Tackling industry challenges, together

Hello and welcome to Insights Distilled, a weekly email briefing that curates tactical technology news for financial services execs. We send you the top stories you need to know – and explain why they matter. Our tech news roundup helps you stay on top of the innovations driving business agility in your industry. To get next week’s edition in your inbox,?sign up here.

This week’s edition highlights several examples of FinServs pushing forward on a promising new technology, despite uncertainty, to avoid being left behind.?

Afterall, it’s easier to execute experiments and build knowledge early, before you’re sprinting for results.?

Citi’s CEO succinctly summed the idea up when describing the bank’s approach to this year's hottest technology: “Overall, the risks of not embracing generative AI far outweigh the risks of engaging with it.”?

Let’s dive in:?

Citi’s CEO outlined the bank’s principles for generative AI, including that it could help increase empathy.??

Distilled: Citi CEO Jane Fraser has publicly planted a flag for how the bank is proactively approaching GenAI to shape its transformation efforts, while putting people and compliance at the forefront.??

Everyone is talking about generative AI, including Citi’s CEO.??

While Fraser’s assertion that generative AI “has the potential to revolutionize all functions across our bank” isn’t surprising, per se, her article is an interesting way for Citi to show investors, regulators, and customers where it stands.??

While the post generally outlines Citi’s priorities, one interesting nugget was Fraser’s assertion that generative AI could help build greater empathy.??

“It may sound counterintuitive, but large language models communicate clearly with their users and never get frustrated,” she wrote. “I believe this has wide applicability for many businesses and industries more broadly.”?

For example, AI-powered chatbots could be integrated into processes where they can prompt customer service agents or inexperienced managers.?

Read Fraser’s full article here.??

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Top FinServs – including Allianz and Citi – are pouring money into a startup that’s taking on index-linked investments.??

Distilled: As investors increasingly demand sophisticated and customizable investment indices, MerQube’s technology is gaining attention.??

Indexing technology firm MerQube just raised a $22 million Series B funding round led by Intel Capital, with participation from Allianz Life Ventures, Citi, JPMorgan, and UBS.??

The company’s data processing abilities allow it to deliver rules-based investment products – based on strategies like defined outcome, risk control, or themes like ESG – more quickly and cost-effectively than traditional players.??

“Today’s legacy systems struggle to keep up,” MerQube’s chief commercial officer, Roby Muntoni, told Insights Distilled. The firm “fills that fintech gap with a building block-based architecture and cloud-based platform that enables these next generation indices,” she added.??

The new investment from – and partnership with – Allianz will help MerQube tailor its solutions for the insurance space (for example, by launching financial products to help manage retirement risk).?

?Ultimately, having FinServ investors helps MerQube align with the necessary requirements to woo investment banks, according to Muntoni: “The MerQube team is grateful that the majority of its investors are also clients.”?

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Barclays is launching a “hackathon” to get banks, fintechs, and market infrastructure firms to come together to rethink an outdated and inefficient sector.??

Distilled: Repurchase agreement (repo) post-trade services are currently fragmented, complex, and inefficient. Barclays wants to push the industry to come together on better tech solutions for all.??

Barclays is hosting a “RepoHack” event in London this fall to prod the industry to collaborate on better data and technology architecture for repurchase agreement (repo) post-trade services.??

Right now, market participants each build, operate, and maintain their own repo trade management infrastructure, but Barclays is pushing adoption of FintechOpen Source Foundation’s common domain model (CDM) standards.??

The hackathon will bring banks, fintechs, and infrastructure firms together to prototype solutions for consistent, accurate data exchange. Applications are now open, and the event will take place at Barclays' London office in September.????

“This will be an opportunity to transform the industry by using and improving standards that the entire industry can get behind,” Barclays executive Lee Braine told Finextra. “Something like this enables participants to experiment and discuss with peers what is happening at the cutting edge of the space.”??

This is a condensed version of the?Insights Distilled?newsletter. To see items 3 - 5,?sign up here?to receive the full email in your inbox.

Quick bits:?

Personnel news: Discover just poached long-time tech executive Jason Strle from Wells Fargo to be its new chief information officer, and the Treasury Department just hired Andrea Gacki to lead the Financial Crimes Enforcement Network (FinCEN).??

Meanwhile, JPMorgan hired Silicon Valley Bank veteran John China to co-head its innovation economy practice, and startup Chargebacks911 lured Bank of America alum Guy Harris and former Apple exec Eric Hoffman.??

Money moves: A handful of top US banks have already reported Q2 earnings. Merrill Lynch was fined $12 million for filing too few suspicious activity reports.??

Industry insights: The head of the UK’s Financial Conduct Authority (FCA) warned FinServs to prepare to battle AI-powered deceptions like “deepfake” videos: “As AI is further adopted, the investment in fraud prevention and operational and cyber resilience will have to accelerate simultaneously.”?