Hosted by top 5 banking and fintech influencer, Jim Marous, Banking Transformed highlights the challenges facing the banking industry. Featuring some of the top minds in business, this podcast explores how financial institutions can prepare for the future of banking.
Supporting Customer Journeys With Data, AI and Better Engagement
To retain market share amid stiff competition, the banking industry has to adapt to changing customer preferences and embrace digital transformation. This includes investing in new technologies, improving operational efficiency, and partnering with third party providers that can help innovation at speed and scale.
To become future-ready, financial institutions need to support customer journeys from the inside-out, enabling the connection with external brands, and delivering contextual solutions in real-time supported by data and analytics.
We have David Feuer, Chief Product Officer at Galileo on the Banking Transformed show. David shares why building an end-to-end digital platform solution is the key to digital banking transformation success.
This episode of Banking Transformed is sponsored by Galileo
Galileo is creating the only end-to-end vertically integrated banking technology stack, from user interface development capabilities to a customizable multi-product banking core and ledger with fully integrated processing and card issuing. The Cyberbank platform isa best-in-class financial technology platform that reinvents how people connect with their money through exceptional digital-first experiences.
Hello, and welcome to Banking Transformed, the top podcast in retail banking. I'm your host, Jim Marous, Owner and CEO of the Digital Bank Report, and co-publisher of The Financial Brand.
Jim Marous (00:22):
To retain market share amidst stiff competition, the banking industry has to adapt to changing customer preferences and embrace digital transformation. This includes investing in new technologies, improving operational efficiency, and partnering and collaborating with third party providers that can help build innovation at speed and scale.
Jim Marous (00:44):
To become future-ready, financial institutions need to support customer journeys from the inside out and from the outside in, enabling the connection with external brands and delivering contextual solutions in real time, supported by data and analytics.
Jim Marous (01:01):
We have David Feuer, Chief Product Officer at Galileo on the Banking Transformed show. David, shares why building an end-to-end digital platform solution is the key to digital banking transformation success.
Jim Marous (01:17):
Modernizing banking is a complex product that involves overcoming a number of challenges. Some of the key challenges include legacy IT systems, data management, regulatory compliance, security concerns, and just overall cultural resistance to change.
Jim Marous (01:32):
To become future-ready, it is more important than ever for banks to address these challenges through careful planning, strategic collaborations and partnerships, and investment in new technologies and talent.
Jim Marous (01:41):
So, David, could you introduce yourself to our audience and give people a quick overview of Galileo?
David Feuer (01:51):
Absolutely, thanks Jim, great to be here. I'm Dave Feuer, I'm the Chief Product Officer of Galileo. At Galileo, we're the driving force between some of North America's most successful FinTech companies such as Bluevine and DailyPay, and Dave, Tomo and Toast, and of course SoFi and many more.
David Feuer (02:09):
As well as the U.S. operations of some international companies like Monzo and Money Lion. We have an API-based transaction processing platform in the network that drives fraud detection, security, decision-making analytics, and of course, compliance functionality so that our clients can be ahead of the regulatory curve and really drive transaction processing at speed and scale with sort of the resiliency, reliability, and value-added services they've come to expect from network transaction processing.
David Feuer (02:42):
And then well, we actually, as a part of SoFI, we acquired TechNosis in February 2022. And what happened was Galileo offered this end-to-end network transaction processing platform, and TechNosis had this next generation digital and core banking platform that empowers financial institutions to create these very specific tailored financial products.
David Feuer (03:03):
So, if you think about where we're going with the speed of commerce and sort of what interfaces customers expect, and that extends well past the traditional bank borders, the way we think about branch banking and into embedded finance and all these experiences customers are beginning to expect from their banking.
David Feuer (03:23):
We actually bought TechNosis because they were the best positioned company to drive those experiences. And so, we've got the network on one side, and then the database and brain on the other side, and together, we're building this stack for next generation banking.
Jim Marous (03:38):
You know, David, you've been involved in the banking industry for some time. What do you see as the challenges that banks have as they try to modernize their banking cores, their services, and even their product offerings?
David Feuer (03:50):
So, wow, getting right into it. I think banks have a number of challenges. The first is that banking itself is not a new endeavor. Banking has been around for thousands of years, and so many of the bank processes internally are actually built with the customer's benefit in mind as well as all the compliance and regulation is of course, built with consumer protections in mind.
David Feuer (04:16):
So, that consumers know that they can rely on their bank and that they can reliably get service around their money. And whether it's borrowing money or saving money or whatever their transaction is, that it's going to happen in a very reliable manner.
David Feuer (04:30):
But what happens is, after many years of building these highly complex and interconnected systems, whether it's because of new technologies, new product development, new channels or regulatory compliance, the banking infrastructure has become significantly monolithic.
David Feuer (04:48):
And so, what's happening is for 250 years under the industrial revolution, we had sort of this way of building banks with branches and human relationships, and very specific behaviors that were expected from banking products such as credit cards and DDA accounts.
