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For Banks to Compete With FinTechs, They Need to Act Like One

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Chief Reality Officer? CFOs Remain Source of Truth Amid Financial Uncertainty

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Visa Canada and Plug and Play Partner to Support FinTechs

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Canada Taps AI as Suspected Money Laundering Efforts Spike

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For Banks to Compete With FinTechs, They Need to Act Like One

The financial services landscape is an inherently customer-centric one.

Within it, the winds of change around customer behavior and expectations about their banking relationships and financial journeys have been blowing stronger than ever.

“Consumers have come to expect a lot of capabilities in the palm of their hand, 24/7, and a lot of what we’ve traditionally thought of as branch functions or back-office functions are being pushed there,” Vish Shastry, chief product officer at Banyan, told PYMNTS for the series “What’s Next in Payments: What is a Bank? The Changing Landscape of Banking and Financial Services.”

Gone are the days of rigid banking hours and branch-centric services, he added, noting that consumers expect a plethora of functionalities at their fingertips, from simple transactions like bill payments to more sophisticated features like card controls and peer-to-peer payments.

For businesses operating in retail — even grocery — that saw their operating models upended and transformed by the COVID-19 pandemic, this imperative around digital innovation is no surprise.

What is a surprise is that for retailers and grocers, consumer behaviors and preferences have returned to the in-person experience — while for banking, they have not.

“eCommerce reverting back to its pre-pandemic growth curve was surprising,” Shastry said. “I would have expected the convenience of delivery for new verticals like grocery, buy online and pick up in store, to have driven a lot more stickiness.”

“What has not been that surprising is the continued pace of change within banking,” he added. “… From a financial services perspective, people just really continue to value convenience.”

Digital Convenience Has Ushered in Relentless Innovation

Shastry pointed out that FinTech platforms like RobinhoodCash App and Venmo have disrupted the status quo, compelling banks to reimagine their offerings continually and challenging traditional players to keep pace with evolving consumer preferences.

At a foundational level, banks now finally have the information they need to drive the right recommendation to the right person at the right time.

“Banks are now using more data to drive recommendations to consumers,” Shastry noted, adding that Banyan is working to target customers. He emphasized that consumers want different things from banks depending on their customer type, and financial institutions need to apply design thinking principles to understand their customers.

“Data science can help financial institutions understand their customers’ behavior better,” he said.

Consumers’ growing affinity for convenience and personalized experiences has spurred financial institutions looking to compete or win share to double down on their digital transformation efforts, with more players across the landscape using technologies like artificial intelligence and machine learning to enhance customer engagement at scale.

By harnessing data analytics and AI-driven insights, banks can deliver targeted recommendations, optimize cross-selling opportunities, and foster deeper connections with their customers.

“If you’re a financial institution, you’ve got to embrace exactly what a lot of the FinTechs are doing, which is building frameworks and tools for experimentation,” Shastry explained.

The Quest for Personalized, Frictionless Banking Experiences

Consumers want their banks to help them understand and manage their financial health, and Shastry emphasized the role banks can play in proactively guiding customers toward sound financial decisions while treading cautiously to avoid intrusiveness.

Against the contemporary backdrop, transparency, trust and a nuanced understanding of customer preferences are linchpins for fostering a more productive lifetime value customer relationship.

The opportunity is in “marrying the data that merchants have about what you purchase with the data and platforms and reach that financial institutions have to be able to get the right product in hand with their customers,” he said.

Shastry also explored the burgeoning trend of FinTech collaborations and the rise of open banking initiatives. While acknowledging the potential of such partnerships in driving innovation, he emphasized the need for robust regulatory frameworks and due diligence to mitigate risks effectively.

Looking ahead, he said he sees a future where data-driven personalization transcends boundaries, seamlessly integrating with merchants’ insights to deliver tailored financial solutions.

Chief Reality Officer? CFOs Remain Source of Truth Amid Financial Uncertainty

With great change comes great opportunity. And as the business landscape undergoes a rapid transformation, it has brought with it a broader shift in the expectations placed upon financial executives.

