Evident, a UK-based fintech company, develops the first AI Index to monitor banks' adoption progress

Evident, a UK-based startup firm launched in 2022, which raised US $3 million in funding from large investors such as Revolut, has reportedly developed an index that evaluates the top twenty-three banks in North America and Europe based on their capacity to create and implement artificial intelligence (AI) powered solutions.

The index, which is reportedly based on millions of public data points, rates the banks based on four criteria: AI-focused talent, AI innovation, leadership in AI strategy and implementation, and transparency of responsible AI practices. Additionally, Evident intends to gradually add additional banks to the index, including regional and online banks, and to extend its coverage to a number of other industries, including insurance, health and energy.

The preliminary rankings suggest that North American banks have a head start over European banks, with North American banks accounting for seven of the top ten banks. With a score of 65%, JPMorgan, which is reportedly known for its significant investment in AI technology, is at the top of the list, with Wells Fargo, Citi, Royal Bank of Canada and UBS rounding out the top five financial institutions. Morgan Stanley and Goldman Sachs reportedly ranked in the middle of the list due to their lack of transparency pertaining to AI governance guidelines.

The creators of the index stated that there is no distinction between banks that create their own AI platforms and banks that purchase AI products from other vendors. Additionally, the index is reportedly limited to measuring AI capability and is not determined by its return on investment.

Some financial analysts forecast that AI use will soar in 2023 as banks continue to improve their digital capabilities, streamline employee duties, and offer a more customizable and user-friendly client experience. Although chatbots powered by ChatGPT technology are expected to gain momentum in 2023, the technology has reportedly shown some flaws to be addressed.

Businesses continue to face compliance challenges, with 74% lacking infrastructure and workforce

Drata, a platform that automates continuous security and compliance, released the findings of its first Compliance Trends Report for 2023, which reportedly surveyed 300 practitioners in the IT and security space from rapidly growing entities to identify common challenges, goals and opportunities with security and IT compliance programs.

The 2023 Compliance Trends Report claims that 87% of respondents have experienced negative effects as a result of inconsistent compliance, such as slower sales cycles, security breaches, business interruptions, business relationship losses, reputational damage or penalties. The majority of survey participants identify a lack of people as the key obstacle to sustaining compliance, while also stating that boosting budgets and automating procedures could strengthen their capacity.

Additionally, the study found that 68% of respondents claim that compliance creates new revenue streams or serves as a competitive edge, while 32% reportedly view it as burdensome or merely checking the box. Moreover, 74% of respondents acknowledge that they lack transmission capacity or workforce to investigate or mitigate risks or security weaknesses in their operations. Adam Markowitz, co-founder and CEO, Drata, commented that the majority of information technology and infosec experts understand the significance of compliance programs but require adequate budget planning and digitalization in order to improve current manual processing and avoid future issues.

The European Commission proposes a new green industrial policy, aiming to ease state aid restrictions while diversifying supply chains

The European Commission proposed a new green industrial strategy, which is expected to be deliberated on by EU leaders at a summit next week. The proposal aims to loosen state aid rules, enabling EU governments to subsidize their own green technology investments. It also includes a proposition to use €250 billion of unused funds from numerous budgets within the EU to provide additional subsidies, which would reportedly nearly match the amounts available to US industry under the Inflation Reduction Act passed in 2022. Additionally, the commission has stated that it will continue to develop a plan for a new "sovereignty fund" that would reportedly be financed through public borrowing in order to serve as a potential source of future green subsidies.

Reports indicate that the EU can expect to gain from US subsidies to the extent that they lower the price of new technology globally. The commission's agenda reportedly includes improvements to expedite licenses and approvals, invest in talent, and advocate for new trade agreements that provide better access to global markets.

Ursula von der Leyen, President, European Commission, commented that Europe is committed to taking the lead in the clean technology transition, as the plan aims to simplify EU subsidy regulations and allocate funding for the growth of a "clean" economy.

Tanja Gönner, CEO, German Federation of Industries (BDI), responded to Brussels' initiative by stating that the Green Deal Industrial Plan correctly acknowledges the crucial role that business plays in the transition to climate neutrality. However, Germany's most powerful business association has a different perspective from the Commission, which reportedly aims to concentrate on specific climate-friendly technology such as heat pumps or e-cars. Gönner emphasized that Europe must pay attention to the strength of its industrial value chains rather than just certain technology.

Finland launches the first EU-approved euro stablecoin, EUROe

Membrane Finance, a Finnish fintech company, has officially unveiled EUROe, Europe's “first and only EU-regulated fully-reserved stablecoin” and payment network, licensed by the Finnish Financial Supervisory Authority (Fin-FSA). EUROe reportedly converts a fiat Euro into a 1:1 pegged digital currency that can be used for transactions on Ethereum. A EUROe is reportedly always equal to a Euro, indicating that at least one fiat Euro is present in a bank or financial institution in Europe, ring-fenced from Membrane Finance, for each EUROe issued.

