As FinTech Connect Europe returned for its tenth year, The Fintech Times explores some of the biggest trends and discussion points across the industry, as fintechs gear up for 2024.
Back at the ExCeL Centre in London for another year, FinTech Connect welcomed fintech giants, startups and experts across a large networking space and several stages.
The buzz surrounding artificial intelligence (AI) has grown exponentially throughout 2022 and 2023, and the early signs are that this trend will continue into next year. Richard Jones, head of investment risk analysis and senior expert risk manager at AXA Investment Managers, kicked things off on the ‘Digital Innovation & Gen AI’ stage, as he welcomed three panellists to discuss how generative AI can be embedded into financial institutions to provide optimal operational support.
Jehangir Byramji, emerging technology innovation lead at Lloyds Banking Group, explained his prediction of which direction he believes AI technology is headed: “What we’ve seen in the last ten or so years is a move to machine learning, which means that AI has become more statistically based. With generative AI, we’ve gone one step further.”
Alexey Gabsatarov, CTO of Kroo Bank, also said: “We, as an industry, are all tackling the growing problem of fraud and financial crime in general. Banks have been applying all sorts of advanced analytics, including various types of machine learning, to respond to these types of challenges.
Phil Starret, CTO at Adobe, explained his view of the evolution of the banking sector, and how AI is driving this: “In my experience in banking, is that banks have always had the data, but have never really known what to do with it. So you’ve got to drive towards the outcomes that you want to achieve, understand the use cases and then progress.
“I think we’re moving beyond what I would call analytics on past behaviours, and moving more towards real-time in terms of identifying patterns of what’s actually happening to try and then predict.”
AI, AI, AI
AI continued to be an important topic throughout day one of FinTech Connect, with another panel exploring how AI could impact the consumer. Jeremy Takle, co-founder and CEO of Pennyworth, revealed which consumer-facing area of AI could receive the most innovation in the short term: “It feels like we are finally at a stage where we can use the automation and brute force what’s available through AI to start opening up very interesting areas of holistic financial management.
“We’ve applied AI very narrowly in banking historically, to solve very specific process issues – whether that’s customer targeting or fraud management or complaints. Now we have the ability to apply it to much greater data sets, including open banking data sets to provide a more holistic view of the customer.”
Lukas Jakubonis, chief business development officer at the Bank of Lithuania, added: “When it comes to AI, finance is still lagging behind. What we had in the late 2000s to 2010 are the same services we are using right now.”
Speaking on how banks and other financial institutions can track the effectiveness of customer-facing AI solutions, Ankit Jain, senior director of technology at Accolite Digital, said: “Before we invest even a penny, we need to decide what success actually looks like. We cannot start an AI project or investment if it’s not clearly positively impacting the top line and or bottom line, as well as risk reduction and regulatory compliance.
“Some of the KPIs we can think about in terms of automation is: what is the cost optimisation? Am I decommissioning some applications? Will it enable me to reduce some risks? It’s not a technological problem – it’s all about change management”.
The elephant in the room? Addressing AI challenges
Adam Davis, associate partner of Bain & Company, took to the stage next to discuss the technology gap between incumbent and challenger banks.
During this session, Jason Maude, head of technology and advocacy at Starling Bank, continued the theme centred around AI: “Generative AI and machine learning in general is indeed a fabulous technology. However, you can’t build them out of nothing. You need data to train and you need data to test. You need to have that background data to create something worthwhile.
“We’re only really now starting to go in on AI and machine learning because we have now built up the set of data that we need from a sufficiently large account base. I worry that, on the one hand, you’ve got startups, which have the expertise and the right culture, but they don’t actually have the required data.
“And then, on the other hand, you have the big banks that have the money to invest, but how are they going to hook up their wide range of databases contained in different systems to their new AI systems? There’s a lot of cleaning that has to be done to make sure you don’t have the same customer three or four different times with different addresses or details.”
Maude also explained how the challenger bank views competition from the incumbents: “I’d be worried when a larger releases a feature that we don’t have in a product set that we offer. At the moment, it seems like a lot of copy – they release one feature and we release five; which they then have to copy.”
Taking advantage of a niche
‘Making money global’ was the theme on the ‘PayTech’ stage in the morning as Joao Pinho, head of UK high growth tech sales, executive director at J.P. Morgan, was joined by Steve Naudé, managing director of Wise Platform, to discuss their growth journey over time.
Naudé advised startups to take advantage of specific niches before trying to take on everything in the financial space: “The reality is that there’s no provider in the world that is the best at every type of payment, in every country of every size, every time. There’s just too much there and so many different types of transactions. We just try to be the best at the stuff that we focus on and maybe that focus will grow or shift over time.”
Pinho also chipped in and explained that, while the fintech ecosystem is very developed, plenty of space still exists for new ideas: “My view is very simplistic. I believe the ecosystem, as it is today, is rich enough and has enough space for any player that really wants to do something unique in the marketplace.”
“People forget how big the payments industry is and how many niches there are within that,” agreed Naudé.
Will the future contain CBDCs?
CBDCs emerged as next on the agenda as Lily Russel-Jones, senior money reporter at The Times, asked some probing questions to Nicole Sandler, head of digital policy at Barclays, about how the bank was exploring the use of digital currencies.
When asked about whether CBDC design proposals go far enough to mitigate potential stability risks, Sandler explained that, if it were to launch in the UK, it would continue to evolve and change – even after it launches: “I think we have to think about where we are now; where we’ll be when CBDCs are launched, which could be four, five or six years; and where we might be in 10 to 15 years time. How a CBDC will look in the beginning is not how it’s going to look in the end. Money evolves – so we have to evolve with it.”
