Weekly Wrap: Leveraging AI to gain Gen Z customers

This week, the Bank Automation News team discusses how identity decisioning platform provider Alloy is using artificial intelligence to attract Generation Z customers. Gen Z, youth born after 1997, can present a challenge to banks because they generally lack traditional credit and banking services. The BAN team also drilled down on the security risks posed by APIs, which are commonly used to connect banking applications to fintech and data services. These vulnerabilities can put data at risk of being stolen, and can also give attackers a gateway into backend systems, experts say. Gartner this week warned that businesses should take a three-pronged approach to securing APIs. Find a discussion of these topics and more in today’s episode of the Weekly Wrap with BAN Editor Myra Thomas and Associate Editor Loraine Lawson for the week ended July 23, 2021. Subscribe to The Buzz Podcast on iTunes , Spotify , or download the episode .

The following is a transcript generated by AI technology that has been lightly edited but still contains errors. Myra Thomas Hi, everyone. I'm Myra Thomas and welcome to the Buzz from Bank Automation News where we explore how automation technology is transforming the banking industry. This is the weekly wrap for what's happening in the industry this week. And before beginning I'd like to give a big thanks to band sponsors and advertisers volante pay it off, and La rod, thank you so much for your support. I'm pleased to be joined by Associate Editor Loraine Lawson. It's July 23 2021. And here is some of the biggest news from across the world this week. Well, this evening, the Olympics in Tokyo will begin and it will be a rather strange occasion. devoid of spectators and the usual enthusiasm from crowds surely helps to drive the athletes on all courtesy of the ongoing pandemic. Social distancing is the order of the day for the athletes as they navigate dealing with a surge in cases courtesy of the Delta variant. In bank technology and banking and technology news the motto the online food delivery platform is the first your unicorn to list shares locally in India. So moto raised 1.3 billion in its IPO this Friday shares gaining about 66% Indian tech startups are red hot at the moment, including India's digital payments startup pay tm, which is set to list as well and looking to raise about 2.2 billion and its upcoming IPO. Both PTM ns moto are backed by China's ant group. American banker is also reporting today that Fifth Third Bancorp is set to close more branches and its legacy markets this year, as it's set to fund digital upgrades and its southeastern expansion. Just last week, the bank announced it was replacing its legacy in house developed core banking system for their deposit and trust servicing. And they're replacing it with FiOS is new general generation platforms for this part of the bank for their wealth management side. And here's a few of the biggest news items from our own bank automation news editorial team. This week, I actually got a chance to sit down and chat with a senior executive at loi, the identity decisioning platform. They're single API platform connects financial services companies to more than 85 data sources to help them verify identities and monitor transactions. I had a chance to speak with Charlie ma who's the general manager of FinTech at Alloy where he's focused on deepening the platform's FinTech offerings and go to market strategy. Basically, this is a young guy who has had a number of really interesting jobs even prior to getting to Alloy. I believe he was the first business hire at plaid, where he led the FinTech, FinTech and developer sales vertical there and build up the firm's New York office prior to visas five $5 billion acquisition. In my conversation with ma he went really in depth about why banks need to work on onboarding Gen Z customers, certainly they need customers next generation customers, but they present you know, really some KYC complications. So, yeah, so Loraine, it turns out to be relatively interesting interview. I don't know ifLoraine Lawson Yeah, you said the Ma was a general manager at Tech and FinTech in LA. That's title. I've never heard of FinTech. What the heck is the general manager of FinTech?Myra Thomas Yeah, it's a little different. I mean, we've gotten some I know, we've seen some really strange titles of FinTech firms, from Tech evangelist to God knows what But yeah, I guess the general manager of FinTech for him is really a way for them to break down the silos and to combine sort of the business business initiative side along with product development, and rollouts and iterations on products. And so it was really interesting to see how he was actually working on both sides of the organization.Loraine Lawson So what are the real difficulties banks face in onboarding Gen Z customers?Myra Thomas I you know, it's really about you know, establishing credit history for someone who's young, and you know, creating the identity trail for a generation of potential customers who have no mortgage history, they you know, may not have had banking accounts previously no credit cards, and the younger generation that might operate in a much differently in their buying habits and the way that they live than their parents did. So the issue is really, you know, the KYC and determining identity and trying to find alternative data sources to verify this group of new customers that banks really need to bring on board. I mean, there's digital banks right, you know, neobanks challenger banks out there that are really you know, looking to you know, pick up this generation as well and you know, they're hitting them where they need to hit it out online. You know, they're targeted but on Tick tock, they're targeting them on social media. And so you know, the traditional banks need to step up their game.Loraine Lawson Yeah, tick tock is used was that generation, my