Loraine Lawson
Hi, everyone, I’m Deputy Editor Loraine Lawson and welcome to the Buzz from Bank Automation News, where we explore how automation and emerging technology is transforming the banking industry. This is our weekly wrap for what’s happening in the industry this week. And before beginning I’d like to give a big thanks to BAN sponsors and advertisers, Glia, and Volante. Thank you for your support. I’m pleased to be joined by Associate Editor Aaron Marsh and I would like to introduce our new associate editor, Alijah Poindexter. Alijah is also the editor-in-chief and co-founder of WG M O network, a web startup with a focus on creative sports writing. Welcome, Alijah.Alijah Poindexter
Hello, hello. Thank you so much for the kind introduction, Lorraine, and, you know, you guys have made it such a seamless transition over the past, you know, kind of hectic holiday weeks, but uh, I came in at a good time. We had a good week of Canadian earnings that came out this week, and there’s certainly a lot to talk about. So thank you and hello, everybody out there.Loraine Lawson
Yes, and if you’re listening, it is December 3 2021. And sort of here are the biggest news items from our editorial team. This past week, Goldman Sachs launched an Amazon-backed financial cloud service. The big six Canadian banks did have earnings. Their earnings report this week, as you mentioned with several technology revolutions coming out of that revelation sorry, US Securities and Exchange Commissioner chairman, Gary Gensler says cryptocurrency as an asset class wants survivalist properly regulated. So let’s look briefly at the Goldman Sachs news. On Tuesday, Goldman Sachs announced its partnering with Amazon Web Services, this was coming out of their reignite conference with Amazon Web Services for the me a slew of announcements. But this is a cloud based solution that will help financial services firms gain insight into data analytics for investment decisions. And it’s really a data and analytics tool for financial institutions. Hence, hedge funds and asset managers, clients will also get access to some of Goldman Sachs created data and AWS computing power. So we covered that. So there are two things going on here that I think are interesting and probably going to be big trends in financial services in general. First is Goldman Sachs has really done this using micro services, which are, you know, small, breaking down functions in finance, and making them available to others through the web. John, I spoke with John Kain AWS as head of worldwide business & market development efforts for banking and capital markets. And he said, he is definitely a trend he’s seeing with financial institutions to sort of break down those functions. And also to be able to build apps, you apps with these micro services. So for instance, you no longer have to make your own KYC solution, there’s probably a micro surface out there that you can tap into with an API. Another trend that I think this reflects is that more enterprises in general are spending on infrastructure as a service. Gartner has reported that it grew by 35%, reaching 130 billion while spending on software and hardware philebus 6% 219 Billions. So this is a huge shift for organizations, I think that banks will be getting into this. Gartner predicts that by 2024 45% of technologies it span will shift from internal servers and other infrastructure to cloud services. I think Amazon is going to get a huge piece of that, although, of course, there are other players like Google and Microsoft, Microsoft, sir. Any thoughts on that guy’sAaron Marsh
Loraine? You know, I’ll jump in on that too, because we’ve got something coming up in in sort of a similar thread. There’s a study that, that that I’m going to explore a little bit next week. And we’ve got a number of parties to weigh in on this that sort of give you a spoiler alert looks at at multi cloud networking, and how organizations of a certain size I think it’s we’re looking at, like 1000 or more employees. So that’s sort of a fairly sizable organization, that and this includes banks and financial institutions that right now within the next two years, there’s there’s a very sizable percentage, they’re looking at moving to multi cloud networking situations, maybe they you know, they have a cloud provider of cloud based provider for this solution, we have another one. And we’re bringing in these multiple cloud multi cloud situations. But what’s interesting is that that’s within the next two years, but then after that, so we move beyond that it goes dramatically upward. So it goes from about maybe like, you know, 47%, half, or 50% of these entities are looking to move to a multi cloud networking situation. It goes to like nine out of 10 and as you as you move toward such an implementation, There are sort of a number of things that can go wrong. So we’re gonna be taking a look at that, and and looking at, you know, the opportunities there and some of the challenges they’re in. So we’re gonna take an additional Look at that. So wait for that one.

Loraine Lawson
It is interesting. Another thing John Kain mentioned, was that a sort of pressured him on this, like, is it just large banks that are doing this? And he said, you know, they definitely see fintechs small startups using their services as well. So I don’t think it’s going to be restricted to just those large organizations. So though I do wonder about community and sort of regional banks, where they will stand with this is, like you said, they might be smaller in size, and maybe the payoff isn’t as great or maybe there’s a hesitation to move things to the cloud. I think multi tenant cloud makes sense for a lot of companies. But that does sort of involve a private cloud, typically. So then there’s additional costs. But that, of course, there’s also the question in my mind, and it’ll be interesting to see how this plays out with like how much you want to depend on these big technology players, because sometimes they do pull the rug on offerings. Now, I don’t think they’ll do that with infrastructure. That’s too big a play for them. But with microservices, you know, there was there was some banks that got burned when Google shut down, it’s a Google Pay. Because they had built out solutions on that or started to and Google shut it down. Because somebody left the organization, so should be interesting. This was a big week for Canadian earning calls with all big six financial institutions reporting, technology played a significant role in many of those calls. What did we learn Elijah, you covered the National Bank of Canada, what did you see happening there?

