Transaction: Bankwell taps Kobalt Labs for AI-driven compliance management

Bankwell will use fintech Kobalt Labs’ AI-driven solution to improve compliance operations. The $3.2 billion bank had previously implemented AI in functions including SMB lending operations and data analytics, but hadn’t applied it to risk and compliance, Ryan Hildebrand , executive vice president and chief innovation officer for Bankwell, told FinAi News. To begin that process, the bank selected Kobalt Labs, Hildebrand said. The fintech has more than 50 banking clients, proving to Bankwell that Kobalt’s services are specifically built for the financial services industry. [caption id="attachment_57383933" align="alignright" width="387"] Ashi Agrawal, CTO. Kobalt Labs [/caption] Other Kobalt Labs banking clients include Celtic Bank, Meriwest Credit Union and TAB Bank , Kobalt Labs Chief Technology Officer Ashi Agrawal said at the FinAi Banking Summit this month. Implementing the tech Since Kobalt’s solution started early-phase testing, Bankwell has seen meaningful improvements in compliance operations efficiency, he said. The solution scans through existing and new regulations and gives Bankwell’s compliance team a summary about how their existing systems are exposed to risks. Bankwell launched Kobalt’s services on March 17, according to Kobalt Labs' release. The bank spent less than a month onboarding and testing, Agrawal said. “Kobalt has enabled our existing compliance staff to take be more proactive. They have reduced time-consuming manual research, which allows them to focus on higher-value work,” Hildebrand said. “From a return-on-investment standpoint, we are seeing approximately a 2X return, and we are still in the early stages of realizing the platform's full potential.” New Canaan, Conn.-based Bankwell might expand Kobalt’s services to vendor management, where the tool can scan all of the bank’s vendors to check compliance, Hildebrand said. “Bankwell currently manages approximately 300 vendors,” he said. “Kobalt's focus for us right now is on regulatory coverage and compliance reporting, with third-party risk management being an area we are actively exploring for future use.” By adding Kobalt, FIs reduce vendor and fintech partner onboarding time by 60% to 70% on average, with processes that previously took months now taking days or weeks, Kobalt’s CTO Agrawal, told FinAi News . Other applications of AI Bankwell uses AI across several areas, Hildebrand said. “On the small business side, we have piloted [lending solution service provider] Casca for lending workflows,” he said. “We have also made a meaningful investment in business intelligence, through [capital market tech provider] Crux , which is benefiting our retail team and the relationships they build and manage.” The bank also uses Microsoft Copilot, which is built on leading large language models, as a core part of its AI ecosystem, Hildebrand said. “We view the question of cloud provider versus fintech as a both/and rather than either/or,” he said. Established cloud platforms such as Microsoft offer reliability, scale and proven infrastructure, Hildebrand said, adding that fintech partners like Kobalt bring cutting-edge, domain-specific solutions built precisely for banking. On the data infrastructure side, the bank is rolling out a comprehensive data strategy to ensure that it has the clean, quality data foundation necessary to accelerate AI adoption across the organization, he said. “Workflow automation across operations remains a top priority for the year ahead,” he said. Register h e r e for the upcoming FinAi Lending Summit, set for Oct. 7-8 in Las Vega s.

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