daughter's that generation and she's always on the tick tock. Now I know you brought it back to automation, because it wouldn't be bank automation news, if it didn't. But how so how does that help solve the problem onboarding Gen Z?Myra Thomas Well, you know, I think he said to me that, you know, artificial intelligence is certainly the key to, you know, helping verify Gen Z customers, because it really changes the way that banks can validate these people and complete the due diligence process. It provides a more holistic and much more comprehensive view of an individual than, you know, traditional manual processes or, you know, any even older automation. So, you know, he really got into the skinny of, you know, looking at artificial intelligence and how, you know, banks need to deploy it much, you know, much in a much more strong manner. You were working on a really popular story, I think, got quite a number hits, which is on, you know, the four most common API attack vulnerabilities. Maybe you could tell us a little bit about that.Loraine Lawson Yeah. So that's kind of new. I mean, it's not necessarily a new attack mode, but it's a growing attack mode. And all the experts I've talked to have said, it's something that companies do need to be concerned about. We've covered APS pretty extensively, talking about how they can be used as integration tools. But now we have to talk about them as security vulnerabilities. So what makes them particularly API's particularly vulnerable to attacks? So an API is just as discrete like to say, a gateway, but it's an automated way to share data between applications and to call functions, which is how programmers would talk about basically getting something to happen, right? So whether that's web applications, it can be apps, mobile apps, it can be Internet of Things devices. So basically, what happens when an API is compromised, is you you have a data breach, according to Gartner's Mark O'Neill. But you don't just have a data breach potentially you have a hacker that has access to your backdoor systems, your backdoor into your systems. That's what if five researcher their big security firm Sander, Vinberg told me that hackers like to operate in that space and an API can give them a backdoor right into it.Myra Thomas So how can a banks address, you know, these vulnerabilities API vulnerabilities? Loraine Lawson Well, there's a lot that needs to be done on the development side. It's not, it's important not just to leave this up to developers. And that's why if you're developing API's, you need to add security folks to that team to sort of act as check and balance. But Gartner recommends that you secure APS from three sides. And they talked about three specific technologies that will address this stuff. The first is API production, which includes validating threat detection, traffic throttling, seeing if they could use attack signatures, just basically filling out the API to see if it's secure. And you can use API management tools and specialized API security platforms for that. But then there's also the security testing, and identifying potential flaws. And again, that can be an APS security testing tool or specialist security platform. And finally, there's access control looking at how whether or not it's secure and how it's access. So technologies for this include API Management, access management, software and identity as a service. So sort of a three prong attack if you're in the business of making API. Myra Thomas Okay, so what can you do? What can a bank do? You know, if the the API's they're using, that they did not build, to make sure that they're safe? Loraine Lawson Yeah, I definitely asked that question. In fact, I reached out to Kendall Reese, the chief information security officer and senior vice president Simmons bank about that. And actually next week, we're talking about that his story on API hardening. I spoke with him and other experts, and he shared with me specifically what his team does to ensure APS are secure. So I'll let our readers tune into that next week. Myra Thomas I believe you also had a chance to speak to someone from the Armed Forces bank. I'm not Loraine Lawson Yes, yes, I got to speak to two people from Armed Forces bank on Armed Forces bank and we did a podcast and talked about all the work they're doing to automate for their members. You know, they have a unique challenge, in that their members are very scattered throughout the world, something more banks are starting to deal with as they try to reach out beyond just physical locations. So they're already a very digital bank, and they shared some of their lessons learned. Myra Thomas Well, I had a chance to sit down with Jimmy Lenz who's the director of the mash masters of engineering and financial technology, and Master of Engineering and cybersecurity quite a long title at Duke University's Pratt School of Engineering, as well as last year as masters of engineering programming, FinTech and cybersecurity. He said, The school is working on a partnership with the FDIC. So the FDIC, you know, has a new innovation Chief, which we had the chance to interview a few weeks back. And Duke is actually working with the FDIC, trying to figure out how to update their technology and automation. So really their innovation, but also the FDIC is looking to spearhead innovation across banking in the US. So that'll be interesting to see what's coming there. Well, that seems like a good place to stop. I want to thank everyone for joining us for the weekly wrap on the Buzz. And thanks once again. For more podcast content, make sure to check out Bank Automation News.com and search the Buzz from from Bank Automation News on iTunes and Spotify.

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APIs pose a security risk, Gartner says

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FTX Trading closes $900M series B fundraise

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