the pure numbers show, the program seems contained right now, it’s not a fast spreading virus going around.

JJ Hornblass
You get the sense that there is, is there a fear that they’ll that they’ll be that the that fraudsters will develop the ability to acquire those biometric footprint data elements.

Jaspreet Kalra
not currently are an I don’t know if people are buying wholesale digital footprints just to you know, impersonate someone else on the internet, that would be a much larger scale of X rays. And you would want to do, I mean, not not talking as a criminal here. But you would want to do more things with a digital footprint than just make an Amazon purchase. So stealing a part of that footprint allows you to make a financial claim, stealing that entire footprint allows you to basically be a dog on the internet and pretend that you’re a cat. So so those are going to be that’s that’s a much more risky area, that’s a much more sort of minefield laden area. But at current stages, you’re not seeing a lot of activity where people’s entire identities are being stolen. It will either be a social security number, or credit card number, or even just an email account that gets compromised. And we all know how many times we’ve sent password confirmation or reset requests to our email ids. So I think it all links up in the end, which is why some good cyber hygiene is just a good practice to have across the board.

Unknown Speaker
Right. Okay.

JJ Hornblass
Lorraine, what do we have planned for next week?

Loraine Lawson
Well, we have a five questions with citizens make this where we delve into sort of a profile of that person. And we may be looking at patents next week.

JJ Hornblass
Good. I would also encourage everyone to check out yesterday’s podcast featuring Stuart Tarr me right

Loraine Lawson
arminius army

JJ Hornblass
of aerospike very interesting on what might allow for AI and ml to adoption to drive higher. And we also want to encourage you to visit us at Bank automation news calm and follow us on Twitter and LinkedIn. Thank you so much for joining us on the buzz. We’ll see you next time.

