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Artificial intelligence & machine learning a ‘double-edged sword’

Although a bank’s business has primarily stayed the same over the last couple of decades, how a bank function has drastically shifted. The fundamental pillars of a bank, according to Mike Telang executive vice president and head of the enterprise plan at Wells Fargo, presently focus on mostly security, regulation, and innovation.

When it comes to technological developments in the monetary services industry, Telang noted its effect on a bank depends heavily on where the bank is in its maturity lifecycle.

I think it depends on the lifecycle of the maturity of where someone is as a bank at that point in time and you’ve got to find an answer for that ... someone has a lot of developments like BlockChain, someone has a lot of developments like security, so we are applying the technology to the use case that suits us finest, Telang noted throughout a board gathering at VM worldwide in san Francisco last week.

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Viewing at emerging technologies, Telang described the challenges Wells Fargo has faced in adopting machine learning ML and artificial intelligence AI.

MLAI, we think the classic instances are within fraud and anti-money laundering and stuff like that, that’s one of the things a bank is jumping all over; it comes with its own set of problems, he pointed out.

I think nearly all large banks are being questioned presently by regulators to go back and identify any MLAI answer that’s brought into the bank because the implication of that is, if the incorrect algorithm is being used, someone is going to decline credit or you’re going to have an effect to the clients.

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It’s a bit of a double-edged sword for a bank where someone has to go all in and someone has to throw all use cases at it, especially the ones that are effective for clients.

Another emerging technology that banks, all at once Wells Fargo, have dabbled with however are yet to find a use case for that enhances upon existing applications like databases, is BlockChain.

For a long time, we think large banks were watching at BlockChain and distributed ledger technology saying it is an answer watching for a problem, then there was a sense that we don’t desire to be left behind if the problem unexpectedly appears, he noted. so we think a lot of banks have invested in BlockChain in addition to the obvious use case of payments is there ... and watching the chain of custody etc., however, we would not speak we have found the game-changing use case just yet.

Discussing his organization’s cloud strategy, Telang noted there is a development of applying a multi-cloud approach to take benefit of the various capabilities of various cloud providers.

You’re going to pick on the provider who has distinguished themselves and at that point it becomes -- it actually has to become a fragment of your strategy to be agile to move that workload across starting with one provider to the other, he pointed out.

When we think of workload we typically think concerning applications, however, for us, we think the value will be in the ability to move our data starting with one to the other without leaving that data behind. so our cloud strategy, once we think of multi-cloud, we are actually trying to kind of simplify it by saying, What’s our strategy within saaS, what’s our strategy within PaaS, what’s our strategy within IaaS -- where we observe the big data go, so we are watching at it that way.

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With digital modification, Telang argued it comes down to the requirement to comprehend the culture nearby an organization. He noted nearby Wells Fargo, there is a multitude of various lines of business, each with their own approach and own set of clients.

Actually what we have to recognize is the fact that they are all variety clients so our challenge is how does someone build, how does someone acquire the common factor across these businesses to share the foundational aspects. What is unique in that business that someone give them full runway to go with and in the contextual? 

Historically they had the whole stack, they could purchase data centers, they could go buy servers, which is why we have what we have -- and we think the guiding principle we have kind of come to is our differentiator is the client knowledge and data; the rest someone doesn’t require to own, he pointed out.

Telang noted Wells Fargo has determined that everything else, including software, have to be commoditized.

Because once someone thinks concerning the primary capability like opening an account -- we have concerning means to uncovered an account today, there is fundamentally no reason for that -- however, the cultural aspect is so unique ... a lot of an application developer’s entity is built within the application they assist and introduce themselves. If someone hasn’t noticed, someone will now. We assist this app, and presently someone tries and tells them you’re breaking their app out and commoditizing it -- it is a huge cultural play, Telang noted.

Touching on disruption, Telang believes it is only a matter of time before banks succumb to the development that has hit many other industries.

A lot of the companies have’ survived either by acquiring them or by re-emerging in a different way. We think banks have to do that. We think it is a matter of time, Telang noted.

We think there is a bit of a runway before -- someone either adapt to it or we mean, some banks are adding a huge investment focusing on fintechs to observe which ones to acquire, which ones they have to partner with --so it will be fascinating to observe the way it plays out, however, we don’t think it is a problem the banks have to ignore much longer.

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