“We’re more a network that enables various fintech to introduce new products into the market within the context of local regulations,” Mastercard’s country manager for Barbados, Jamaica, Trinidad & Tobago and the Eastern Caribbean, Dalton Fowles, told the Trinidad and Tobago’s Daily Express.

Fowles cited the example of digital payments for small and midsize businesses, especially local mom-and-pop shops. He said tap-to-pay options will appear in the region soon.

Helping those small businesses can be a boon for the broader economy. The Caribbean Development Bank reports that micro, small and midsize enterprises (MSMEs) account for around 50% of regional jobs and 60% to 70% of GDP.

The region’s unbanked are another prime target of fintech solutions. According to the National Financial Literacy Programme, an estimated 19% of the population in Trinidad and Tobago were unbanked in 2022. In Jamaica, this rises to about 22%, stated the Bank of Jamaica in its 2024 National Financial Inclusion Report. Some estimates put the number of unbanked in the Caribbean at two-thirds of its 45 million inhabitants.

Last year saw the launch of the Caribbean Fintech Sprint for Financial Inclusion, an open call for solutions to regional financial issues backed by the European Union and the United Nations Capital Development Fund. The winners were Unqueue and MLajan Mobile Wallet. Unqueue helps smallholder farmers access markets, while MLajan Mobile Wallet provides digital financial services in Dominica.

A Mastercard white paper released in March 2024 relating to remittances, or cross-border payments, highlighted digital offerings to cash environments, transaction transparency and safety, regulatory compliance, convenience, and value as critical to potential products and services. Mastercard studies have found that some Caribbean markets have 30% to 45% of their GDP in cash, which Fowles believes is ripe to be digitized.        

While artificial intelligence was already promising profound changes in the traditional banking business model, the latest innovation in the technology—generative AI—portends a multisensory revolution in banking services. Indeed, GenAI, with its ability to collect and interpret financial data on a vast scale, could force some of the Arabian Gulf region’s biggest banks to rethink their already costly digital banking strategies.

GenAI’s insatiable appetite for data offers banks in the Gulf Cooperation Council states the prospect of not only a more intimate relationship with customers, but also improved management processes, such as fraud detection and other important back-office functions. Unsurprisingly, banks that are best able to quickly deploy GenAI are looking forward to a return on their bottom line, despite concerns over the human impact of the new tech.

Banks that integrate and scale GenAI could see a 22% to 30% improvement in productivity over the next three years, Accenture estimated in a February report on AI in banking, and up to 600 basis points in revenue growth, and 300 basis points in return on equity. In the US, the giant management consultant found, 73% of time spent by bank employees has a high potential to be impacted by generative AI, some 39% by automation, and 34% by augmentation.

Whether those figures would apply to GCC financial institutions is unknown; what is clear is that the Gulf’s petrodollar revenue and its governments’ ability to lavish significant sums to gain a position in GenAI, makes GCC banks financially well positioned to adopt the latest innovations and capitalize on market demand.

Boosting that scenario are highly positive consumer attitudes in the region toward innovative technology such as mobile commerce and the rapid take-up of digital banking by GCC institutions’ customers that sped the rollout of AI chatbots in customer service.

Major Gulf banks, including Al Rajhi Bank of Saudi Arabia, Qatar National Bank, and National Bank of Kuwait are already using AI to varying degrees. In the United Arab Emirates, Emirates NBD has partnered with management consultants McKinsey and QuantumBlack—the firm’s AI arm—with the latter reportedly involved in the design and early-stage deployment of generative AI use cases.

But with GenAI chatbots now available based on OpenAI’s ChatGPT and Alphabet’s Bard, workers can engage and use the latest AI iterations as digital assistants, transforming the way in which banks do business. New opportunities to drive customer engagement, such as gamification, also promise to increase customer retention.

Whether through automation or augmentation, Accenture expects dramatic results in the back, middle, and front offices,  predicting 25% of all staff will be impacted by both. The UAE is backing AI at the government level, with the minister for AI—a position created in 2017—noting in February that nine banks and nine other financial institutions are using blockchain solutions.

The UAE, which has its own AI university, has taken another technological leap, launching its own open-source, open-access large language model. The latest version, Falcon 2, offers itself as the Gulf’s answer to Google’s and Meta’s GenAI innovations. Falcon 2’s array of applications, and its developer’s claim that it is the only AI model with vision-to-language capabilities, makes it probable GCC banks will want to evaluate a homegrown variant.

Generative AI’s potential to rescript the business of banking implies almost limitless applications. However, having poured millions if not billions into digital banking, GCC banks may hesitate over another round of technology investment expenditure. And there is also the question whether they are nimble enough.

“Banks have been traditionally product-centric,” says Rajesh Saxena, CEO of Retail and Central Banking at Intellect Design Arena, a fintech designer for financial services. “This approach has made large-scale transformations within banks time-consuming, expensive, and risky, not least because the back-end systems and products are all embedded into a monolithic architecture.”

But if the cost base for GCC banks is similar to their international counterparts’—staff compensation at global banks makes up half the cost-base on average, Moody’s Investors Service estimates—they may wish to accelerate GenAI integration. Regardless of the potential upheaval, Saxena thinks the latest innovations could quickly up banks’ compliance programs, where generative AI’s speed and accuracy could contain reputational exposure to issues such as money laundering, etc.

“AI algorithms analyze vast amounts of data to assess credit risk, detect anomalies, and prevent AML fraud,” Saxena notes. That might be particularly relevant to financial institutions in the UAE. Earlier this year, the Paris-based Financial Action Task Force removed the UAE from its “grey list” for deficiencies in money laundering controls, a move that drew criticism from some anti-money laundering analysts.

Many traditional banks’ initial indecisiveness in rolling out AI prompted many analysts to predict that more dynamism of challenger or neobanks could end their dominance. And challenger banks have doubtless upped the stakes, especially in customer service and with product innovations such as Buy Now, Pay Later (BNPL). But the premise that they are displacing traditional banks in the US and Europe is unproven.

