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Industry roundup: 7 February

Powering fintech innovation through Barclays and Rainmaking partnership

Barclays partners with Rainmaking, a global innovation and venture development company, to enable Barclays to launch a new suite of initiatives for fintech founders around the world, from the early stages to scale-up and beyond, and support their business growth and development.

Rise Start-Up Academy, a virtual accelerator for building ideas and digital skills for fintech founders in the early stages, was the first to launch. The application is available to founders working on new fintech trends such as wealth equality, climate and the future of money. The Rise Growth Academy will be launched in the next phase to provide capabilities in main areas such as investment preparation, recruitment, accelerating sales and leadership development. Additionally, a fintech venture studio will be operational in late 2022 on co-development of new fintech ventures in collaboration with in-house talent, start-ups and other major companies.

Barclays' quest to transform banking operations for customers and the clients it serves is supported with the new partnership. Barclays Group's innovation team works closely with start-ups at the forefront of innovation to deliver new products and services to market quickly and broadly.

Mariquit Corcoran, Group Chief Innovation Officer, Barclays, commented that collaborating with fintechs has enabled Barclays to unlock innovative opportunities for customers, colleagues and communities involved. According to the press release, Rainmaking has an impressive track record of working with large companies to build successful new ventures. The approach is based on a proven methodology used to build 65 proprietary ventures and accelerate over 950 startups and 100 cohorts through the subsidiary Startupbootcamp. Normally, only 10% of early-stage startups survive, but more than three-quarters (76%) of startup bootcamp companies are still active or retired. This created 4,626 jobs and raised more than $ 800 million, according to Rainmaking. 

Chris Locke, CEO Europe, Rainmaking, commented that by providing Barclays with the tools to improve digital skills, they can help fintech founders to build and scale their businesses for future revenue growth. Additionally, a new suite of state-of-the-art fintech programs integrated with the power of entrepreneurship will unleash the strength of Barclays' scale and expertise.

Sonal Lakhani, Global Head of Programmes and Strategic Initiatives, Barclays Innovation Office, will lead this partnership. Lakhani has also led the expansion of Barclays and Female Innovator Labs and Anthemis in the UK and Europe in 2021. As fintechs continue to evolve in the financial ecosystem, Barclays continues to play a key role through its award-winning fintech platform, Rise. Additional programmes for fintech enterprises at various stages of the journey will be rolled out in 2022.

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Singapore aims towards a smart digital economy boosted with AI ethics software

Singapore released a software toolkit designed to ensure that financial institutions use artificial intelligence (AI) in a responsible manner. In addition, five white papers have been released to help banks evaluate deployments based on predefined principles. The Veritas Consortium, a part of Singapore's National AI Strategy, is comprised of 27 industry players including Amazon Web Services, Bank of China, Bank of Singapore, Google Cloud, Goldman Sachs, OCBC Bank and Union Bank of the Philippines. The consortium developed the software toolkit to automate the fairness metrics assessment and facilitate visualization of the assessment interface. According to the Monetary Authority of Singapore (MAS), the open-source toolkit, available on GitHub, includes an interface plug-in that automates the evaluation of "fairness" indicators and integrates them into the IT systems of financial institutions.

MAS further commented that the toolkit provides a detailed methodology for incorporating Fairness, Ethics, Accountability and Transparency (FEAT principles) into the use of AI and data analytics within the financial services sector, while defining objectives in a fair assessment method and identifying potential biases.

Additionally, the toolkit’s ethics and accountability assessment section provides a framework to help financial institutions make quantifiable measurements of ethical practices. Organizations will be able to assess transparency by determining the amount of internal and external transparency needed to explain and interpret the predictions generated by the machine learning model.

Sopnendu Mohanty, Chief FinTech Officer, MAS, commented that “the new open-source software, assessment methodologies, and enhanced guidance will further improve the technical capabilities of financial institutions in developing responsible AI for the financial sector.”

Some members of the Veritas Consortium have also applied this method to various functions within the organization, such as customer marketing, insurance fraud detection and credit risk assessment. The group is looking to develop additional use cases and pilot projects with selected financial institutions within the consortium to further integrate the methodology into their existing governance framework. MAS is currently collaborating with InfoComm Media Development Authority and Personal Data Protection Commission (PDPC) to include the toolkit in PDPC's trusted AI testing framework.

Digital dollar coding developments via the Federal Reserve Bank of Boston and MIT

Researchers at Massachusetts Institute of Technology (MIT) and the Federal Reserve Bank of Boston are studying CBDC technology mechanics and have developed a system that can handle 1.7 million transactions per second without the use of distributed ledger technology. A study was published to describe a theoretical high-performance and robust transaction processor for a CBDC developed using open-source research software. Researchers have investigated two possible code bases, both of which exceed speed and throughput requirements.

The first DLT-based architecture organized fully validated transactions into batches or blocks and processed the transactions through an order server that embodies an ordered transaction history. Over 99% of the transactions were completed in less than 2 seconds, but the order server created a bottleneck, resulting in a peak throughput of approximately 170,000 transactions per second. However, the second architecture processed transactions in parallel on multiple computers without relying on a single order server to avoid double payments. This illustrated excellent scalability with a throughput of 1.7 million transactions per second and 99% of transactions completed in less than a second.

While ​​blockchain technology ideas were used, a distributed ledger operating under the jurisdiction of different actors was not necessary to reach the outcomes, according to the research. Furthermore, a distributed ledger does not conform to the trust assumptions of the Project Hamilton methodology, which assumes that the platform will be managed by a central actor. Additionally, distributed ledger architecture has its disadvantages even when processing under the control of a single actor, such as performance bottlenecks and the need to maintain transaction history.

The Federal Reserve released its long-awaited discussion paper on the risks and benefits of the digital dollar and invited the public to comment, but was careful to avoid making suggestions about its plans last month. The Federal Bank of Boston and MIT researchers will proceed with their technical work, transitioning into phase two by exploring new features and alternative technical designs, as policy questions continue.

Cloud-first digital banking: KeyBank and Google Cloud partnership

KeyBank, a subsidiary of KeyCorp, partners with Google Cloud and Deloitte Touche Ltd, a consulting firm, to launch a new cloud-first banking solution. KeyBank intends to utilize Google Cloud to become the first major regional bank in the United States to run its primary platforms and applications in the cloud.

KeyBank will be able to transform the way digital experiences are designed and delivered to customers using Google Cloud. It will leverage Google Cloud's artificial intelligence (AI) and data services to enhance its existing “client-first” approach to create a more flexible and personalized digital banking experience. For example, KeyBank Contact Centre leverages AI for a cloud-based virtual agent service to answer customer calls. The service also supports human customer service agents by providing up-to-date information about each caller and can also process some basic queries without human intervention.

KeyBank, one of Google Cloud’s early adopters of the multi-cloud application development platform, Anthos, also utilizes Google Cloud's Kubernetes service to power many digital services and applications. Deloitte will play a role in helping KeyBank migrate much of its on-premises data centre infrastructure to Google Cloud. Furthermore, this migration will enable KeyBank’s new products with advanced capabilities in fraud prevention, anti-money laundering and data analytics capabilities to reach the market faster. Migration of KeyBank’s computing infrastructure to Google Cloud is set to begin late 2022 and expected to be complete by 2025.

Janet Foutty, Executive Chair, Deloitte US, commented that Google, KeyBank and Deloitte share a mutual vision for innovation by leveraging the latest engineering technology to digitize the banking operations process and accelerate the transition from KeyBank's traditional data centre to Google Cloud.

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