David Feuer (05:06):
And what's actually happened is since the advent of the internet and sort of the API economy and the internet economy, consumer expectations have evolved rapidly. So, consumers expect their banking experience to be mobile and local and social, and expect them to be highly tailored to who they are because they're used to having tailored experiences from things like CRM databases and social media, et cetera.
David Feuer (05:31):
And so, we're seeing consumer expectations leapfrog the infrastructure in the bank and the regulatory compliance processes in the bank that are meant to safeguard those consumers. And so, there's this sort of very specific tension between stability that's built into bank systems and the agility that the next generation of consumers are demanding.
David Feuer (05:51):
And I think that's the fundamental challenge is working through that stability and through that agility. And what we're trying to do is build a set of systems that a bank can adopt that say, “Hey, you don't have to change everything about your bank, you need to decide what you want to do from a strategy perspective. Who are the personas? Who are the customers you're trying to attract with what products? How do you plan on getting them to market? And how can we help you build that in a very customer-sensitive modern, but compliant way?”
Jim Marous (06:21):
So, well said, because you really are looking at a situation that adding to that is the fact that the compliance people are from the old world banking, so it's really hard for them to get up to speed.
Jim Marous (06:34):
For the first time ever, as you mentioned, the consumer’s asking for more than ever from their financial institutions based on what they're getting outside of banking. So, that what they see and what they hear and how they do things, normally, they're saying, “I want this in my banking relationships.”
Jim Marous (06:50):
And then another challenge I see is that financial services have been profitable. So, what happens is the desire to change is there, the push to change maybe isn't there because we haven't done badly in the past.
Jim Marous (07:05):
So, a strategic priority, obviously, for every financial institution as we get with the digital banking report, our research, is to improve the customer's digital banking experience.
Jim Marous (07:15):
Now, I tend to think that often or too often, it's more words than actions, but how does Galileo help empower banks to more efficiently, acquire and onboard new customers, build better communications, and deliver better products and services?
David Feuer (07:33):
So, I think the first thing I would say is that the first thing we try to do is build outside in. So, rather than think first about the bank and the bank infrastructure, we think first about the customer and the customer experience. How do we drive empathy into that relationship?
David Feuer (07:48):
So, as an example, we have this intelligent digital assistant called Konecta, and yes, Konecta works with Google Assistant and Slack and WhatsApp and SMS.
David Feuer (07:58):
And on the backend, it works with SugarCRM and Avaya and Genesys and Salesforce, and all the sorts of backend systems you would expect. But it's really meant, first and foremost, to drive empathy into the customer relationship.
David Feuer (08:10):
So, something we're doing is trying to understand how to interact with a customer in a way that feels more natural and in a way that feels more empathetic so that the intelligent digital assistant isn't just a chatbot where it's sort of doing a search for you, but rather, it's doing things like varying responses. It's maintaining a conversational flow, it's responding in ways that are more natural and short.
David Feuer (08:34):
And so, if it understands that you as a consumer are using shorthand, like you're saying, “Okay, okay,” instead of saying, “Alright,” it'll react in that manner. So, in that way, it feels like a much more natural way of getting to the answers you want, rather than a consumer going through sort of the arduous process of having that interaction be really focused on sort of a cold — I hate to say, a cold search interface.
David Feuer (09:00):
And so, being able to take that same spirit of using AI for the customer advantage or for the customer experience, and building that into our product stack has really created a place for us to carve out a unique niche in banking where we can say, “Your core needs to behave that way, your core needs to be all about the customer.”
David Feuer (09:22):
And in fact, the customer is the root of our core, the root of how we charge for our cores, the root of how we think about our core. We don't think in terms of infrastructure, we think about the customer and what are the products that they need.
David Feuer (09:32):
And so, as we think about the customer lifecycle — so we've heard banks ask us from womb to tomb, “What can you provide to a customer?” We're thinking about the customer lifecycle holistically and really building a product around that lifecycle.
David Feuer (09:46):
And then as we think about our digital product, which is really meant to sit in front of both our core and multiple other cores, thinking about what are the experiences and interfaces that the customer expects, and how can we build that into a value proposition that's not just a cold application, but really, an application that's really tailored for whatever specific personas or market segments that bank is looking to address.
David Feuer (10:10):
And so, I think really bringing this customer first perspective across our whole portfolio and really driving this feeling that it's not about infrastructure, and the infrastructure is fundamentally commoditized, but what's unique is your ability to really address customer needs at speed, at scale, and in a way in which they want to interact with you.
David Feuer (10:31):
So, that for younger customers, you're able to offer them SMS for a different segment of customers. Let's say for baby boomers, you're able to offer something that's much more native, either through a web interface or through an app, or they can walk into your branch and offer assistive technologies for the person that's offering the loan or whatever product it is, and actually, speaking to the customer.