So, what about the GCC?

With fintech valuations still high, the likelihood of traditional banks acquiring their upstart rivals is questionable. And venture capital, the main source of funding for many fintechs, is also under pressure. Data from PitchBook shows a downward shift in investor sentiment that might slow further funding rounds. Global deal activity fell to $350 billion last year, from $530 billion in 2022.

In the GCC, a digitally savvy population’s strong focus on user experience has helped neobanks disrupt the status quo for their traditional rivals. Fintechs in the region have benefited not only from innovative technology but from targeting a specific market segment, says Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors.

That leadership could prove temporary, however, and may be just as likely to benefit traditional banks.

“GenAI can quickly make traditional banks more efficient and effective,” says Schulman. “It may threaten challenger banks by eroding competitive advantage more than it helps them; neobanks have been known for innovation for more than a decade, but the digital gap has narrowed and their frontrunner status may slip faster with generative AI.”

So, is that goodbye to further growth for neobanks? Not quite.

Some analysts, including Schulman, speculate the rivals could find a compromise that results in more collaboration. “An uptick in mergers and exploratory partnerships seems inevitable,” he predicts.

In the US and Europe, challenger banks have lost some of their luster with the realization that banking is built on relationships and that retaining customer loyalty necessitates a presence across multiple—often unexciting—business clusters.

Setting the GCC apart is its importance as a center for Islamic finance, a market with assets of $4.5 trillion in 2022, according to November’s ICD-LSEG Islamic Finance Development report, the latest date for which figures are available. Bahrain and Dubai are positioning themselves as Islamic finance hubs, and applying generative AI would seem a natural progression that could have global implications for the two tech-centered economies.

One advantage: Falling costs of training could also move Islamic finance toward a wider adoption of GenAI. And while the interpretative characteristics of sharia law make adapting AI to Islamic finance a complex task, AI-driven applications and processes that offer opinions on financial products’ and transactions’ validity and adherence to Islamic finance law could further the GCC’s ambitions as a go-to hub.

That said, the need to address cultural and legal issues could hamper development of a dedicated AI tool, warns Yiannis Antoniou, practice head of Data, Analytics, and AI at consultant Lab49.

“The lack of a cohesive and widely accepted cross-border Islamic finance framework leads to complexity and inefficiencies that make multinational financial institutions’ compliance [obligations] especially difficult,” he says.

Automating work and deriving cost savings are just the beginning of what could be an extraordinary chapter in GCC banking. Yet, the real opportunity lies in harnessing generative AI to fuel growth—assuming the latest innovations do not overwhelm banks and result in a loss of control.

“Banks won’t be able to cordon off generative AI’s impact on their organization in the early days of change,” Accenture’s AI in banking report states. “It touches almost every job in banking.”

Still, with substantial financial resources and a falling cost of training personnel in AI, banks in the GCC have an opportunity to overtake the successes of their maverick fintech rivals.

Global Finance: You have served at various companies. How much of a CFO’s role is company-specific?

Alan Taylor: The role of CFO has consistent responsibilities across companies. You have a responsibility to help allocate resources in the best way possible. You are the chief resource allocator, and that is a fun responsibility in general. At Weave it has been unique because we’re building something that people really want, addressing a significant need, and the growth has been incredible. Experiencing this growth over the past eight years has been rewarding.

GF: What has been your biggest challenge?

Taylor: The biggest challenge is managing this exceptional growth. Scaling and balancing resources is critical. I’ve made mistakes by under resourcing some groups and over resourcing others and erring on both sides is a problem. People generally respond well to frugality, but there’s a limit. Adequate resourcing is essential to avoid stifling productivity. You’ve got to get people adequate resources; you can’t starve them.

GF: What is the thing you spend most of your time on?

Taylor: As a public company CFO, I focus on reporting earnings and engaging with investors. It involves communicating our story, delivering results and maintaining credibility with investors and analysts, which helps establish us as a trusted investment. You become the face of the organization; you develop a level of credibility that helps the organization to be a trusted ticker symbol.

GF: Is it true that the role of the CFO has become more strategic over the years?

Taylor: Absolutely true. We recently introduced a Strategic Annual Plan Process [STRAP], which is a three-year forecast, updated annually. In the fall, the first year of the plan becomes our annual operating plan for the following year. Although the software industry evolves rapidly, and three years out is a very long time, this forward-looking approach provides valuable direction and helps us remain agile. This kind of strategic planning is essential for our role as CFOs.

GF: How do you see artificial intelligence (AI) affecting your work?

Taylor: AI’s potential is immediately apparent in several areas. It excels at fact-checking and data verification, traditionally the responsibility of CFOs. AI performs these tasks quickly and accurately, improving efficiency. Financial reporting tools like Workiva are integrating AI, enhancing the preparation of documents such as 10-Ks and 10-Qs, incorporating risk factors and issues from other companies.

There are tough aspects that will become clearer in the future. Operationally, AI promises substantial efficiency improvements. Reports indicate a 25%-30% increase in coding efficiency for product development teams. The finance team must drive the planning process to realize these efficiencies.

GF: What keeps you up at night?

Taylor: Security and phishing. As the allocator of resources, protecting them is vital. Ransomware attacks and system hacks pose existential risks, threatening customer trust and operational integrity.

GF: What advice do you have for aspiring CFOs?

Taylor: At the end of the day, the key thing you take with you from different job experiences are the relationships. Our CEO Brett White often says, “Be kind to people, be tough on the business,” and that is a critical attribute. Caring about people and supporting their success is essential, especially for finance staff. As a CFO, the most valuable resource is people, and they must be treated with respect and consideration. I’m the chief resource allocator, and the best resource you have in any business is the people. You have to care about them.

