JJ Hornblass 00:01
Hi, everyone. I’m JJ Hornblass and welcome to FinTech unfiltered from Bank innovation, the nation’s leading new service on banking and FinTech. This is our weekly wrap on what’s happening in banking innovation before beginning I want to thank bank innovation advertisers, snowflake, phi serve MX and unqork for their support, and I am pleased to be joined today by Bianca Chen and Garrett right from the bank innovation team. Hello to both of you. It is Friday, January 15 2021. Of course, in the news this week with the news this week was marked by the second vote for impeachment of President Trump by the House of Representatives following last week’s violent insurrection and raid on the Capitol by his loyalists. President Elect Joe Biden has unveiled a massive new COVID-19 stimulus and relief package, which would likely add 14 $100 to the $600 of direct payments that Congress has already approved, total spending for that package would reach $1.9 trillion. Earning season officially kicks off today, and analysts are expecting widely varied results among publicly traded companies. This week, Toyota agreed to pay $180 million for violating the Clean Air Act. It is the largest such penalty ever levied by the federal government. And finally, Stephen Thomas of San Francisco, says he has made peace with forgetting his Bitcoin password that would have turned him into a multi millionaire. Thomas has about 200 and million $220 million worth of Bitcoin, locked away on a hard drive that will erase its data after 10 password attempts. Thomas has tried to put in the correct password eight times. With no luck, the programmer lost the piece of paper containing the password. After this, Thomas said and I quote, it was actually a really big milestone in my life. It wasn’t going to be about how much money I have in my bank account. Speaking of bank accounts, this week saw massive funding rounds for several fintechs that put significant amounts of money into their bank accounts. Let’s start with row and talk about them. There’s also blenden Amex, which announced huge rounds. Garrett, do you want to talk about the row? The row investment first?Garret Reich 03:22
Yeah, for sure. So rows a slightly smaller investment than the other two data with us it was 15 million still substantial. They’re kind of going to put that money into their new ape like the new AP software, which kind of builds on their on the business banking software. And so it’s really about trying to funnel these accounts payable solutions. Even though we’re finding that only about 15% are like a company’s like nationwide, like 15% of financial institutions are actually using completely digital invoice software’s. So it’s interesting how we’re seeing these like influx of like, really opportunities available for these financial institutions. But we’re always really trying to push that in and kind of build on the software that they already have in place to really help these financial institutions to grow their their digital invoice platform. It is necessary in today’s industry, because it can save anywhere from like 25 to 25% is what they found, they can save anywhere from like 80% of time just by having all these things digitized, instead of you know, going through, you know, the traditional processes. So I spoke to Erica Bowman at at a group and she was actually able to kind of provide some context around this she said that it is going to be really imperative because it is such a time saver. But it might also be difficult to get in the door with things just because they are used to these traditional processes. their employees are used to those traditional processes, and they might not be quite ready for that upgrade, even though it’s a huge time and money saver.JJ Hornblass 04:56
I mean, they wouldn’t you would think Gareth dad at some point in time The not really not too distant future, an AP will become, you know, absolutely completely digitized there is real, unless there’s a wild exception. I don’t even understand why there’s any need for human intervention whatsoever. I mean, is that a fair? What’s your thought on it?Garret Reich 05:24
No, for sure, cuz I mean, a lot of this is very redundant processes, I mean, we’re seeing the same thing over and over again, it’s, it functions the exact same way from, you know, invoice to invoice. So it would just make sense to have it digitize because you’re really saving so many resources, from a financial institution standpoint, and just making sure that, you know, all the processes also stay the same, to just make sure that it’s a consistent, you know, consistent space. And so I definitely think it should be 100% digitized. And that’s really, that’s, that’s the short term goal. It’s not even a long term goal anymore. It’s a short term goal to have it 100 100% digitized.JJ Hornblass 06:02
So did they express a long term goal?Garret Reich 06:07
Not really, they’re really just trying to focus on getting the software out to consumers, and then really trying to get them interested in it too. Like, that’s, that’s really the biggest thing that they’re trying to focus on is just getting it in the, in the doors of the banks, making sure that they’re using them. And then I’m sure they’ll kind of focus more on the long term goals, but they’re really just wanting to get this, you know, just get the project out, you know, get the funding through the door, and then work on long term goals from there.JJ Hornblass 06:33
What about the other major funding rounds this

