By W.B. King
On the second episode of FintechTalks, a podcast sponsored by Fintech Meetup, host Sanjib Kalita had a forward-leaning conversation with Simon Taylor, head of strategy and content for Sardine. Among topics discussed were emerging technologies in the banking space, including artificial intelligence (AI), stablecoin and tokenization.
Kalita is head of industry at Fintech Meetup, a novel, tech-centric “speed dating” conference platform that brings industry executives together to address innovations and issues impacting the global financial services industry. Using proprietary device intelligence and behavior biometrics, the San Francisco-based Sardine applies machine learning to detect and stop fraud before it occurs.
Getting Digital Right
In recent years, Kalita noted that the banking landscape has grown in several different ways, which is exciting but also places pressure on financial institutions (FIs) to continuously and safely evolve and adopt new technologies to meet the expectations of account holders.
“The pace of change has now become your strategic advantage,” Taylor said in response. Prior to his current post, Taylor led blockchain research and development at Barclays. In 2016, the FI becoming the first bank in the world to successfully perform a live trade transaction over a blockchain distributed ledger technology with a real customer attached.
“If you can change faster, if you can adapt faster than everybody else to market shifts, you win—that doesn't mean you should do a deal really quickly or you shouldn't do your due diligence; it means you need an internal clock speed that is higher than your peers and your competitors,” he said. “I don't think lot of organizations have that as a North star—as a real way of thinking,” he added.
In many cases, Taylor said it’s not banks and credit unions that are moving at these quickened speeds, but it is major asset managers like Apollo Global Management and Blackstone or leading fintechs that are taking these opportunities to the next level.
“Since the pandemic, digital became the default and if you're not capable of doing that all yourself, who are the partners that can help you get there and get digital and get it right?” Taylor offered.
Stick the Landing
As a former banking executive, Kalita said “moving fast wasn’t necessarily our modus operandi.” The focus, rather, was correctly executing new initiatives. He posed the question to Taylor: How do FIs find the balance?
“I have the good fortune to spending a lot of time with large institutions and smaller institutions and it comes down to doing what you're great at and focusing on exactly what that is. Some of the largest institutions I know are in their transition to cloud-native everything or at least migrating to the cloud, and there’s a dividend you get if you stick the landing in that migration,” Taylor said.
“Then suddenly you open the aperture of possibilities all the major cloud service providers, the Amazons the Googles the Microsofts," he added. "Suddenly there is a network of other companies that can plug into what you're already offering that can help you go faster."
When the conversation turned to stablecoins and tokenization, Taylor said the adoption and use these digital currencies is inevitable, noting that Stripe recently acquired the stablecoin platform Bridge for $1.1 billion. “Financial institutions and banks will need to play more of a role—that’s my contrarian belief,” he said.
Digital Transformation Without Internal Change
Another inevitability is AI adoption, which Taylor said is currently in a bubble of sorts. “The magnitude is unbelievable. The low hanging fruit of really powerful [non-human] agents is absolutely there.” As an example, he noted the San Francisco-based Casca, a next-generation loan origination system billed as being able to enable banks, credit unions and non-bank lenders to originate commercial loans with 90% less manual effort.
“This is digital transformation without internal change,” Taylor offered, noting that human oversight is still required. “AI will soon disappear. It will become less of a chatbot and start to feel more normal and that’s going to be really, really powerful,” he added, conceding that faster payment rails via AI also means faster fraud.
“The scams are already an issue,” he said, citing numerous bad actors and "automated push payment" fraud cases. “Scams are the biggest issue in financial services. It’s top of my priority and we’ve got to fix it.”