Once upon a time, banking was simple: Take deposits, use depositors’ money to make loans, and transfer payments between clients and earn a commission.

All three pillars are now under assault.

Longer-term savings have migrated to wealth managers who promise much better returns over time. An array of innovative fintechs offer alternatives for payments. Home or car buyers are ever more likely to borrow from nonbank originators. Some 70% of residential mortgages in the US, the world’s largest banking market, are processed by nonbanks, according to Brian Graham, partner at the Klaros Group, which advises and invests in financial firms.

Corporate borrowers have been shifting to nonbank lending since the 2008 global financial crisis, the latest hot alternatives being collateralized loan obligations and private credit. The latter has mushroomed to $2.1 trillion globally and is still growing fast. Nonbank financial institutions, or NBFIs, hold two-thirds of financial assets in the most advanced economies, according to the Financial Stability Board (FSB).

In order for the banking sector to regain market share from nonbanks, banks will need to change how they compete for customers. Long-established banks will need to become less cautious and more agile in navigating regulations. One avenue for the banking sector is to start from scratch, as KakaoBank did in South Korea and Nubank in Brazil.

Higher interest rates have given banks some relief over the past few years, increasing their net interest income while hampering competitors—particularly fintech startups dependent on equity financing. The FSB reported that global NBFI assets shrank 5.5% in 2022, the first notable decrease since 2009, while banks’ balance sheets grew by 6.9%.

Long-term trends remain adverse, though. “Banks are losing market share to nonbanks, and the situation is much worse than what the statistics show,” says Miklós Gábor Dietz, lead of McKinsey’s Global Banking Strategy and Innovation team, the global Ecosystems Hub and is the managing partner of Vancouver Office.

Banks are competing with the equivalent of weights tied to their ankles. These, of course, are the extra regulations and capital requirements most countries have piled on since the 2008 crisis. Any new loan needs to be risk-weighted and have capital set aside to offset it, restraints that nonbank lenders can often ignore.

Even as earnings seem to be healthy, banks struggle to earn a return on all that capital, Dietz points out—particularly on corporate lending. “On paper, this is the most profitable business in the world,” he says. “But on average globally, corporate banking is adding no value.”

Banks’ long histories and diverse business lines leave them lagging behind newer, more-focused rivals, as competition increasingly revolves around technology, adds Steven Breeden, American financial services technology lead at Bain & Company. “Banks are struggling with historical complexity traps and breaking through silos,” he says. “There’s a cohort of 10 or so banks globally that really get it on tech transformation.”

Yet banks get one large advantage in exchange for the regulators’ heavy hand: state-guaranteed deposits, a cheaper and (usually) more stable source of funding than nonbank rivals can tap.

History and the capacity for a wide range of transactions also have their pluses. “Banks inject trust into the financial system,” says Sandeep Vishnu, a partner at industry consultant Capco. “They are continuing to lose market share, but any complex transaction requires banks to play a role.”

Increasingly, that role is to “run in the background,” and have deep pockets on call, while more-dynamic actors close the deal directly with borrowers or merchants. Rocket Mortgage or another US originator may find the home-buying customer; the loan will likely be packaged into a mortgage-backed security and bought by a bank. At the corporate level, a private credit or leveraged-loan syndicate will likely secure bank credit lines as an anchor.

That’s risky for the financial system, says Viral Acharya, a professor at New York University’s Stern School of Business who specializes in financial regulation. “The growth of nonbanks is really coming on the back of liquidity from the largest banks,” he explains. “The cynical view is that everyone wants to have a put from the banking system in an emergency.”

Running in the background is not a great strategic position for banks either, McKinsey’s Dietz adds. The customer-facing entity gets a free ride, so to speak, on the bank’s capital base, and reaps consumer data that may be more valuable than the transaction itself.

The classic example in developed markets is the relationship between credit card provider Visa and the numerous banks that underwrite its plastic. Equity investors value Visa at 29 times earnings and 13 times book value, according to Bloomberg. The equivalent numbers for JPMorgan Chase, the world’s most profitable bank, are 12 and 2.3. “Banks haven’t solved their fundamental problem, which is losing customer ownership,” Dietz concludes.

The outlook for traditional banks is not all so bleak, particularly in emerging markets. Nonbank competitors are less developed there, leaving banks in control of 57.9% of financial assets, the FSB reports.

The megatrend of unbanked populations joining the financial system via cellular connection may enhance, not threaten, banks’ dominance. India is the prime example. Narendra Modi’s government requires the mobile payments systems that have mushroomed over the past decade are overwhelmingly linked to banks, Vishnu says. The result: 400 million new bank accounts.

Banking systems in middle-income emerging markets tend to be younger, with less “sticky” customer loyalty than in North America or Western Europe, leading to hotter competition and more innovation that crowds out nonbank startups. “The most innovative banks in the world, aside from India, are in Turkey or Poland,” Dietz asserts. “They are leapfrogging with more digital, more automated services.”

Elsewhere, online-only “digital-attacker banks” are shaking up the landscape, Bain’s Breeden says. The biggest player in this category is probably Nubank, based in Brazil and expanding aggressively into Mexico and Colombia. Founded in 2013, it exploded from 25 million customers in 2020 to more than 100 million earlier this year, focusing on credit cards and personal loans for retail customers.

In South Korea, online-only KakaoBank has grown from a standing start in 2016 to more than 23 million customers in a nation of just under 52 million. Attacking a highly mature banking market, the bank found a niche as the go-to institution for refinancing mortgages. It’s now eyeing expansion into Thailand in partnership with brick-and-mortar incumbent Siam Commercial Bank.

Unlike many fintechs around the world, Nubank and KakaoBank are also making money. Nubank’s net profit hit $1 billion for 2023, and KakaoBank earned about $267 million.

One more innovative champion hails from the unlikely location of Kazakhstan. Kaspi, one of the biggest e-commerce platforms in the oil-rich ex-Soviet nation of nearly 20 million, used its customer reach to start Kaspi Bank, with dramatic results. “Their return on equity is 90% instead of the 10% that’s standard,” Dietz notes.