David Feuer (10:54):
I think really driving that customer empathy through our stack is where a huge part of our value proposition lies. And what we're seeing is that in the age of embedded finance, there's a whole bunch of different players that are saying, “We've got a better relationship with our customer than our bank does, you should do your banking through me and not the bank.”
David Feuer (11:14):
And so, while success can breed complacency, I think success is also breeding interest. And in the internet economy where there's all sorts of lane changing, we're seeing cell phone companies offering checking accounts. And we're seeing Starbucks with more money in a mobile wallet than most banks in the United States.
David Feuer (11:31):
And so, I think there's a real opportunity for banks to feel that competitiveness and customers to really benefit from that competitive environment.
Jim Marous (11:43):
It's interesting, David, you're really talking about moving the experience beyond transactions into greater engagement, and the technology to do so is getting there faster than ever, and the consumer's expectations of you building engagement is there more than ever.
Jim Marous (12:01):
You know what's interesting, also, as we look at it, again, the liners or the baseline is being set by things like Netflix and Amazon, all these others that say, “I want more interaction in my daily life, that's going to save me time.” So, it's a little bit of that pull and push moment again.
Jim Marous (12:20):
But when you're talking about that, when financial institutions are trying to move from what their legacy process was with transaction-based, to engagement and conversational-based, what's the biggest challenge that you see as you meet with other financial institutions?
David Feuer (12:35):
So, that was really well-said, Jim, there's tension there. We know that engagement drives value. And so, we know that, for instance, branch banks used to have wine and cheese parties so that people would do commerce at the bank, and the bank would naturally be the place that would facilitate that commerce through loans and guarantees and all sorts of the other things that banks do in order to facilitate, corporate treasury transactions and that sort of thing.
David Feuer (13:02):
And the question is, what does that look like in the digital world? I think thinking about the way banks drive engagement —I talk about this frequently, but my son who's 19 and in university, leaves the house with his cell phone and his license, he doesn't have a wallet with him.
David Feuer (13:21):
The last thing he wants to do is talk to a banker or get on the phone with his bank if there's a challenge. He'd rather send a text, get a response, and disengage quickly. And so, that transactional nature of banking that really drove the larger relationships and engagement for the previous generation is really changing.
David Feuer (13:40):
And the question is what is the sort of engagement that is expected from a bank where customers aren't forced to spend a whole bunch of time with their bank, but in fact they actually want to spend that time with the bank because they're getting more out of that interaction than they would out of a simple transaction?
David Feuer (13:54):
So, as an example, we're seeing banks ask us, “Hey, can you look at relevant insights from the conversation that a customer has had with the bank, and influence the applications that the application brings up what’s top of mind for the customer when they open up the application?”
David Feuer (14:09):
Because we know what their customer service requests have been in the past. We know what all those requests have been about. Can you take that and put that front and center? And can we do it in a way that doesn't completely change the applications of the customer, loses the navigation aspect, the intuitive navigation aspect of the application.
David Feuer (14:27):
And I think this is all example of using data for competitive advantage. And the question is, can banks use data to better tailor the experience for the customer not to drive a whole bunch of engagement in an artificial way, to sort of keep them scrolling like a social media application would, but rather to help them get deeper insights into whatever they're trying to solve? Why hasn't the transaction settled yet? Did I in fact, perform this transaction?
David Feuer (14:58):
Customers reach out to a bank when there's a problem. Customers don't typically reach out to the bank just to check in on things in general. And so, most people think, “Okay, what's the fastest way for us to solve this problem? Because it's a cost issue.”
David Feuer (15:13):
And so, they think in terms of things like call containment, and I think banks are losing the opportunity to actually create a very specific tailored experience to tell customers, “Hey, we've got you, we understand what you need, and we're going to provide a whole suite of tools and capabilities that allow you as a bank to position yourself as being there for the customer, being reliable.” And that means responding to the customer in a way that they expect.
David Feuer (15:39):
And again, I think that's radically changing as we see this next generation of customers have a completely different expectation around their experiences. So, that's a really long way of saying, I think the tension you point out is correct, I think driving engagement while solving this transactional problem very quickly is at odds.
David Feuer (15:58):
But I think it's not necessarily about can you solve the problem quickly? It's how can you solve the problem in the deepest, most informative way? So, you are educating the consumer, you're giving them insights, and you're using their own data not against them to offer them or sell them, but rather for them to say, “Hey, instead of taking on credit card debt, why don't you try this new buy-now pay later product, or this save now-pay later product? How can we take all of our products set and present that to you?”
David Feuer (16:26):
And that's really where we started with Konecta and said, “Okay, can we get AI to use transcripts and history of interactions to really drive a very empathetic customer experience?” And then driving that back into the rest of the portfolio has been super exciting for us.
David Feuer (16:41):
And it's something that banks have really reacted to because banks know data is important, banks know the relationship with the customer is important. I think being able to create that sort of connection there, that connective tissue is really important as banks take their muscle memory from branch banking and bring that into the internet era.