Alijah Poindexter
Yeah, so National Bank of Canada, they had their q4 and year end earnings call back on Wednesday. And it was a super strong, I mean, there’s no way around it, it was very strong q4, for National Bank of Canada and a pretty solid year, you know, your overall. But where I think the greatest, you know, point of interest is for NBC at this point, is their sort of their FinTech angle. Just recently, back in September, National Bank of Canada acquired flinx. And for those of you who do not know, flinx is a FinTech, you know, financial data aggregator, based in Canada, so they have all sorts of financial data, they are linked to over 250 fintechs in the US and Canadian markets. So this is extremely big. And, you know, sort of the, the Jive on this, the spin on this is that it’ll give NBC a key, you know, a key reach into the open banking market. And open banking, you know, according to the people in the call from National Bank of Canada is very much still in its infancy in Canada. And it’s still very much in its infancy worldwide. But this, you know, this is kind of their first stake into that market. This will allow, you know, internal and external developers alike, to go in there and access API’s, create tools, create apps, create all that good stuff. And it’ll sort of make financial data accessible in a secure digital environment. So this, it’s very big. And I think National Bank of Canada, you know, on the financial side, they they’re, you know, they’re at a pretty good point right now. But when it comes to the tech side, as well, the banking automation side, they certainly are looking good from that perspective. And it’ll be interesting to see what they do in 2022.

Loraine Lawson
Yeah, again, with the micro services and building out new products and offerings. Interesting play airing you covered, I believe, TD Bank, and the Royal Bank of Canada, they always do interesting things with technology, what did you learn?

Aaron Marsh
Yeah, well, I’m gonna get to, we’re still still on the way to TD Bank. So look for that to come. But the but RBC had had their their call as well. And, you know, once again, it looked like a solid quarter for them. One of the things that I sort of noticed as the year over year, you know, fourth quarter 2021, and looking at 2020, revenues increased in the low double digits, something like I think, like 10.7%, but like, 10 to 11%. So revenue was up 10 to 11%. But they kept more of it. Because, you know, net income ended up increasing almost 20% was like 19.9%. So there’s some efficiencies going on there. And that was, you know, that seems like part of their strategy, you know, that we, that we heard several times, is that they’re going to they expect, you know, it spend two to increase, and they’re looking to drive efficiencies and productivity gains. But they’re also looking to, to to enhance that, that digital customer experience and sales capabilities. And one of the things that they have to kind of show for it, and this was a point that that I don’t think was was brought out that strongly and it’s it should be more of a focus. Now the tool is called my advisor. And it’s it’s like a digital platform, financial advisory tool. It’s free to RBC, you know, customers, they can, they can go and launch this and sort of just brings together all their accounts, again, savings account investment accounts, loans, and they get sort of a single view of that, and they can do some financial scenario planning and look at some, you know, look at savings and things like that, so is a financial advisor to and also allows them to connect to, you know, either do virtual, you know, video chats with financial advisors, or schedule, an in person meeting, and so on, that they launched that in, in 2017. And so it took them three years to kind of get to a critical mass, I had to go and dig around to find this information. But at this time, last year, they had had just tipped over 2 million users of that. So it took them like three, three years to get to that point to about 2 million. But then over the last year, they kind of spiked that up about 50%. Now they’ve now they’re almost at 3 million. So over this last year, they kind of you know, getting some traction and picking up a little momentum there. So they’re gonna, you know, it seems like some of these these investments and that focus on the digital experience and capabilities, it’s starting to starting to show and I think that’s, I think we’re gonna see that into the next year.

Loraine Lawson
Yeah, I would agree. I covered Scotiabank. CIBC, which is a Canadian Imperial Bank of Commerce. And then today, I heard from the Bank of Montreal, and very similar findings, that they all have a sort of personal advisory investment tools that they have rolled out maybe three years ago, maybe just last year, some of them and they’re starting to see returns on those and digital is increasing across the board for Canadian base, they report on that. So that was interesting to see digital engagement as up digital transactions, and not just transactions like think about but also doing deposits online. So that was definitely a strong technology trend that we saw. An interesting thing I’ve thought I never thought I would hear a bank actually say this out loud. But Scotia Bank CFO did say that their digital and automation efforts led to closing 10% of its branches, branches and a full time reduction staff. And part of the reason they admitted to that is because they had a $28 million restructuring charge related to that. So that was an interesting piece. Also see CBS CIBC outlined what they consider disintermediate just its intermediate risk technology trends, and how those relate to banks. And I thought it was interesting. You’re kind of seeing two reactions to crypto and blockchain and AI and, and it’s sort of falls into the, let’s see how we can leverage crypto. But they pointed out you know, this is a, this is a bit of a risk to vapes. It’s disruptive. And crypto could potentially take away opportunities for the vapes in terms of it provides a way for people to invest without going through a bank right now. So it’s really put that under the risk category, which I thought was interesting. And it’s all it I mean, it’s all the positive to pointed out that automation and artificial intelligence present both challenges and opportunities. And so the bank is investing in AI and talked about that a little bit. So, on a related note here in the US Securities and Exchange Commission Chairman Gary Gensler said that crypto is an asset class won’t survive unless it’s properly regulated. So was that surprised us? What’s a three action there, Aaron?