Regulation has stymied similar vertical integration in bigger markets. Chinese authorities famously curtailed Ant Financial, sister organization to e-commerce power Alibaba, a few years ago. That has left most lending in the world’s No. 2 economy to very traditional state-owned banks.

Globally, much-anticipated financial services competition from online giants like Amazon, Meta, and Google has largely failed to materialize—largely because they would have to obtain banking licenses in the process. “Big tech has been making some surgical moves, mostly in the realm of payments and digital wallets,” Breeden says. “They are reluctant to set up fully fledged banks from a risk-compliance perspective.”

In the developed world, the banking establishment also has tools to fight back against nonbank competitors, if it can shake off some rust and unleash those tools. The spread of digital payments systems actually represents an opportunity for banks, Capco’s Vishnu says. They can negotiate better fee splits with these new entrants than with incumbent credit card providers like Visa. This would bolster a key income source for banks in the US and Western Europe. “Digital is now disintermediating the credit cards,” he notes.

Banks still retain considerable “customer ownership,” and of course trust, as the holders of deposit guarantees. The banks can possibly build on these factors to expand services instead of retreating.

One obvious area would be shifting more depositors into asset management, selling the convenience of keeping various forms of wealth under one roof. While larger banks are already doing this, they could do it more effectively. “Banks are seeing a lot of stress on net interest and fee income,” Vishnu says. “Capturing some of the wealth management that’s going outside banking could counteract that.”

Though banks in the US have access to the huge money pool, only two of the top-10 US asset managers are banks: JPMorgan Chase and BNY. And they are dwarfed by nonbank giants like BlackRock, Vanguard Group, and Fidelity Investments. European banks are more competitive in this area, accounting for three of the top-five asset managers on the Continent: Credit Agricole, UBS Group, and Deutsche Bank.

Dietz, at McKinsey, sees much broader possibilities for banks that can “organize themselves around customer needs,” creating and dominating new financial services verticals. For instance, one-stop shopping for home acquisition and ownership: combining brokerage, mortgage, and insurance in a single app. Or offering, as financial services firms do, “an adviser who knows everything about you”: wealth management, estate planning, tax and legal services bound together—a service like a private bank for the nonrich.

Breaking out these core functions into separate units would also bring universal banks some of the focus and maneuverability of “pure play” disrupters, while maintaining the strength and breadth of a larger organization, suggests Dietz.

“Unbundling the business and expanding into some nonbank areas are the two things that banks can do to escape the value trap they are in,” he says. “If they do, the opportunity is tremendous.”

One big obstacle to this transformation is psychological. Since 2008, many developed-world banks have hunkered down in a defensive crouch, focused on building buffers to avoid the near-death experiences of that time and complying with the onslaught of new regulation. Going on the offensive into new business lines has seeped out of their DNA. “Banks need to start erring on the side of maximizing their reach [and] not worry so much about losses,” Capco’s Vishnu says.

Another hurdle is technological. To leap to the kind of one-stop shopping Dietz envisions, banks will need software that works as simply and intuitively as that of digital-native pioneers like Uber or Airbnb. “Banks need to step up their game on human-centered design,” says Bain’s Breeden.

Among banks in the developed world, big US institutions look the best prepared for ongoing shifts in the financial landscape. They are ahead of the pack technologically, Breeden observes. “A handful of banks in the US Tier 1 rise above all others in being tech forward,” he affirms.

The top US players can also take advantage of weakness further down in the country’s archipelago of over 4,500 licensed banks, Klaros’ Graham says. Washington regulators contained the fallout when three second-tier banks—Silicon Valley Bank, Signature Bank, and First Republic Bank—abruptly failed last year. But many others continue to struggle with their key weakness: unrecorded losses on bonds bought when interest rates were much lower. Mounting liabilities from commercial real estate loans are compounding the problem.

A large amount of the US banking system’s reserve capital is “impaired,” Graham states. The concealed weakness is not dire enough to trigger a 2008-style wave of insolvencies, adds Graham, but it is enough to spawn an army of “zombie banks” that have reined in lending to conserve capital. Either they will yield clients or they’ll have to be acquired by stronger rivals. “This is an incredibly target-rich environment for banks that can afford to play offense,” Graham says. “They can acquire teams or grow loans.”

Like death and taxes, highly regulated banks holding state-guaranteed deposits are embedded as a fact of life in complex economies. “There is no alternative to banking as an ecosystem,” says Vishnu.

Also, like death and taxes, potential clients and customers increasingly avoid banks to the extent they can. For banks, there is no time to lose in reversing that trend.

“We are going to adopt blockchain technology to ensure that all data and transactions in the government space are transparent and tamper-proof,” said Vice President Mahamudu Bawumia at the May 14th Commonwealth Regional Conference and Annual General Meeting of Heads of Anti-Corruption Agencies in Africa.

Ghana’s previous plan, Revenue Assurance and Compliance Enforcement, was designed to identify and eliminate revenue leakages in areas such as petroleum bunkering, gold and minerals exports, port operations, transit goods, warehousing, border controls, and free zone operations.

 “Implementing blockchain technology to safeguard government revenue involves creating a transparent, secure and efficient system for managing and tracking revenue and expenditure,” says Arthur Augustus, a senior software engineer at Lagos-based fintech vendor Parthian Partners Limited.

By harnessing blockchain’s immutability, decentralization and transparency, African governments can significantly reduce fraud, improve tax compliance, and ensure efficient use of public funds. This, in turn, will lead to better governance and increased public trust, according to Augustus.

“Government procurement processes can be managed using smart contracts, ensuring that contracts are awarded and executed based on predefined criteria. Also, blockchain can be used to track the supply chain of goods and services procured by the government, ensuring that there is no misreporting in the supply chain,” he said.

