“[Our] broad portfolio helped soften some of the impacts...We don’t think it’s going to bump back to the levels pre-COVID, but we hope that it’s going to bump back to a reasonable level.” ~John
“It’s actually been an interesting catalyst for a number of things...I think that this is going to be an interesting transformational moment for financial services...” ~Mayopoulos
“A lot of what we’ve been doing is listening to [our customers] to find creative ways to help serve them and help them get through these tough times. We've been lucky that we had started on a digital journey [that] enables us to leverage technology...to really serve our customers differently than we have in the past.” ~Kay
The discussion panelists:
- Senior Vice President and CIO of Principal Financial Group®, Kathy Kay, is responsible for the company’s global technology and digital strategies, IT and digital operations, and innovation.
- Stefan John is Senior Vice President, BASF Corporation and General Counsel and Chief Compliance Officer of BASF North America. As GC, John is responsible for BASF’s legal and governmental affairs in North America and as CCO he chairs BASF Corporations’ Compliance Oversight Committee.
- Tim Mayopoulos is the President of Blend, a Silicon Valley technology company in the consumer lending industry. Mayopoulos was President and CEO of Fannie Mae and has a long career in financial services including GC and other senior roles at leading financial institutions.
The regulatory environment and “tech debt” are two big challenges for financial services companies says Tim. “Many companies are still running on platforms that are 20, 30, even 40 years old.” One challenge “is just getting everybody comfortable, including regulators, with the idea that you can actually undertake these transformations without breaking things.” The good news? Financial regulators have become more open minded as they see the positive impact of technology in other industries.
Because you might be working in a regulated industry doesn't mean you can't be innovative adds Kathy. While you have an obligation to meet all the regulatory requirements, this doesn't mean that you can't think about solving problems differently.
“There's a recognition that if you don't start leveraging different ways of solving things, like using machines and AI and learning systems, and modeling things differently, that you might have more risks sticking to the old ways of doing things.” ~Kay
Turning to what he calls “the old economy” BASF’s John notes “we make stuff that you can feel touch and smell” and every aspect is highly regulated. A big challenge was convincing regulators that BASF “can survive fine and can work with technology in an environment like COVID.”
Solutions: Now and Next
As someone who started her career as a developer in the General Motors research labs Kathy was always fascinated by machine learning. In fact, she wrote learning systems. “I have always looked for ways for technology to help...
“...I am a former customer of Text IQ at PG&E. We were leveraging [Text IQ AI] to respond to litigation at a speed and quality that we never could have, just because of the complexity of the cases, the amount of data.” ~Kay
“I am one who is looking at AI from a problem point of view” says Stefan. While I may not fully understand to what extent AI can be a solution, “I can give you the problem, right?”
BASF has hundreds of thousands of customers and has enormous troves of data, notes Stefan. What do you do with all the data? We are sitting on a gold mine.
“AI hopefully is a tool that can help us mine that goldmine. Help us to understand what use we can make with all that data: how to structure it, how to commercialize the data that we are sitting on.” ~John
“I think about my days at Fannie Mae, we certainly used AI and machine learning to streamline many things for our employees and our customers,” says Mayopoulos.
"At Fannie Mae, they have this enormous document known as the seller servicer guide...and it goes on for many thousands of pages. We use natural language learning processes to [analyze customer queries]...to deliver those answers very quickly and concisely to the customer.” ~Mayopoulos
At the intersection of risk, regulatory compliance, technology, and innovation, our panelists go on to discuss the ways they have leveraged AI, and explore the many applications that have yet to be implemented and the profound benefits they portend like risk reduction, cost reduction, protecting customers, and delivering enhanced services.
It is a conversation and free flow of ideas that is both engaging and instructive. It should not be missed.
Learn more about AI for regulated industries here.