Jim Marous (16:58):
You know, it's interesting, the cloud gives us a capability to store, manage, and process data all the way across the entire customer journey to capture that and know where a customer is at any time.
Jim Marous (17:12):
That capability, integrated with the ability to quickly decide where a person is in their life cycle or what they're doing at any time, we're already seeing that in the way our listening devices, be it the phone or the Alexa device, whatever, listens to everything, and then prompts us with things that, yeah, you may be a little spooked out by it, but basically, it saves you time and it can save you money while at the same time, giving you a value transfer, which is really what we're talking about here.
Jim Marous (17:41):
We're talking about the thing that says, “Are you providing value for this relationship beyond simply doing the back-office transactions?” We can't get into the whole idea of engagement without talking about the elephant in the room, conversational AI, which certainly got a name for itself more than ever outside of the tech stacks and people that are doing this stuff on November 30th with Open AI's ChatGPT.
Jim Marous (18:08):
When a bank decides that they want to integrate a broader form of conversational AI than simply a chatbot, what should their focus be? Where should they start?
David Feuer (18:20):
Okay, there's a lot in that question. I think the first thing is, does a bank really want to chatbot, or do they really want an intelligent digital assistant? And I know it may sound like I'm playing some word games here but they're actually very different.
David Feuer (18:37):
So, if you think about chatbots, they’re sort of these automated programs that interact via text or maybe through auditory means, but that was sort of that cold search like interaction that I was referring to which we've had since the ‘90s.
David Feuer (18:51):
I don't know if you remember Dr. Sbaitso, but there used to be these kind of really boring cold chat interfaces that were really excited when the 486 and the Pentium processor first came out and sort of old school computing.
David Feuer (19:06):
But what we can actually do is create this experience that recognizes voice and text and knows when to provide this AI or human-based support, based on the way the conversation's going and the tone that the client is taking.
David Feuer (19:19):
And so, I think the first thing I would recommend to a bank is sort of think about what experience they're trying to drive and what you want to invest timewise into cost savings versus driving new value proposition to customers.
David Feuer (19:35):
And I think what most banks will find is that the cost savings is relatively equal in terms of call containment, and let's say, times bankers or agents have to spend on the phone with the customers. I think that the real question is do customers walk away from the interaction with a higher sense of loyalty towards a bank and a higher brand attitude towards that bank as being modern adaptive, and sort of that bank has my back, versus they walk away and say, “Wow, that bank's technology is just like every other old bank's technology, and frankly, if they could have just gotten me to the human faster, then that human could have solved my problem faster.”
David Feuer (20:16):
So, I'd say that's really the first piece that a bank has to choose. I think the other thing that banks should think about is to what extent is it important to create an omnichannel interface across all of your customer touch points.
David Feuer (20:28):
And so, can a bank say, “I have a chatbot, I have an app, I might have an Amazon Alexa application, or an Apple Watch application, or some other sort of ecosystems that I play in order to be available for customers. And then of course, I've got tellers that customers can come talk to in branches, or maybe I don't, but I've got live humans that may be available to chat as needed as a tier two sort of escalation point.”
David Feuer (20:53):
And so, how can I create a consistent customer interface so that that customer's needs — who that customer is, is front and center no matter what interface that customer is using. In the days of branch banking, it was really easy because the customer got to know the personalities that worked at the bank, the bankers got to know the customers, and so there was a real relationship there.
David Feuer (21:14):
And so, how do we break down the walls of the cold digital interface between the customers and the bank, so that as a bank looks across all of their omnichannel capabilities, that customers getting a consistent experience and feels as if they and their needs are front and center as a part of that interaction.
David Feuer (21:32):
And so, to get started, I would say it's those two things. It's how do I really want to create an interface that drives loyalty and that drives a great experience so that at the end of the day, half the time when I call a bank — and I have multiple bank accounts, because of course, I have to have these experiences, I feel as if the person I'm talking to is simply typing into a search engine the same way I could have.
David Feuer (21:53):
So, how do we avoid that and really get the customer the answer they need quicker and in a better empathetic manner. And the second is, how can I create this omnichannel interface so that we keep the customer and their needs front and center?
David Feuer (22:07):
And I think if we start to think through that, then we start to think about making AI and making data a key part of the value proposition of the bank, and a key part of addressing customer needs. And so, those are the questions that I would start asking to get started on this journey.
Jim Marous (22:21):
It's going to be interesting because you've used ChatGPT, I've used it, and I find that the format of the question drives the quality of the answer. And I think we're going to start to see, especially in financial services, conversational AI actually asking follow-up questions to be able to refine what the customer's actually asking for.
Jim Marous (22:43):
Because we as customers don't always ask the things we're trying to find out. And those follow up questions are going to be really key in building better content responses, and to be able to point them in the right direction within the financial institution.
Jim Marous (22:57):
I'm quite impressed with the way CapitalOne, for instance, manages how a customer can select a credit card. They really show, they ask you certain questions, they put you in a curtain category and say, “These are the cards we look for.”