These automated contracts ensure that all parties compete fairly and that the most suitable vendor is selected while allowing for proper tracking along the supply chain. They also ensure that goods and services are delivered as specified and prevent fraud and misreporting. According to Augustus, governments must prepare for the downsides of this innovation, including data privacy issues, environmental effects, and resistance to change. He added that they can mitigate these challenges by investing in technical expertise, creating robust legal frameworks, and ensuring that the transition to blockchain is inclusive and sustainable.        

Tech consultant Juniper Research predicts that banks’ spending on genAI will rocket to $85 billion in 2030, up from $6 billion this year, as the firms push to offer a more personalized user experience. But a key lesson of the blockchain bandwagon is that innovation for the sake of it is unlikely to succeed, whereas innovation that solves problems or provides a better user experience has value.

Among the past year’s innovations that appear to be yielding the best results are systems that solve cash-flow and liquidity-management problems, improve supply chain efficiency, and furnish a more seamless way for treasurers to carry out their daily operations. All of these deliver real value to their banking partners.

Similarly, our respondents singled out innovations that offer greater protection against fraud, increase stability and performance, and improve support for small and midsize enterprises (SMEs), citing the additional value they provide.

Some hyperpersonalized app enhancements underscore how far banks have come in tailoring their services to match customer journeys, many of them leveraging AI and machine learning to provide personalized recommendations in real time. From apps tailored to different age ranges to wealth management and financial advisory tools providing customized advice and investment guides, all promise to help banks strengthen their client relationships    —Gilly Wright

Our initial call attracted entries from innovators touting their achievements at the global, regional and local levels. Global Finance also received nominations for the top innovations of the year from correspondents and external sources. To accommodate invention, we do not set categories but insist that nominations be a “first” in some way. The editorial board evaluated entries, and nominations were vetted with independent research. Winners were selected following rigorous debate.

While geopolitical tensions, rising oil prices and financial stress are being felt globally, financial institutions understand that innovation during tough times isn’t just about survival but about positioning for future success. Challenges often reveal new problems to solve, demanding increased focus on finding innovative ways to improve efficiencies. Customers’ changing needs also require a response identifying and addressing these evolving needs. The 2024 Best Innovations alumni have developed problem-solving solutions using existing and cutting-edge technologies to push ahead with new ways to improve user experience and meet future challenges, whether to solve a problem, address a need, or create more value.

Brazil’s Banco Bradesco is using the artificial intelligence (AI) revolution to understand central bank communications better. Its new generative AI tool analyzes and summarizes the minutes and announcements from the Monetary Policy Committee of Brazil’s central bank and the Federal Open Market Committee of the US Federal Reserve. It generates detailed visualizations like time-series graphs almost immediately. Other features include a “Hawk/Dove indicator,” which provides a simplified representation of the direction of the Central Bank of Brazil’s monetary policy.

Bradesco’s resource managers are the tool’s main users. The bank believes it creates analyses and summaries that are faster and more bias-free than traditional analyses. Its use could lead to revenue gains of as high as 4.2 million Brazilian reais (about $818,000) annually, Bradesco projects.       

Helplines have existed for decades. In Central and Eastern Europe, they are often used in the farming sector, where users can ask questions of agricultural engineers. However, providing live experts to answer questions requires expense and time. Users sometimes have to wait hours, even days, for an answer.

Turkey’s DenizBank solved this problem by integrating OpenAI’s ChatGPT services via application programming interface (API) to enhance the efficiency of its “Ask an Engineer” offering. Launched in March 2024, the chatbot is dynamic, meaning it improves the more it is used.     

In Kazakhstan, would-be homeowners often engage in shared-equity construction, a process in which future owners buy shares in a house under construction. One shortcoming is that the actual use of funds isn’t always straightforward.

Eurasian Bank’s AI-based tool allows real-time automated and transparent monitoring of shareholders’ funds during housing construction. This mitigates fraud and discourages inflated costs. Forecast analytics are used to vet changes in the timing of construction and installation work, and the protocol ensures all necessary documents are accessed during the construction process. 

Kapital Bank has been leading the charge in Azerbaijan’s digital transformation, where 50% of its loan sales are now online. Its secret sauce has been facial recognition software spiced with AI chatbots and a new online scoring model that can verify a customer’s identity and assess whether they are qualified for a loan. The service is available 24/7, and a borrower never has to visit a physical branch.

The crypto- and digital-asset market is filled with friction and security risks. However, in 2023, BBVA in Switzerland became the first Tier-1 eurozone bank to provide individual investors custody and trading services for 15 selected cryptocurrencies. It also added tokenization services.

These new capabilities will allow BBVA to meet the needs of its private banking and institutional clients, including fund managers and large companies keen to explore new business opportunities in the digital environment.

The project’s deployment required the collaborative efforts of several bank departments, including business, legal, compliance, engineering, security and IT, as well as outside technology vendors Metaco and Avaloq.

China’s securities depository, China Central Depository & Clearing Co. (CCDC), recently rolled out one of the world’s first public platforms for blockchain-based digital bond issuance. The underlying distributed ledger technology (DLT) ensures data transparency, openness and multiparty verification.

Not only can market risk be better monitored, but market costs can be saved for participants: about $30 million so far, estimates CCDC. By the end of 2023, the blockchain-based digital bond platform was connected to more than 20 representative financial institutions, including the Industrial and Commercial Bank of China, Bank of China, Bank of Communications and China Merchants Bank.     

R3’s Corda is a leading DLT platform for financial services organizations. In October, it powered the first digital bond issuance on Euroclear’s Digital Financial Market Infrastructure.

The bond, issued by the World Bank with Citi acting as issuer agent, raised €100 million (about $108 million) to support the World Bank’s sustainable development activities.

The Corda platform prioritizes privacy, security and interoperability; and it has supported many other DLT projects, including Progmat’s recent tokenized bond project in Japan. 