Once seen primarily as experts in numbers and financial reporting, the modern chief financial officer (CFO) now plays a crucial role in shaping their company’s strategy and future direction, requiring them to be operational leaders and strategic partners to rest of the executive leadership team, the board and the business itself more broadly.

“The role of the CFOs has become a lot more operational. Today’s CFOs are a mix of COO — chief operating officer — and CRO – chief reality officer,” Vinay Bassi, CFO at TruBridge (formally known as CPSI), told PYMNTS for the “Day in the Life of a CFO” series.

One of the most significant drivers of change for the CFO role has been the rapid advancement of technology. Digital tools and data analytics have transformed how financial operations are managed, enabling CFOs to provide real-time insights and forecasts that are critical for strategic decision-making. The modern CFO must be tech-savvy, leveraging technology to optimize financial processes and drive efficiency.

“To put it in simple terms, 10 years back, CFOs were like air traffic controllers who could only see the planes that have already landed or were about to land. Now, as technology has evolved, CFOs are still like air traffic controllers but the visibility has rapidly transformed and you can track planes in the air along their entire journey,” Bassi said.

Still, despite the evolution of the CFO role, one constant remains — the CFO’s role as the custodian of truth in financial matters, he added, going on to highlight the CFO’s responsibility to translate the company’s progress and performance into tangible numbers, and the importance of providing a clear picture of both risk and opportunity to stakeholders.

Effectively Navigating Complexity in a Dynamic Business Landscape

As the business landscape evolves, CFOs must navigate through unprecedented levels of uncertainty and complexity, a backdrop increasingly requiring CFOs to possess a diverse skill set, including strategic thinking, leadership, and communication skills, as well as to effectively collaborate with other departments and influence the company’s direction.

As Bassi explained, this makes it crucial for CFOs to “spend a lot of timing learning the drivers of their business, and then simplifying them and communicating it back to the rest of the leadership team.”

“To give a football analogy, I always think about CFO as being the blind side of the CEO and the board,” he added, noting that the CFO is in a unique position to help protect the rest of the business from events and potential disruptions outside of their field of vision.

The complexities and uncertainties filling today’s landscape are only likely to compound further when it comes to the realities of tomorrow’s operating ecosystem.

“My advice for other CFOs, is after knowing the drivers of the business, try to segregate them into two parts: what is controllable and what is non-controllable? A non-controllable could be an event like another pandemic, but controllable could be, ‘Hey, if there is an interest rate decline, what do I do? If there is a recession, what is my plan A, B, and C?’” Bassi said.

“The fundamental piece is that you are going into war, or battle, with the army you have and not the army you might want. This means that building your team and focusing on your team is critical. Train your finance associates, give them exposure, and attract and retain talent,” he said.

It Has Never Been More Important for CFOs to Embrace Technology

The integration of digital solutions and automation has reshaped both the CFO’s day-to-day responsibilities and the potential impact they can have on their organization’s roadmap.

“Day-to-day, there is an unsatiable desire to have more technology … but it’s important to remember that garbage in means garbage out, and more data is meaningless if it’s not data you can use. There is lot of great technology available, but it needs to be designed to your specifications and the pace of adoption has to be there,” said Bassi, stressing the importance of conducting cost-benefit analyses and aligning technological investments with strategic objectives — particularly when it comes to innovations like artificial intelligence (AI).

“We just need to make sure we know how to use our technology to the benefit of our customers first, our shareholders, our employees,” he said.

Looking ahead to the coming years, Bassi envisions CFOs becoming even more technologically adept and globally minded. With increasing data availability and analytical tools at their disposal, CFOs will play a crucial role in driving informed decision-making and guiding the company through complex challenges. Speed of decision-making and flexibility will be key, he emphasized, as businesses adapt to changing market dynamics.

Visa Canada and Plug and Play Partner to Support FinTechs

Visa Canada will support the entrance of accelerator and venture capital (VC) firm Plug and Play into the Canadian FinTech market.

This collaboration will enable Canadian FinTechs to access Visa’s global network; join exclusive, interactive events; and connect with new partners, the companies said in a Monday (Jan. 22) press release.