In contrast to the high costs and slow speeds of traditional finance, the company states that it will enable almost instantaneous payments at close to zero cost. Every transaction in the EUROe network reportedly occurs "on-chain", which is documented to an unchangeable ledger. With blockchain, users will reportedly gain better knowledge of their lenders, transactions and assets, improving credit provisioning and lending decisions.

In addition, EUROe can now be used in smart contracts and for Ethereum transactions said reports. Smart contracts, which are self-executing programs, aim to instantly carry out transactions on the blockchain in accordance with pre-programmed criteria. Membrane Finance intends to publish EUROe smart contracts on a growing number of blockchains, including Arbitrum One, Polygon and Solana.

Juha Viitala, CEO, Membrane Finance, commented that stablecoins are a crucial component in shifting towards a blockchain-based financial infrastructure. Viitala added that the introduction of EUROe could motivate more citizens to use decentralized finance who were previously concerned about the volatility of cryptocurrencies.

Recently, Maki.vc, a Finnish seed-stage venture capital firm, reportedly invested €2 million in the business. The use of EUROe and smart contracts for corporate clients is reportedly now available through registration at euroe.com.

JP Morgan Chase plans to establish a new digital bank in Germany

JP Morgan Chase intends to establish a new digital bank in Germany, becoming the company's second overseas venture following the launch of Chase in the UK. The launch in Germany is reportedly scheduled for late 2024 or early 2025, with the intention of expanding into additional EU nations thereafter.

Reports indicate that JP Morgan Chase has been recruiting heavily in Berlin, potentially slating the capital as a headquarters for future EU consumer operations. Chase, a digital retail bank that debuted in the UK in 2021, with accounts currently totalling over a million clients and US 10 billion in deposits, also intends to expand its offering. JP Morgan also purchased Nutmeg, a UK-based startup, with the intention of integrating parts of the digital wealth manager into Chase.

American Express launches a cash flow management hub designed for small businesses

American Express has unveiled a new digital hub, dubbed American Express Business Blueprint, created specifically for small businesses and their cash flow management, offering them digital financial products, cash flow data and a simple method to access and manage business cards.

As part of American Express's plan to broaden its small company solutions beyond its business cards, Business Blueprint reportedly draws on the Kabbage platform, which was purchased in 2020. Complimentary tailored cash flow insights are reportedly available to all small businesses in the US, enabling them to make more informed financial decisions. Additionally, the Business Blueprint site reportedly enables small businesses to access applications for specific financial products, such as a business line of credit, to assist in managing their cash flow more effectively.

A recent American Express survey of 1,100 small businesses reportedly found that 82% of those polled stated that a cash flow management hub would free up more of their time for business operations, increasing efficiency (72%) and profitability (50%). In efforts to assist small businesses in managing their cash flow effectively, Business Blueprint aims to match products with their daily activities, such as borrowing funds, processing invoices and payments to vendors, initiating wire transfers, verifying account balances, making mobile check deposits and accepting credit card payments, to name a few.

My Insights, a free cash flow analytics tool that is reportedly integrated into the American Express Business Blueprint, offers small businesses personalized, round-the-clock data analysis of their business profile, providing them with analyses of incoming and outgoing cash flow, trends in spending and specific spending by account, a maximum of two years' worth of transactional history, 30-day cash balance projections, and expense notifications, warning clients of increased spending.

Danske Bank discontinues new financing of fossil fuels

Danske Bank, the second largest bank in Denmark, with approximately 3.3 million clients and DKK 2,800 billion (US $409 billion) reportedly invested in capital and loans, announced recently that it would no longer finance fossil fuels after determining that the financed emissions account for 99.9% of its carbon impact, stated reports. Additionally, the bank intends to support a structured transition to low-carbon economies and plans to refrain from providing refinancing or new long-term financing to oil and gas exploration and production (E&P) companies that do not establish a credible transition plan in accordance with the Paris Agreement.

Less than a week prior to the announcement by Danske Bank, Reclaim Finance reported that the top five banks in Canada, led by the Royal Bank of Canada, have invested US $37.4 billion in fossil fuel financing since joining the Glasgow Financial Alliance for Net Zero (GFANZ) in 2021.

The policy document, as stated by Danske Bank, intends to suppress long-term financing or refinancing to fossil fuels that derive more than 5% of their revenue from fossil fuels. However, it does intend to permit finance to otherwise ineligible corporations provided they are ring-fenced for renewable energy or carbon capture, utilization and storage (CCUS) operations, in addition to exempting companies above the 5% barrier that include 2030 phaseout plans.

Danske Bank stated that it had already cut its investments in fossil fuels by 37% and its lending to oil and gas industries by 50% since 2020, with the carbon footprint reportedly at 41.1 million tonnes.