In December 2022, the First Abu Dhabi Bank launched a white-label treasury management system, delivered as software as a service (SaaS), in collaboration with fintech platform provider ION Group. One of the key features is a pay-as-you-go model that can bundle modules or functionalities depending on client needs and priced accordingly. Additional modules can be activated and made available when needed.

FAB also launched a sustainability-linked current account for businesses to support clients in achieving environmental, social and governance objectives by contributing to sustainable developments, integrated into their everyday cash management and a sustainability-linked supply chain finance offering.   

In 2023, Gulf International Bank began to offer an automated tool to help onboard suppliers electronically to supply chain finance programs. This tool allowed the entire buyer-supplier ecosystem to move away from manual invoice and payment processing to real-time monitoring of invoices, payments and balance tracking.    

The bank’s New Cash Management Program consists of two innovative solutions for corporate customers: the Multi-Currency Optimizer and Virtual Account Management. With the first customers activated at the end of 2023, the program includes the first and only notional cash pooling in Italy, optimizing corporate treasury management for groups of companies with international multicurrency operations, including foreign exchange (FX) and liquidity management.    

TreasurUp has created the first excess-liquidity front end for banks, going live in 2024. It’s designed from the clients’ point of view—bridging the gap between identifying liquidity needs and liquidity products—and ranges from basic trade to advanced optimization. Linked to cash visibility and cash flow forecasting, it gives an accurate starting point but also allows for a dynamic forecast and recommendation on a “best fit” product—from a savings account to fixed income products and even FX swaps, all using the bank’s pricing. Clients can choose from basic triggers to advanced liquidity management, combining multiple products seamlessly into cash positions and forecasts.  

Taiwan’s CTBC Bank has developed an AI-powered protocol designed to thwart customer-level fraud before it is committed. According to the bank, AI Skynet can identify 80% of suspicious accounts 90 days before a scam is reported, reducing fraud cases by 24%. CTBC has been using patented AI technologies to improve credit underwriting, reducing appraisal times by 40%. Its “digital robots” have generated credit scores for all 10.2 million of the bank’s customers.

CTBC Bank has the most ATMs of any organization in Taiwan. With the AI empowerment brought by its AI Skynet project, its ATMs now call the nearest dispatching police office automatically and in real time when a suspicious transaction is detected.

Banks increasingly use face-recognition technology for customer onboarding and electronic know-your-customer (KYC) compliance. However, companies still worry about “face-spoofing attacks,” in which fraudsters use a fake face—such as a photograph, 3D model, or physical mask—to bypass a facial recognition system.

Thailand’s KASIKORN Business-Technology Group has developed computer vision technology to foil such attacks. It uses active and passive “liveness” detections. Indeed, KASIKORN is the only organization in Thailand and the third in Asia to achieve this highest level of ISO accreditation for facial-liveness detection.        

Many of the new reportable fields introduced by the 2024 European Market Infrastructure Regulation Regulatory Fitness Program (EMIR Refit) relate to commodities and energy, and gathering the necessary reference data may prove challenging for many institutions. The new regulations went into effect for the EU on April 29 and will go into effect for the UK on September 30.

Fintech firm SmartStream’s Reference Data Services (RDS) has created a new data management service, EMIR Refit, to help firms comply. It is based on validated reference data gathered from multiple sources and covers exchange-traded derivatives and supporting attributes for listed securities traded over the counter. 

Features include opening foreign currency accounts, cardless cash withdrawals, integration of a digital wallet service, insightful views into spending, the DAwards rewards program, and access to the Rashid virtual assistant. The mobile platform also provides Islamic lifestyle services like checking prayer times, Qibla direction and Athkar, as well as weather forecasts. Families can view and transact using minor accounts. At the same time, cardholders have complete control over their cards. This includes enabling them for international use, managing cash advances and applying for new or replacement cards instantly.        

In a first for Bahrain, the National Bank of Kuwait launched, in June 2022, an enhanced app offering a comprehensive solution—integrating multiple banking products and simplifying the customer’s experience. The user can spend, earn and enjoy rewards without the worry of missing the settlement of outstanding payments.      

Launched in December 2023, QIB Lite is a user-friendly and simplified version of the QIB Mobile App designed for individuals seeking quick and straightforward access to their daily banking needs. It is aimed at low-income earners in Qatar to improve financial inclusion. It consolidates all features and services into one screen, making it easier to navigate and more accessible.          

February 2024 marked the launch of Jeel Weyay, an innovative digital banking experience for children ages 8-14, featuring a creatively designed card and access to their banking application.           

The Omnify API platform is part of Arab Bank’s fully integrated portfolio of digital banking offerings. Arab Bank’s fintech, Acabes, designed the banking-as-a-service (BaaS) API platform for select markets in the Middle East and North Africa. It enables partner companies to embed financial products for their customers while providing customers with the requisite tools to develop integrated and advanced offerings. Omnify also has different APIs that offer financial products like KYC screening, accounts using virtual international bank account numbers, custom virtual and physical credit and debit cards, and various payment capabilities.

Bank Millennium’s new mobile app for business and corporate customers is a user-friendly application that can handle large volumes of data for corporate finance departments. To develop the app, Bank Millennium interviewed customers to understand their organizations and how they use the bank’s solutions. The app provides many features like biometric login, easy management of multiple companies and company accounts, more functionality for domestic and foreign transfers, one-click payment authorization, complete order histories, and quickly generated statements that can be sent via a messaging app.          

Papaya Global’s workforce payments offering is an SaaS platform specially designed for the global workforce. This true end-to-end fintech platform fuses global payroll and cross-border payments into a single process. It delivers payments directly to a worldwide workforce, without bank processing or currency conversion fees. Papaya enables companies to pay an entire workforce, tax authorities and benefits vendors using a single platform. This automated platform supports different types of employment, ensures compliance globally and provides real-time reports on workforce spending. Papaya also integrates human resources and finance data through human capital management and enterprise resource planning systems to create a single source of truth for clients.