Jim Marous (23:10):
But let's go a step further and look at your credit rate, let's say a customer says, “How do I fix my credit rating?” Well, this doesn't look like a product sale opportunity, what is this a real interaction, conversational opportunity, which builds loyalty, but it's going to probably need some follow-up questions.
Jim Marous (23:29):
So, I think we're really going to see some really interesting integrations between the response content and follow-up questions to get to know more. And as you refer to, the ability to then capture that information and keep it on file so you don't go back and retrace old footsteps.
Jim Marous (23:46):
And I think that's what the consumer really gets frustrated with when they got to reteach and reteach and reteach their finance institution. So, when we start talking about trends and opportunities, what do you see as far as the trends and opportunities with regard to conversational AI and what are you preparing for?
David Feuer (24:04):
So, I think there's a few areas in which we really see opportunities to advance AI technology to help drive this kind of next generation customer relationship. I think the first is, if we think about natural language processing and really trying to understand what the customer is doing and how to present that back to the bank so that the search is really tailored to how the customer is feeling and what the customer is doing.
David Feuer (24:34):
There's sort of the natural language processing side of things. And so, really figuring out how, let's say, not necessarily to tailor the response to the way the customer is asking the question, rather figuring out what exactly the customer is trying to find out — find that out for them, but then tailor the response to where the customer is and who the customer is, and all of that is super interesting.
David Feuer (24:55):
So, rather than give different responses based on the way the question is asked, give the correct response, but then present it in a way that's appropriate to that customer, that's something that we're really trying to do. Whereas, let's say, your challenge, I think is that ChatGPT is actually answering the question very differently depending on how you're asking the same question. And so, that is definitely a challenge that we're looking at.
David Feuer (25:17):
I think the second piece of the challenge is, how do we use large language models like ChatGPT, by the way, to present conversation summaries? And that's actually something that we're doing now. We actually use ChatGPT to automate, or we can use ChatGPT to automate conversation summaries in cyber bank Konecta, which is our intelligent digital assistant.
David Feuer (25:41):
And I think that's been something that's been a learning experience for us. It's really great, it's an opportunity for bank to use that kind of technology. But some banks really just aren't ready for that yet and aren't interested, and that's totally fine.
David Feuer (25:57):
But I think there is an opportunity in using large language models to really do the analysis and really figure out how to drive new value based on sort of these external AI engines. So, we've got the chat history, can we use these external AI large language models to drive conversation summaries which help both the customer and of course, the bank itself.
Jim Marous (26:21):
David Feuer (26:22):
So, I think there's one last one. Which is can the banks use our AI to really figure out what are the key insights to present to the customer? So, the first is sort of the conversational side of AI and the customer empathy side of AI, and that's great.
David Feuer (26:41):
And that's sort of the omnichannel approach and how you can use AI to create those interfaces and really, naturally, sort of drive the insights in how you interface with customers. I think the second piece is really teaching or rather surfacing what are the key things for that customer to offer that customer based on where the customer is in their micro moment.
David Feuer (27:04):
So, as an example, if we know based on two or three interactions that that customer is getting ready for a specific life event, or that customer is trying to buy a vehicle and they're researching vehicles, how can I as a bank create a customer sensitive, relevant set of offers that it's not just bank loans, but maybe it's relationships I have with car dealerships or relationships I have with car manufacturers, and the sort of long tail of retail experiences that I could help drive to my customers as a bank that would in the digital world, replace those wine and cheese parties where customers of a bank would discover each other and start to do business in the bank.
David Feuer (27:43):
And so, I think that's a third real way that we are using AI, is to create relevant connections inside the bank, and identify the micro moments customers are in so that we can turn those micro moments around, and offer the customers relevant products versus finding out where they are and then putting them in sort of a generic experience.
Jim Marous (28:01):
So, let's go even broader on AI. We've gotten into conversational, and we've gotten into customer-experience management, but how can all forms of AI integrate with banking solutions such as new product innovation, back-office efficiencies, and actually, just driving a better experience management from this context of customer support and product sales?
David Feuer (28:26):
Wow, hard question. Okay, so AI is nothing new, I don't think. I mean, we've known a lot of these theory in the mathematics behind AI is got cays clustering and regression analysis and all these kinds of complex mathematical concepts have been around for quite a while.
David Feuer (28:44):
I think the power of AI is that when it's combined with Cloud computing and this as a service model, it really allows banks to very specifically target AI to solve specific problems, and then use the virtually infinite scale, the Cloud to point all of that data and to point all of that number crunching at a specific problem to go solve it.
David Feuer (29:07):
So, as banks think about leveraging AI everywhere and how they can do that, I think the first question is, what question are you asking AI to solve? I think a lot of people think AI is sort of this needle in a haystack thing where there's a haystack of data and like it can go find the needle.
David Feuer (29:26):
But I think AI is much more about, “Hey, do I have a problem that I need to figure out how to answer that using patterns and pattern analysis, I can go answer?” And so, the way we see it at Galileo is that AI is something that should be a part of the way banks simply do business, it's a part of their stack.