Garret Reich 06:36
this week? Yeah, so we had a head MX and blend, they both had $300 million investments, which is, it’s a lot of money for a FinTech, that’s wanting to grow and establish your platforms. That’s actually where I spent the majority of my week was, which was with these two and kind of figuring out how to structure structure and article around these two. So I spoke to Brandon do it at MX, who kind of spoke to the theme of data. And this is something that I’m seeing a lot in a lot of my reporting is that these fintechs are really focusing on data and optimizing it because you can’t push technology and, you know, to just straight technology, you really need to make sure that it’s, it’s relevant to the financial institution, it’s relevant to the consumer, because otherwise, they’re less likely to really want to integrate it if it doesn’t have some sort of purpose. So that’s what they’re kind of trying to focus on is data and trying to optimize that data. Do it was saying, you know, there’s a, there’s some significant problems with data structuring, and really making sure that it’s optimized around the financial institution. He also talked about some cool technology that’s kind of coming out, and something that he saw, kind of growing, and it was this idea of like, it’s like small technologies, so something as easy as like a social security number, infrastructure. So the bot goes through, and it’s able to recognize, you know, all of us know, our social security numbers by heart. But the last four are significantly. I don’t know, I just know, I know, the last four, just off top my head without a problem. Whereas the first five, it’s usually to kind of process so the body is able to go through and recognize, okay, if the number is being typed in at the same speed all the way through that it’s more likely to be, it’s more likely to be fraud, it’s more likely to be some sort of bots that’s processing it. versus if someone’s slowly typing the first five, and then quickly typing the last four, it’s more likely to be human. So he was kind of touching on tech like that, that they find really interesting. And then blend was often

JJ Hornblass 08:36
that would be that would be on the authentication that would have authentication applications or security or both.

Garret Reich 08:42
So it’s really a little bit of both, they’re trying to kind of focus on both because especially with, you know, this open banking system, and you know, moving away from brick and mortar locations. If everything is done online, if everything’s done, virtually, they need to make sure that, that everything is secure that everything is, is really, there’s just really mitigating the fraud element.

JJ Hornblass 09:06
Bianca, do we see something else? Where was sort of a keypad related key related security? What was that though?

Bianca Chan 09:14
I mean, we’re seeing big trends around behavioral biometrics. And analytics makes sense that MX is kind of playing in this space, they work with huge financial institutions, ally, BBVA BCU, Robin Hood, and they really play in the the fraud mitigation loan approval space. So it makes sense what Garrett saying in terms of the security aspect, and sort of, I guess, trying to automate any anomalies in in the behavior that, you know, we can regularly expect from consumers.

JJ Hornblass 09:48
I mean, it’s interesting because we there was this, you know, notion not that long ago, a couple of years ago that that voice would predominate rather than taxed But if you’re building in the security and authentication around tax, essentially, then, you know, maybe that has maybe that has maybe maybe voice won’t necessarily become as prominent from from a authentication security standpoint.

10:19
Well, the way it

Bianca Chan 10:21
is how often you like talk bank, like a bank action, or or do you, you know, verbally request a bank transaction versus when you go online on your mobile app, and you’re typing in, you know, your password you’re typing in, yes, I’d like to send this money to this person. So I just, I guess, my nature of how people bank today, it makes sense that Texas kind of accelerating faster than than voice would be?

JJ Hornblass 10:48
Yeah. I also thought that I know, I’ve long thought that, from that voice from a security and privacy standpoint was a little more problematic than text. But you know, this now, you know, what garraway, you’re saying? It seems like he’s really leaning towards, or at least within the, you know, within the confines of overall security and authentication to maintain that kind of tax driven? initiative? What about a blend Garrett?

Garret Reich 11:23
So we’re kind of blend in once again, they’re also very data driven, you know, like they added 200 plus employees to their roster, you know, that they’re growing quite a bit. And instead of focusing specifically on automation, they are both companies are really trying to funnel this idea of data, which is, it’s really a growing trend that we’re seeing. And it’s it’s, it’s a good trend that we’re seeing too, you know, that these companies are focusing on intelligent data. And really making sure that the processes and the AI behind it has the right data to really feel the system itself. That’s what really they’re focusing on. He kind of touched on the fact that they’re looking into integrating software’s like OCR is the optical character recognization to kind of digitized signatures and make sure that you’re, you’re kind of expediting that process as well.

JJ Hornblass 12:12
Right? Well, because they’re very focused on the lending process, where documentation is kind of the big, the big hindrance to digitization, I think,

Garret Reich 12:21
yeah, of course. And if it really is, if you can move signatures and a lot of those stubborn processes, you know, that are typically done in person. What you know, with pen and paper, it’s, if you’re able to automate that it’s a complete game changer. Yeah, there’s so much time in the long run.

JJ Hornblass 12:41
So blend MX row, you know, how do how do their initiatives sync with what Matt carbonara from Citi ventures told you this week.