Standard Bank’s Smart Nudge supports client engagement by leveraging machine learning and AI to suggest personalized and innovative opportunities for clients, including additional information, products or other relevant content. This business-to-business engine considers the corporate decision-making environment and information across various trading-asset classes, client behavior, and transactional data to develop recommendations. With Smart Nudge, teams can collaborate across business units to expand relationships with clients further. This tool also recalibrates based on interactions and feedback to improve the accuracy of its output and recommendations.

Akbank’s wealth management team introduced a digital portfolio management product accessible through the bank’s Akbank Mobile app. This product simplifies investing for customers and lowers the barriers to entry for investing. The tool streamlines traditional processes and offers products tailored to its customers’ investment objectives. Customers also can access finance professionals who can help manage their portfolios. Users can select a portfolio that aligns with their risk tolerance and financial goals and monitor it on their mobile app while accessing funds at any time. By scaling its offerings, Akbank’s product has lowered the capital requirements and created a fully digital experience.     

Taxpayer refund advance loans are a high-demand product requiring analysis of thousands of documents during specific times of the year. Banco do Brasil’s Digital Compliance project leverages AI technology to create a more efficient process. The model extracts client information from the documents using a neural network and optical character recognition (OCR) services, including name, address, tax paid, bank account and validation codes. The Digital Compliance project saves time by processing millions of records and eliminating human error. The result is a better user experience.

Kuwaiti wealth adviser Markaz unveiled its GCC Momentum fund, the first passive fund to invest across the Gulf Cooperation Council (GCC) markets to provide regional exposure. The fund follows the momentum methodology and holds shares of companies listed in the S&P Momentum GCC Composite Index that have sustained a high momentum score over the past 12 months. This fund capitalizes on the upward trajectory of stock prices by investing in those with the most growth momentum.        

The Apex Structured Liquidity Solution gives institutional and private investors access to private credit and microfinance industries. This low-risk cash management solution offers risk-adjusted returns in US dollars. It provides investors with a predictable fixed-income cash flow without the volatility of mark-to-market adjustments. Through a partnership with FAVO Capital, Apex leverages AI to analyze clients’ live bank accounts, assessing their creditworthiness within two hours. Integrating with client bank accounts ensures more-reliable repayments that result in steady returns for investors.          

The Pulsoo app gives small-business owners a holistic approach to managing financial and regulatory positions. The app, a collaboration between Banco BPI and the Portuguese telecom NOS, is tailored toward small and midsize enterprises (SMEs), sole proprietors, and self-employed professionals. The app can aggregate and initiate payments as well as connect with tax authorities. It can link multiple bank accounts from major Portuguese banks and access a consolidated view that includes balances and transactions. Pulsoo users can transfer funds between accounts, initiate service payments, and process payments for government authorities. Its budgeting functions help companies manage funds, and it provides a preview of upcoming transactions.          

Boubyan Bank recently enhanced the peer-to-peer payment functionality, called ePay, of its SME banking application, so that small businesses can seamlessly manage their payments. With ePay, customers can schedule payments with automatic payment links. The new subscription model works such that customers can settle payments weekly, monthly or annually. They can also send automatic SMS reminders to customers who have not yet paid. And ePay enables customers to pay the links with a debit card, between Boubyan users with a face ID, or a credit card.     

OTP Group’s Naturália is a digital credit offering for the agricultural sector that offers loans based on nonfinancial agricultural information. With more precise data, OTP Group can monitor the industry’s risks and trends and offer more personalized loans to customers. Naturália uses a detailed, transparent and integrated database that maps properties and collateral to provide bespoke loans to customers. The platform also processes requisite loan documents in an automated process that leverages the integration of business process management, robotic process automation, OCR, and many document management systems.       

MNT-Halan developed innovative technology that provides a digital solution for unbanked populations. The resulting products have driven digital engagement, customer retention and market share. The company’s Halan superapp offers remote access to consumers for the entire Halan product and service ecosystem, including small- and micro-business lending, payments, investment products, e-commerce, and consumer finance solutions like savings and buy-now-pay-later products. Housing these services in one app makes financial processes more accessible to underserved communities. Users can receive salaries through the app, transfer funds to other accounts, make investments and purchase items.

Among the company’s offerings is Neuron, a core banking system platform in the Middle East and Africa designed for integration. The API software enables MNT-Halan to connect with various digital banking services that optimize the banking experience. Neuron connects users, merchants, lending agents, and MNT-Halan branches to give customers a more active role in their finances while developing their businesses to achieve financial independence.    

Payment institution Roger (PiR), a fintech based in the Czech Republic, has developed the region’s first service for automated invoice verification. The service targets small and midsize enterprises (SMEs) that rely on factor financing to maintain consistent cash flow.

Verifying invoices’ creditworthiness is critical in factor financing, but it takes time. However, using automation and an online interface, PiR has dramatically shortened the period an SME must wait to be paid—from 60-90 days to just three days.

Each invoice is automatically processed based on electronic data interchange communication. Input data is decomposed into structured code, and the system then transforms it into invoices written to the verify invoices interface and then sent for approval.

SMEs now receive as much as 75% of the value of their invoice within three days, with the remaining 25% after the customer has paid.      

Moody’s is developing new offerings that disseminate its data and expertise to help its customers mitigate tomorrow’s risks. By leveraging AI and machine learning, Moody’s products create efficiencies and deliver powerful insights to customers. The company deployed a copilot tool to employees to drive firmwide innovation and create a development life cycle. Moody’s Research Assistant is an add-on to CreditView that combines genAI with Moody’s proprietary data. This product is designed to find real-time answers and generate credit memos and custom reports from Moody’s extensive content. The Automated Credit Memo combines genAI technology, data and analytics to assist loan underwriters in creating comprehensive, consistent credit memos for review and approval. This solution compiles relevant information currently in a bank origination system. It combines that with Moody’s content on borrowers, market conditions and third-party data, that can be integrated with Moody’s available financial data and know-your-customer compliance data.