JJ Hornblass
Hi, everyone. I’m JJ Hornblass and welcome to the Buzz from Bank Automation News, where we cover what’s happening in banking automation technology. This is our weekly wrap for what’s happening in our industry as of April 32,021. Before we get into it, I want to thank Bank Automation News advertisers, Narmi and MX for their support. So thank you to both of those sponsors. pleased to be joined by Loraine Lawson and Jaspreet Kalra. From the Bank Automation News team. Welcome to both of you. We’re going to start with some general technology news. Combined revenue at Amazon, Apple, Alphabet, excuse me, Microsoft and Facebook. I guess what used to be called the Fang group hit 1.2 trillion this year, up 25%. From March 2020, that’s in the first quarter alone, and they benefited from what has been described as a perfect positive storm for those technology companies. Robin Hood the prop the popular stock trading app is now using JP Morgan Chase to handle money transfers into customers accounts. Previously it had used Sutton bank, a community lender in North Central Ohio with eight branches. For that for those transactions. Jeff Bezos said yesterday that Prime video streaming hours are up more than 70% on a year-over-year basis, with more than 175 million Prime members having streamed TV shows and movies in the past year. And in banking automation industry news data shows that 58% of banks are currently using automation on a wide scale, a rate that’s lower than the 67% across all industries. And that’s according to a new study that was released this weekend that we reported on. Lorraine, why is it that banks are not at par with other industries when it comes to automation at a wide scale?
Loraine Lawson
Well, it’s interesting, you know, this study was by Accenture. They said there are a number of reasons including a shortage of talent, a lack of clear automation strategy, legacy applications that lack necessary computing power, for instance, and data silos.JJ Hornblass
Which of those do you think is the greatest cause of this deficiency?Loraine Lawson
Good question. I would guess that it’s a little bit legacy applications and a little bit shortage of talent. And those things probably go together. I do see smaller banks and community banks, for instance, doing small automations digitalization using digitalization platforms. And they’re only able to go so far. And one of the reasons I was talking to an analyst today, he said, you know, how far they go depends on how modern their core system is, and how well they’re able to integrate with it to automate. I mean, you leave seeing more technologyJJ Hornblass
being introduced that allows financial institutions to deal with legacy core systems in various ways. So I’m not sure that I wonder, I guess I’m asking the both of you. I wonder whether that will be less of an issue as we go forward over the next couple years. Do either of you have a sense for that? Agree or disagree with that, that sentiment?Loraine Lawson
I do hear of a lot of banks now ripping out their cores and replacing them with new API enabled cores. And recently, five serve, you know, had their earnings report and they talked about that they had sold roughly half, which they only sold 10. But roughly half or half were DNA servers or platforms. I mean, and that is an API enabled platform. So it’s definitely something I think banks are moving towards.JJ Hornblass
Just free to view on This,Jaspreet Kalra
I mean, so from whatever I’ve read about it and sort of reported on, I would say that it’s a moment of transition for those core banking systems. But it’s not happening as fast as perhaps some people would like for it to happen. So I think that is going to move forward. But yet again, at the same time, implementing automation and being excited by it are two very different things. So once you get excited about the technology, you sometimes realize that it doesn’t work as well as we expected it to. So I think that’s also why we’re seeing some of those gaps were in people sort of wanted to jump on the train, but the champion too soon. Now they want to sort of pull back and see what works best.JJ Hornblass
Yeah, I wonder whether that will kick, you know, maintain a less steep trajectory for adoption going forward because of these hiccups? I mean, we saw that in at our conference just this month, how, you know, the how some of the implementations have fallen short. Citibank was a was one example of a of an institution where maybe some of the automation initiatives didn’t exactly meet their expectations. I guess you could look at the 58% to 67% in two ways, you know, maybe that it’s close, maybe that it’s not. And I guess that that the the reason why I it strikes me is that as compared to other industries, not every industry has the same volume of opportunities for automation. If you’re, if you’re selling ice cream, use, you know, maybe you don’t, you still have to hand the ice cream cone to the customer, it’s hard to automate that as it were. It’s a bad example, but you get the point I’m trying to make. But in banking, there is ample opportunity, ample opportunity. And so I these factors, I guess, if we had to, if we were if the three of us were forced to make a decisive prediction, do we think that when we’re sitting together in a year that banking will match the industry wide automation rates? Or no, Lorraine, you could start with that incredibly impossible question.Loraine Lawson
So I think there are a couple of things to know, one is, you know, banks are starting out behind, and they’re playing catch up. So will they be on par? I doubt it because the other companies are advancing even as the banks are catching up. But another thing to consider is the technology in general does go through a hype cycle, you know, that they’re, they’re sort of starts out, and they’re early adopters. And then it has a peak of inflated expectations. And right after that, it takes a deep dive into what’s called the trough of disillusionment, where people are like, this does not deliver on all the marketing hype, then slowly, they pick back up and eventually sort of plateau into a level of productivity that’s somewhere between the trigger event and the peak inflammation inflated expectations peak. So that’s something to consider too, that that there’s going to be a period where you’re being sort of disappointed with automation. And they may not, you know, invested in as much, but eventually, it’ll level back out. JustJaspreet Kalra
sort of the way I look at it. And I’m going to reference a book I was recently reading by firsthand respect, in which he talks about the future of work at automation centric enterprises will be much like what a centaur looks like. So half man, half horse, whereas the half horse part is easier to do. It’s just rules based tasks that RPA can do. And then you have the half man, which is the customer experience side, the emotional side and the trust side, which is going to remain human focused. And the exciting part is where the human meets the horse. That midriff where AI is being implemented, where intelligent automations are being implemented, I think we’ll see, banks use a lot more of that as compared to say, manufacturing enterprises, that I figured out how to successfully automate much of how to make a car, you’ll still need human inspectors on site, but the machine knows how to move things around now. So there isn’t a lot more left to do there. So I think you might see sort of a convergence going forward, but I totally agree with the rain on that as well that this beam might just be something that’s part of a technology hype cycle, that sometimes your expectations so just higher because you think the technology works better than it does.

JJ Hornblass
Yeah, I’m gonna cheat My answer I’m going to say, it’s not going to be in a year. But it’ll be it’ll take about two to three years. And it’s just because things tend to move slower in financial services largely because of the regulatory regime under which it operates. Sorry for cheating to the both of you. Next story. The next news that came out also this week was related to a study. And this is that losses from Digital payments fraud. Or I guess fraud in digital payments in e commerce are expected to exceed $20 billion this year jesperi give us some additional background on this study. And and let’s talk about like where the automation solutions are available in order to maybe stem some of these fraud losses.