“As a leader in digital payments, we work with FinTechs to shape the future of payments through strategic collaborations and product offerings that help push the boundaries of payment technology and user experiences,” Chris Ferron, head of digital partnerships and FinTech at Visa Canada, said in the release. “We look forward to working with Plug and Play to advance the mission of FinTechs and make money movement easy.”

Plug and Play connects startups, corporations, VC firms, universities and government agencies; offers corporate innovation programs; and organizes startup acceleration programs, according to the release. The organization is headquartered in Silicon Valley and operates from more than 50 locations on five continents.

Visa is a founding sponsor of the organization, the release said.

“Our joint efforts with Visa will amplify the impact of FinTech startups across the region in Canada,” Saeed Amidi, founder and CEO of Plug and Play, said in the release. “Together, we will showcase our dedication to fostering innovation and supporting the growth of groundbreaking ideas within the global entrepreneurial community.”

The alliance of Visa and Plug and Play in Canada builds on the organizations’ collaboration in the United States, per the release. In that collaboration, they launched an Inclusive Fintech Accelerator program, which was designed for diverse founders in the tech industry and provided participants with access to Visa products, application programming interfaces (APIs) and insights.

In another effort to promote startups, Visa’s Africa FinTech Accelerator said in June that it would help 40 startups per year expand via a program centered around business growth and mentoring. FinTech startups in Africa can apply for the program during two application periods each year.

In May, Visa selected seven startups for its 2023 Visa Accelerator Program in Asia-Pacific. The Visa Accelerator Program is now in its fourth year, with previous cohorts having been selected in 2021, 2022 and 2023. Applications for its 2024 cohort are open until March 8.

Canada Taps AI as Suspected Money Laundering Efforts Spike

Canada is reportedly upping its use of artificial intelligence (AI) to combat money laundering.

Donna Achimov, deputy director of the country’s Financial Transactions and Reports Analysis Centre (FINTRAC) told Reuters Monday (Jan. 8) that AI helps the agency analyze data and spot suspicious transactions.

The efforts are happening as Canada is dealing with a spike in such transactions, of which there were 560,858 for the 2022-2023 financial year, almost five times the amount reported during the 2015-2016 financial year, Reuters said. 

The report also noted that roughly three-quarters of suspicious transactions recorded between April and September 2023 were reported by financial institutions (FIs). Against this backdrop, FINTRAC has “significantly” increased the frequency of meetings with banks, Reuters said.

FINTRAC’s efforts echo what is happening with FIs in the United States, PYMNTS wrote Monday, as 43% of American FIs logged an increase in fraud in 2023 compared to 2022. 

In addition, FIs with assets of $5 billion or more saw the average cost of fraud rise by 65% between 2022 and 2023, from $2.3 million to $3.8 million, according to joint research by PYMNTS Intelligence and Hawk AI.

In all, more than 40% of banks in the U.S. saw an increase in fraud during the same period, leading to a surge in major fraudulent transactions and financial losses.

“To combat the growing threat of fraud, FIs are taking proactive measures to enhance their fraud-fighting efforts,” PYMNTS wrote. “These include ramping up their investments in machine learning (ML) and AI technologies, recognized as cutting-edge tools in curbing fraudulent transactions. Currently, 66% of FIs with assets of $5 billion or more are utilizing ML and AI technologies to combat fraud, a significant increase from 34% in 2022.”

The research also found that the embrace of AI as a crime-fighting tool depended on the size of the bank. While just 44% of FIs in the $1 billion to $5 billion asset range rely on the technology to combat fraud, the share climbs to 97% among those with more $100 billion in assets.

And AI integrations — and AI models’ ability to continually learn from new data and contexts — can also help make sure that the balance between security and convenience doesn’t move too far in one direction, Hawk AI CEO Tobias Schweiger told PYMNTS in September.

“A tool like Hawk AI that’s capable of combining things like sanction screening and anti-money laundering transaction monitoring with fraud protection while enriching the signals of one another and vice-versa is the answer for how banks can win the arms race and how they can do it much more efficiently,” Schweiger said.