Following a successful launch in the UK and North America, MilltechFX expanded into Europe in March 2022. With its FX-as-a-Service offering, MilltechFX’s multibank FX marketplace helps asset managers and corporates significantly reduce FX costs and the operational burden associated with FX execution and rolling hedging requirements.  

Global Finance: BBVA recently introduced a machine learning (ML) pipeline for early debt recovery. What problem does this innovation solve?

Clara Higuera: When clients start facing difficulties in repaying loans, this is a double problem—for the customer and for the bank. Until two years ago, the debt recovery process was very manual, delaying offering solutions to clients.

We now have five machine-learning models that are either in development or in the production process. One model, for example, predicts the probability that a client will start facing difficulties—e.g., being unable to repay a loan—even when they are up to date with payments. Another is a model for predicting prolonged default—i.e., a default lasting two years or more for a customer already in default.

These models allow the bank to offer solutions earlier—within a month for many clients—whereas before, it could take a year before a solution was offered to those clients.

GF: What solutions or interventions can the bank apply when a loan appears to be troubled?

Higuera: It varies. It can involve a call from a financial adviser to a client or the offer of a refinancing solution. The ML models also rank clients according to their criticality, so financial advisers can prioritize which clients to contact first.

GF: Your offering uses a nonlinear boosting algorithm, XG-Boost. Nonlinear ML algorithms have been criticized for lacking interpretability. That is, it can be difficult for a bank to explain in everyday business language how it has arrived at a decision—either internally or to a client. Is this a concern for BBVA?

Higuera: Currently, we have used mainly tree-based models, like XG-Boost, which are less interpretable than logistic regression [which the bank used previously]. But for this reason, we have an evaluation and interpretability module in the pipeline that helps us visualize and understand the more important variables globally and locally.

Also, these models will not be used directly for the client but are more for our financial managers to manage debt. We do not use the most uninterpretable models, like neural networks, because we want some interpretability.

Finally, we hold sessions with the business units to analyze specific cases with them, which helps to [explain decisions and] uncover potential errors.

GF: Did the ML Pipeline require a “culture change” within BBVA before the innovation could be developed?

Higuera: The bank has used analytics for a long time and already has an established way of working. However, it took some time to build this new model, and we had to build trust to reach our goal. This was probably the most difficult part because we had to live with a lot of uncertainty.

We had to approach it by integrating the traditional methodology [i.e., logistic regression] with the new one [XG-Boost] and report performance comparisons so we could convince everyone that it worked.

It was also important that the team that was formed included data scientists from the bank’s Risk Analysis department and our AI Factory unit. As new modules were added to the pipeline, progress was constantly discussed.

GF: Is there any one of the five models that has been particularly useful?

Higuera: We see each of these as a funnel to help prevent clients from going from a critical state to an even more critical state. Each model provides insights that can slow down that movement toward default. The project is designed to be holistic—to help clients earlier.

GF: What organizational and innovation lessons have you learned?

Higuera: The value that data and AI can give to your organization is essential. Communication between the technical and nontechnical sides of the organization is also critical. Working as a team, a fundamental value at BBVA, is also essential.  

Global Finance: How will artificial intelligence (AI) influence banking of the future?

Bahadir Yilmaz: AI enables faster and smarter decision-making in a personalized fashion, using much bigger datasets than ever before. Data combined with superior analytics leads to insight and foresight, which allows us to give our customers a superior experience that is easy, personal, instant and relevant. We would like to position analytics and AI as the most critical enablers in transforming our operations. We have the people, the knowledge and the management support to achieve this. Long term, we must stay close to the latest developments in the market, so we must stay relevant. Therefore, having an active and safe approach toward technologies like generative AI is key.

GF: How does ING balance innovation with Europe’s more cautious approach to generative AI (genAI)?

Yilmaz: ING supports innovation while ensuring that neither the bank nor our customers are exposed to any risks related to innovation or experimentation. Innovation initiatives must be done in a responsible, structured and supervised way. This is especially true for genAI, a new technology in uncharted territory. We recognize it has potential benefits, so to test this, we’re taking a tightly controlled and focused approach where we can apply genAI and learn from controlled experiments. As a bank, we have access to a lot of personal information about our customers. They trust us to keep this data as safe as their money. We have a responsibility to safeguard their information, protect their privacy and ensure our systems and online environment are secure. We also must leverage the potential of AI in a responsible manner, aiming to keep the bank safe by focusing on and prioritizing domains like KYC, detection of financial crime, fraud and sustainability.

GF: How are you future-proofing ING’s use of genAI?

Yilmaz: ING recognizes the potential of genAI. It’s all about providing a better customer experience. We want our customers to interact with us in a personal, fast, relevant and easy way. We are taking a prudent and responsible approach to doing this safely and securely and exploring opportunities in two areas: customer contact, such as chatbots and transcript analysis, and software engineering to write code or fix bugs.

These experiments have shown there is value in incorporating genAI into our processes. Now we’re going to expand our experiments into areas like marketing—with consent from the customer—KYC and Wholesale Banking lending, where we believe genAI can potentially transform our business processes and contribute to a superior customer experience.

GF: What is innovation’s role at ING, and what other technologies are involved?

Yilmaz: ING has a reputable and well-regarded approach to innovation. Innovation in terms of using technology to improve our services and the customer experience continuously has always been a key part of our strategy. We aim to create products and services that seamlessly provide solutions to our customers regardless of segment and business line. Everything around us—from our customers’ needs and expectations to the business environment—continues to change increasingly rapidly. Many of these environmental changes are, and need to be dealt with, within the core of ING as part of our “business as usual” process improvements and our ongoing digital transformation.