Garret Reich 12:53
So he, he actually got pretty techie with us today. Or last week, he kind of touched on, you know, ICS, and csps, which were new terms, to me, kind of building the infrastructure from, once again, I know this is getting repetitive, but it’s building from the data. So the csps are actually we’ll start with the ICS. It’s infrastructure as coding. So it’s building the, like building the infrastructure from a code base standpoint. And then the csps are the cloud security, posture management to make sure that everything is secure, make sure that everything is is really consistent, once again. And so he’s also pushing this idea of banking at the edge too, which is staying innovative, but staying relevant. So making sure that everything that you’re pushing, just like we were talking about before is relevant to the customer. And then how do we weave those into the banking processes. He also he

JJ Hornblass 13:52
runs and he runs Citi ventures, for which is the venture capital arm of Citi group. So interesting to hear what he has, has to say conversational AI and chatbots. What’s an update that we have from that side of the technology coin? Yeah, so

Bianca Chan 14:18
quick updates for me. In my reporting this week, we spoke to temenos, which, of course, is a major software banking software provider based in Geneva. And they have some news around their engage platform, which is of course, the same technology that underpins America’s go to app which we’ve covered extensively. But the interesting thing here is the engage the whole tech stack is built on this idea of achieving this, you know, human digital balance that we always talk about. And so, the premise is, you can connect your consumers or your business banking customers with a bank. Through this chat messaging app similar, similarly matched, like, I guess, like a dating app, you could say, but basically, the consumers can choose the bank or based on like, their profile, their interests, their areas of expertise, the location, and then they can message with a real with a real bank or a real human.

JJ Hornblass 15:20
So don’t tell me there’s a swipe right swipe left dynamic.

Bianca Chan 15:24
There is not in this app.

JJ Hornblass 15:27
To know,

Bianca Chan 15:28
yeah, yeah. But they’re, they’re eyeing automated messaging to incorporate this year, which I thought was kind of interesting, because that, that seems to mark some sense of a pivot away from, you know, oh, here’s a human banker that you get to talk to through a digital interface. Now we’re introducing automated messaging, it seems a little bit counterintuitive, based on the whole kind of mission of what the engage platform is built for the same kind of trends, I guess, in wealth management, where you could make the same argument where the human relationship is super important in understanding you know, people’s goals, the complexity of banking, transactions, and relationships. And so you’re seeing this move to more self service tools. It should definitely help scalability wise. Now you don’t have to have you know, a banker who could be speaking about, I don’t know, more complex, like savings goal, let’s say versus, hey, you know, can you help me get it? Can you help me change my password? Let’s say, that’s pretty interesting.

JJ Hornblass 16:32
And I could see sto

Bianca Chan 16:34
Yeah, so um, because Cisco, which, you know, powers chat bots, for some of the largest banks in the country like JPMorgan Chase, TD, Standard Chartered. So they are a partner with NCR, which works with smaller financial institutions and credit unions and regional banks. And the whole idea here is to like, democratize, chatbot technology. And so of course, with every single answer that a chat bot, you know, spins up for a consumer is attached to some back end, like intent to understand what the customer wants. And so they’ve added a new tool that will be a free add on to ncrs customers that essentially creates a database that pulls together conversational data from multiple different institutions. So it’ll help identify trending questions, and then more quickly spin up those chat bot answers. So cuz Cisco, their AI is specifically embedded in the financial services space. So when there were a lot of questions popping up about like ATM cleaning, or like COVID, or the pandemic, it’s tool, which has been used in house by ecosystem for the past 18 months, and is now going to be rolled out further, essentially, is able to identify those outliers outside of you know, traditional financial talk and, and quickly spin up answers. So it’s this whole idea of democratizing chatbot today,

JJ Hornblass 18:03
but they have to filter that those answers and data for the institution, right, because some things are very specific. So that in and of itself, is must be quite the effort to kind of filter between data that is empirically usable, versus the that that is more, you know, too specific to share.

Bianca Chan 18:28
Yeah, well, that’s back to Garrett’s points about, you know, cleanse data, structured data, and especially with conversational AI and natural language processing, that is so important. And that should help mitigate some of the time spent on filtering out and parsing out, you know, which which pieces of data go where, essentially, but it is an interesting kind of dynamic, because it it’s not the data is just not as structured as let’s say, like a loan application where you have fields that are filled in, it varies by person to person, how they kind of how they Converse. So it’s it’s interesting, but data is definitely the key there.

JJ Hornblass 19:12
Yeah. Okay. Well, what next week, we have a busy week ahead of us. Do you want to give at least a little bit of a preview?

Bianca Chan 19:25
Yeah, sure. So, um, we will, of course, be continuing our coverage around the automation space and have some exciting updates to come.

JJ Hornblass 19:38
Yes, state. Maybe everyone wants to check out the site on Tuesday. In the meantime, Garrett and Bianca, thank you so much. And thank you all so much for joining us. As of course, we encourage you to rate the podcast on your podcast platform of choice, and follow us on Twitter and LinkedIn. And thanks so much for for being with us. We’ll see you next time.