David Feuer (29:45):
The same way banks think about a banking core and an application and a general ledger and all those sorts of pieces of banking infrastructure, they should be thinking of AI as kind of a key part of their banking infrastructure. I think the way we see it is that it should be a part of every layer of the stack, but the banks really need to be thinking of what is the customer problem I'm trying to solve and how can I use AI to solve that problem?
David Feuer (30:07):
You know, too frequently in my conversations with banks, the questions they're asking are sort of like, “How can I get to the extra 7% of value? How can I create an offer that gets to the most relevant customers?”
David Feuer (30:18):
And those are good questions that need to be answered and something I'm more than happy to engage with customers on. But I think at the end of the day, what customers really want when it comes to value is to get things like relevant offers so that as they're looking to borrow money, they need access to liquidity through lending.
David Feuer (30:37):
And so, what are their options and what makes the most sense for what their credit score is, where they are in life, how much they're looking to borrow, and all of that. And I think too frequently, we see banks sort of borrowing concepts from, let's say the retail world where offers are sort of spray and prey, because despite having a CRM database, for the most part, retailers really don't know all that much about their customers.
David Feuer (31:01):
In banks, we know all kinds of things about customers, and we're seeing banks make ever more intelligent assumptions and heuristics around let's say loans and just customers situations in general, because the banks sit in the middle of all these inflows and outflows, and see these interactions and can say, “Oh, they're getting regular direct deposits from multiple different sources.”
David Feuer (31:25):
This is somebody that we're not concerned about from an employment perspective. So, I think by starting and saying, “What is the customer problem I'm trying to solve?” And then looking at how to answer that from an omnichannel perspective and saying, “At every point in my stack, am I really thinking about where's the data, where's the AI, and am I being customer sensitive enough?”
David Feuer (31:47):
I think that's sort of the next generation of how AI is going to come about and really address banking needs. And I think we're well on that path as well as many other companies and banks that we've talked to.
David Feuer (31:59):
So, it's a super exciting time and especially with Cloud computing and being able to run all this as a service, banks don't have to worry about, well, what if I have a spike in customers and then I have way more transactions than I can handle, or way more data than I can handle? It's sort of like, a lot of this stuff is available as a service, the bank just has to decide what problems it's trying to solve, and then we can talk about how we can help there.
Jim Marous (32:22):
So, getting into that and what Galileo does, you can really help build the back-office technologies to be future-ready. How do you support what is now a greater speed and need for scalability in the marketplace?
David Feuer (32:35):
So, I think there's a couple ways in which we specifically address that. The first is, as a company, we're an API first company. So, we try to do everything we can to reduce the TCO burden of our clients, many of whom are banks, to have to install, maintain, and do the operations, maintenance and administration of software.
David Feuer (32:58):
That's a heavy lift, it's hard to do, and frankly, a lot of banks simply don't want yet another application or set of applications with yet another group of people that have to run it. And so, really being able to offer software as a service, I think is a significant benefit to the banks because they simply don't have to worry about a lot of the overhead associated with installing and maintaining software.
David Feuer (33:21):
Of course, a lot of our software is available for on-premises or in a customer's private Cloud if needed. But really thinking about API first, and thinking that we can probably scale our infrastructure and scale it smartly better than a bank can scale our software, and so being able to offer that has been key.
David Feuer (33:39):
And so, on the Galileo side, we've been an API-first company for almost two decades now. And that's super exciting for us, is that's become a mainstream way of adopting both applications and of course, network transaction processing services in the debit world and the ACH world, et cetera. It’s sort of a natural extension of that world.
David Feuer (33:59):
In core banking, it's less so. So, we see this revolution, this concept of coreless banking that says, “Hey, I need banking core functionality, but I don't know if I actually need this huge monolithic piece of software. What I really need is specific capabilities, I need a DDA account, I need a specific type of-
Jim Marous (34:17):
Very specific solution.
David Feuer (34:18):
Yeah. So, banks are coming to us and saying, “I don't know if I'm ready to replace my core, but I need an SMP lending API. I need a special type of DDA account. I want this type of CD, can you offer me that as an API so that I can very quickly roll out that product, get some market experience, test the market, and drive that value proposition with no software to install?”
David Feuer (34:40):
And removing a lot of the overhead associated with the customary way of adopting software and really thinking about software as sort of this heavy on-prem infrastructure that has licenses associated with the number of users using it and all that stuff. Can we alleviate some of that using a more internet modern native model?
David Feuer (34:57):
And so, a lot of the scale we think about with Cloud computing is sort of the processing and memory and sort of the technology side of scale. But the way I like to think of scale is how can we unlock a bank's business so that they can run as fast as their market is demanding, and as fast as their risk appetite is.