Jaspreet Kalra
So what is the study largely explored is that there’s been a absolute boom in e commerce transactions over the last year and a half. And we all know why. But at the same time, the most critical element for any fraudster of any sort of malevolent actor is financial gain, and which is why those payment rewards become so important. And increasingly, what we’re seeing as a trend across the sort of sector is theft of digital identity, because identity has become so central to every transaction you make. So every time you swipe a card, or you pay with your Apple phone each time it links back to you. So all fraudster has to do is either steal your credit card account number, or your social security card, and then just go forward with those transactions. And what gets really fleshed out in this sort of exploration is that these credentials are available for sale as little as for about as little as $15 on the dark web. So you can go to paypal credentials, $15, and make a maritime out of it. Now, what comes to sort of stopping these sort of activities, machine learning and AI are sort of really important in emerging history, the important linchpins for stopping this sort of activity, because if a thing called behavioral biometrics, now not to get too technical, but most people create a digital fingerprint much in the same way we have actual fingerprints. So your keystroke activity will be significantly different than my keystroke activity for your the devices that you use will be significantly different from the devices that I use. So detecting those patterns and processing that sort of large scale data can help flag some patterns. But at the same time, as is always the case, bad guys tend to stay a step ahead of the good guys. So we use also seeing deep fakes, which is basically digitally altered videos and photographs being used to circumvent KYC systems, there is limited data are valuable and what the scale of this problem is. But at the same time, it is possible for people who really want to fake credentials, and get through the systems without triggering any alarms. So I think this is going to be a very sort of important focus area going forward. Because as more and more of our activities become digital, the first frontier is going to be how to protect individual identity for customers. And the second frontier being how to ensure that you can monitor someone’s activity without, you know, over collecting that data or May, or putting into that sort of privacy sphere that the customer enjoys whenever they’re making a purchase on the internet.

JJ Hornblass
The mechanics of the well let’s just say this first 20 billion doesn’t seem actually like a lot considering the volume of e commerce and the growth are we making too much of this? Or is is the issue not the top line dollar number, but more the potential for that number to increase considering, you know, for example, identities available on the dark web.

Jaspreet Kalra
two pronged if you look at say, Western Europe or the us a lot of companies, a lot of banks have moved very extensively to implement anti fraud and AML measures. Whereas China, which is going to be the biggest is the biggest e commerce market has very limited controls in place and a lot of new retailers are joining the online space. A lot of your local restaurants, a lot of your local retailers are now trying to create an online presence for themselves as compared to say an Amazon as compared to say an eBay, they don’t have the resources to invest that much in fraud management. So I think those relationships also and those sort of risks are also proportional. That for someone who has a bottom line or a profit of $5,000, losing $3,000 to start with me Really disastrous consequences? Well, sure, I mean, as compared to the overall commerce, ecommerce value, this might be a limited figure, which I think is a good thing. But it also has the potential to expand going forward. Because we know that it’s not like any sort of malevolent actor would walk away from the feeling of saying, Oh, this is too little money to be made. Or this is not a big enough sort of field. So I think this is this is sort of going to be a developing debate. But if you look at just the pure numbers show, the program seems contained right now, it’s not a fast spreading virus going around.

JJ Hornblass
You get the sense that there is, is there a fear that they’ll that they’ll be that the that fraudsters will develop the ability to acquire those biometric footprint data elements.

Jaspreet Kalra
not currently are an I don’t know if people are buying wholesale digital footprints just to you know, impersonate someone else on the internet, that would be a much larger scale of X rays. And you would want to do, I mean, not not talking as a criminal here. But you would want to do more things with a digital footprint than just make an Amazon purchase. So stealing a part of that footprint allows you to make a financial claim, stealing that entire footprint allows you to basically be a dog on the internet and pretend that you’re a cat. So so those are going to be that’s that’s a much more risky area, that’s a much more sort of minefield laden area. But at current stages, you’re not seeing a lot of activity where people’s entire identities are being stolen. It will either be a social security number, or credit card number, or even just an email account that gets compromised. And we all know how many times we’ve sent password confirmation or reset requests to our email ids. So I think it all links up in the end, which is why some good cyber hygiene is just a good practice to have across the board.

Unknown Speaker
Right. Okay.

JJ Hornblass
Lorraine, what do we have planned for next week?

Loraine Lawson
Well, we have a five questions with citizens make this where we delve into sort of a profile of that person. And we may be looking at patents next week.

JJ Hornblass
Good. I would also encourage everyone to check out yesterday’s podcast featuring Stuart Tarr me right

Loraine Lawson
arminius army

JJ Hornblass
of aerospike very interesting on what might allow for AI and ml to adoption to drive higher. And we also want to encourage you to visit us at Bank automation news calm and follow us on Twitter and LinkedIn. Thank you so much for joining us on the buzz. We’ll see you next time.