Aaron Marsh
Oh, yeah. No, that was that was an interesting setup, Lorraine, this was it the digital asset compliance and market integrity summit in New York on Thursday morning, I believe and what what is set up it was this discussion between, you know, current SEC chairman, Gary Gensler and former SEC chairman, Jay Clayton. And, you know, first of all, they obviously had some differing opinions on this. Whereas Jay Clayton was kind of like, Hey, this is this is promising technology, a lot could come of it, you know, maybe in the end, he seemed to have more of a, like a laissez faire, you know, hands off kind of an attitude at least that was my impression, whereas Gensler was not mincing any words, you know, very, very strangely said this is an investment asset class, and it should be regulated like an investment like a security and he seemed to to just be very clear that it meets that definition, and it needs that regulation. And that right now, this you know, what do you what do you refer to as a global $2.6 trillion market in cryptocurrency now? This is this is not have adequate oversight and what’s going to happen if we don’t do it. He said there’s you know, he referred to it as a, as a spill in aisle three. But, but you know what he in a later called that a financial stability event. So that’s a look sounds a little more serious when you put it that way. And he said that that could come at the, you know, at the act from the actions of either fraudsters or good actors in this space, you know, maybe somebody could just sort of slip up or mess up and that something was going to happen. And the result of this was going to be that investors face harm and trust in cryptocurrency would be undermined. And then once that trust, once you lose that, this is toast, you know, people are going to pull out of it. And you have sort of a house of cards here is that so you sort of painted it as, and this could This could well crumble. So I think it was probably some of the most straightforward remarks we’ve heard from from the chairman. And He’s usually not shy about his his views on this, but this was, this was a very straight conversation. But I think, you know, that said, That said, the setup itself, you can take something from it between Jay Clayton and Gary Gensler, and their differing views, what we’ve seen since we published that article, is, is some very mixed feedback where some people say, you know, what, I agree here, and sometimes that this is bad, you know, your hands off, it’s this, this, this market is survived and grown to its point now without your meddling, you know, sector, you know, that and so on. So it’s, there are some very, very polarized views in this space. And and it’s, it’s, it’s very interesting to watch now as this unfolds, and we’re going to, we’re going to continue to do that, I think, into the into the next week. Now, that’s

Loraine Lawson
kind of an age old political battle to I think, not to wax too much into politics. But when I heard from the OCC, previous director, or was the deputy director at money, 2020, he was very laissez faire as well. And I think, you know, that’s, like I said, an age old political battle of do we regulate or do we not? And how, how involved you want to be in a capitalist society and in these things, so definitely interesting to think about it through that lens as well. But here’s a look ahead at some of the stories we’re working on. We’ve discussed some of the stories. Aaron, do you want to talk a little bit about what you’re working on for next week?

Aaron Marsh
Yeah, I’ve got a bunch of things in the hopper to look for one of them will be we’ll be taking a look at at the use of AI or applications of AI for credit unions, and some of the opportunities there and the big challenges that they face, we’re gonna take a look at that. As well as wait for this one because it’s in the works. We’re looking at El Salvador’s Banco Banco Agricola. And their implementation of we’re talking about cryptocurrency This is them implementing, as by directed as directed by their laws, implementing Bitcoin as a payment in about three months time. So they had to look at that after this, this law came down and they had to now implement this, we, you know, sort of dissect that a little bit and look at what they put in place to make that make that happen.

Loraine Lawson
Ledger, what about you? What are you working on for next week or looking into?

Alijah Poindexter
Yeah, so just recently, I turned America group released a joint study with CPP O, which is Canada’s biggest sort of payment analysts group. And it just kind of delves into what are the trends in automated payments in 2021, moving forward into 2022. And I spoke with some really deep subject matter experts on that, and I’m going to have a super exciting article about that. IDC also released a study, just recently, this past November, going into advice for technology buyers, we’ll have something about that Thursday or Friday. And as well interact. Just recently, Canada’s largest payment processor recently sort of formed a partnership with Microsoft as a czar or is your and I always have trouble pronouncing that but that that partnership will certainly be lucrative for a lot of people. And it’s in, you know, that cloud capability, which is so, so important. As we move forward. We’ll certainly make the payment landscape up in the great white north. A little bit more interesting going into 2022. So a lot of cool stuff coming down the pipeline.

Loraine Lawson
Yeah, Canada’s really hitting it this this month. Interesting technology trends going on there. Thank you so much for joining us for the weekly wrap on the Buzz. Don’t forget to attend our Bank automation summit March 1 through 2 in Charlotte, North Carolina. You can learn more about that at Bankautomationsummit.com. For more podcast content, check out finainews.com and search the Buzz from Bank Automation News on iTunes and Spotify. Thank you