David Feuer (35:13):
And so, when banks want to move into a new area, they can simply come to us, and we can unlock that functionality from them in the Cloud very quickly and turn that around and deliver that directly to them without the overhead of the heavy software sale install, et cetera,
Jim Marous (35:28):
Without the time element, I mean, because it really shortens this … I don't think most bankers understand that these things can be implemented in a matter of months instead of matter of years.
Jim Marous (35:39):
And as you stated, solving for individual problems as a starting point is a good way to put your toe of the water, but also to solve those problems quickly. Because if you try to solve them as part of a broader measure, you'll never get to the actual solution.
David Feuer (35:55):
So, 100% correct. And I think a lot of what we're challenged with is a lot of the banks have aging cores, aging digital interfaces that they do need to replace, or they need to significantly augment. And so, it's not about one or two APIs, it's about 100 and it's about a risk model that really expects the bank to not just leverage the banking core as an API, but really to manage all the interfaces themselves and manage the software and database in fact themselves.
David Feuer (36:25):
And so, of course, we have to offer on-premises solutions, and of course, we have to not just accommodate, but directly address those customers. So, I don't want anybody to think that somehow, we're only offering APIs.
David Feuer (36:36):
When we think about software and scale and we think about the future, I don't think the future looks like banks running thousands of applications, which is what banks do today. I think the future looks like banks both creating ecosystems through their unique offer and plugging into third party ecosystems. Like we had talked about Apple Watch and Amazon Alexa to really be where a customer expects them to be in that customer's flow.
David Feuer (37:02):
And then on the flip side, really leveraging ecosystems and plugging into ecosystems as it makes sense, whether it's emerging standards like FedNow for real-time payments, or whether it's other third-party systems for liquidity analysis and lending.
David Feuer (37:15):
And so, as we think about the internet economy and we think about the internet facilitating this ecosystems world, can we help banks accelerate their participation and development of ecosystems by quite literally treating ourselves and the banks as ecosystems partners that can go to market together, and where we can offer APIs just like Amazon One with Alexa or Apple would with Apple Watch?
Jim Marous (37:41):
Let's say you're the chief innovation or information officer, whatever you want to be, but you're in charge of updating an organization's tech stack, and that's on everybody's agenda right now. As a person within that finance decision, where would you start today?
David Feuer (37:59):
I would start by asking why are you updating the tech stack? What is the problem you're trying to solve? And sorry, going back to the product side, that's where I started.
Jim Marous (38:10):
David Feuer (38:12):
So, what are we trying to solve for? I think in most cases when I talk to CTOs and CIOs at banks, the problem they're trying to solve for is, it inevitably comes down to, “My tech stack is holding me back, I can't develop the products I need or the experiences I need because my tech stack cannot evolve quickly enough to meet those needs.”
David Feuer (38:34):
And so, if you think about doing process modeling in a first-generation core versus a third-generation core, and you think about scaling, we had just mentioned real-time payments. If you think about scaling for the needs of real-time payments, if you look at markets like UPI in India and Pixton in Brazil, the banking cores are failing the banks because they simply can't keep up with the number of transactions that come, the exponential, the S-curve of transactions that come from real-time payments networks, and that’s because the banking cores were never built for that.
David Feuer (39:03):
And so, this whole need for third-generation cores that allow for not just innovative product development and delivery, but also, that allow for scaling of certain components as needed are splitting cores as needed, and doing all of these cool, innovative things that are going to be necessary in order to really participate and take advantage of the internet economy — I think those are the problems that CIOs are telling me they're having.
David Feuer (39:27):
And then asking, “Hey, how would you solve it?” And I think sometimes the answer is a rip it or replace strategy that says we need a good amount of time to sit there and really go through the products you have and the products you want to keep and where your value proposition is, and replacing your core.
David Feuer (39:42):
But sometimes it's really saying, “Okay, well you've got these three products that you haven't been able to launch and that's what's causing you to rethink all this. How can we get you the ability to take those three products and get them to market right away, and then figure out either core augmentation strategy or a core migration strategy over time so that it works with what — so that you're operating at the speed that the market demands versus at the speed that your business can keep up with.”
David Feuer (40:09):
And so, I think that's the question, is what problem are you trying to solve and how can we go about partnering to solve it? And I think more often than not, the answer greatly varies depending on the size of the bank, depending on the opportunity. And of course, when it comes to embedded finance and sort of many of the Fin techs, they might not even have a banking license.
David Feuer (40:28):
And so, they're looking to do, let's say, servicing without origination or they're looking to specifically create banking type experiences without being a bank. And so, sometimes a core is needed, but sometimes, less than a core is needed. And it's really just a digital experience, or it's really just, “How can I create that customer interface so that I can be there when customers need me for a specific thing or a specific set of things.”
David Feuer (40:52):
Starting with that problem and I like to say that's outside in. Starting with the customer and the customer's experience and the customer problem, is the best way to build a technology stack that maintains business optionality and technology optionality because you immediately see the value as opposed to building yet another monolith of technology infrastructure that says, “Well, if I build it, the customers will come.” And I think we all know what happens in that scenario.
Jim Marous (41:18):
Or you're trying to put a solution to something you don't have a problem for. So, you get in front of a lot of financial institutions and what Galileo provides is really a very flexible, iterative model of updating the tech stack and the capabilities and the interactions.
Jim Marous (41:40):
When you meet with finance institutions, since you provide them with your solution, what gets in the way of them actually implementing either your solution or another similar solution to the marketplaces? What makes them not move forward?
David Feuer (41:57):
I think more often than not, it's a strong desire … I think I'm going to break this down to two specific areas. The first is a very specific idea of a problem that needs to be solved. But in fact, when getting into the details, the problem is much too complex.
David Feuer (42:19):
And even though it can be articulated as one problem, in fact, it's multiple problems having to do with multiple legacy pieces of infrastructure that are maybe in a state of flux. And so, there are other areas that have to be updated in order to accommodate.
David Feuer (42:36):
So, as an example, we talk about being able to offer an omnichannel experience using this cyber bank Konecta intelligent digital assistant. So, sometimes, we see customers they're super incentivized and get started with us and create a couple of great experiences, and then they want to extend that experience to, let's say, another country or another line of business that they might have.
David Feuer (42:59):
And the fact that they're running on their own very old school technology stack that in fact does not have APIs and has a very highly proprietary ICT system. And so, it's simply not possible to interact with the customer service agents on the other side of that interaction because there's no entry point. Because they're running software appliances that was frankly either highly customized or defined in the 1970s.
David Feuer (43:29):
And so, there is no API for us to plug into, and there is no infrastructure, there's no SIP trunks, it's all sort of old school telecom stuff. And so, they would have to upgrade the way that call center works in order to use our product.
David Feuer (43:43):
And there's not much we can do in that situation other than to sit and help them go through a vendor review process, understand the value proposition, and really partner with them on that, which is something that we've done in the past and we will continue to do.
David Feuer (43:56):
But that's certainly one of them, where the solution works great, they're super happy and now they want to expand it, but they recognize that there's other challenges that they have to solve in order to get to that point because many banks are islands of different technology, and all those technologies have different capabilities.
David Feuer (44:14):
So, I think that's one of them. I think the other reason the products fail is there's frequently a component of the bank where there's misaligned incentives. And so, we still have quite a bit of roles where people actually owners of infrastructure as opposed to owners of application experiences.
David Feuer (44:37):
And so, rather than thinking of themselves as sort of, I own the customer chat experience, or I own call center or I own the application, it's sort of like I own this piece of infrastructure and I have the experts in this piece of infrastructure.
David Feuer (44:54):
And so, without being able to empower people to really say, “Hey, you may not own this infrastructure, you're going to own a new piece of infrastructure. But in fact, that infrastructure is better and has a much richer set of functionality that allows you to have a greater impact on the bank,” that sort of organizational behavior and organizational challenge can get in the way.
David Feuer (45:14):
So, as I talk to CIOs and CTOs, frequently the personalities start to come out, and what I've found is, by and large, even those personalities that own the infrastructure, very much want to change. They want to embrace change because they immediately see the value and the impact it can have on customers. I think they struggle with seeing how it would fit into their specific career and career goals and career description, and that's something that we work through together.
David Feuer (45:40):
But that's another challenge that we see that the way banks are set up is very old school and so many of them are struggling to kind of create this new sense of ownership and empowerment that we see in the DevOps culture of kind of technology forward companies.
Jim Marous (45:57):
David, thank you so much for your time today. You know, it's been very interesting because it gets down to, we all have the desire to change, it sometimes is a lot harder than we expect it to be. And it tastes a commitment top-down commitment.
Jim Marous (46:15):
Again, thank you very much, and before we get off the line, how do people get ahold of you and Galileo?
David Feuer (46:19):
Ah, thanks for asking Jim. So, the easiest way is to go to our website galileo-ft.com and go to the contact us forum. I believe it's part of the company dropdown and they can just submit their information, and that's a good way to get to me or anybody else on my team. We'd love to work with you and hopefully we can help you solve your problems.
Jim Marous (46:39):
Thanks a lot, have a great day.
David Feuer (46:41):
Thanks, Jim, great being here.
Jim Marous (46:44):
Thanks for listening to Banking Transformed, the winner of three international award for podcast excellence. We really appreciate the support we've received to make this endeavor a success. If you enjoy what we're doing, please take some time to show some love in the form of a review.
Jim Marous (46:59):
Finally, be sure to catch my recent articles on the financial brand and check out the research you're doing on the Digital Bank Report.
Jim Marous (47:08):
This has been a production of Evergreen Podcasts. A special thank you to our senior producer, Leah Haslage, audio engineer, Sean Rule-Hoffman, and video producer Will Pritts. I'm your host, Jim Marous.
Jim Marous (47:18):
Remember, a modernized back-office platform is the key, tomorrow's customer engagement success.