AI troubles, Mastercard layoffs: Top tech news August 2024

August 30, 2024 3:09 PM

Enjoy complimentary access to top ideas and insights — selected by our editors.

In August's roundup of top tech news: Banks and retailers wrestle with the unseen consequences of artificial intelligence, Mastercard lays off roughly 3% of its workforce and more.

Click here to read last month's roundup of top tech news.

Krish Swamy, chief data and analytics officer at Citizens Financial Group (above left); Matthew Burris, head of fraud network strategies and data science at Bank of America (middle); and Dan Jermyn, chief AI officer at Commonwealth Bank of Australia (at right.)

Fraud, productivity are top of mind for AI thought leaders in banks

Article by Penny Crosman

Bank technology executives honored on a list of artificial intelligence leaders released in August see no letup in their companies of AI investment and effort, and are focused on practical use cases like fraud detection and personalization.

Krish Swamy, chief data and analytics officer at Citizens Financial Group, expects the bank's investments in AI in 2025 and 2026 will be higher than in 2024.

"We will do fewer things and do them really, really well versus trying to do 20 different things and expecting them to take flight," he said in an interview.

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Zions leaders reflect on lessons learned from 11-year core upgrade

Article by Miriam Cross

The core transformation that consumed Zions Bancorporation for more than a decade has come to a close.

This massive undertaking by the Salt Lake City regional bank, which saw its transition from multiple core providers for different products to the TCS BaNCS system from Tata Consultancy Services in Mumbai, India, was "a blockbuster deal," said Brad Smith, a partner at Cornerstone Advisors. At the time, other deals signed with international cores in the U.S. had flamed out or resulted in lawsuits, halting the market and pushing regional banks to wait and see.

"Most people from the outside would say it was the first successful large-scale U.S. bank core transformation from an international core provider," said Smith.

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AI use in customer service faces legal challenges that could hit banks

Article by Penny Crosman

Two recent lawsuits challenge companies that use artificial intelligence in their chatbots and call centers, as many U.S. banks do.

In one case, a customer whose grandmother had just died booked a plane trip on Air Canada and was assured by the airline's generative AI-based chatbot that he had 90 days to apply for a bereavement discount. This turned out to not be the airline's policy and it refused to give the steep bereavement discount, saying its policy was stated correctly on its website. A civil resolution tribunal ordered Air Canada to award the customer the discount and pay fees.

In the other case, several customers sued Patagonia after finding out that Talkdesk, a contact center technology vendor Patagonia uses, was recording and analyzing customer-support calls and using them to train its AI model. The customers say they would not have made these calls if they knew Talkdesk was eavesdropping on them, and that this was a violation of California's data privacy law. The complaint was filed on July 11 and has not yet gone to trial.

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Lionel Ng/Bloomberg

What Mastercard's layoffs reveal about the fate of payment revenue

Article by John Adams

Mastercard, which just posted earnings that beat analysts' projections and included upbeat commentary about consumer spending, plans to lay off about 3% of its employees by the end of September.

The card network said the cuts would unlock capacity that will enable investment and a redeployment of resources into growth areas, according to a report by Bloomberg.

The staff reductions come as both Mastercard and Visa focus on growing revenue from sources beyond payment fees, particularly in mature markets. That includes focusing on emerging markets with a cash-reliant population and selling technology, artificial intelligence and consulting services to a large international network of financial institutions, partner fintechs and merchants.

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Kim Kirk (left), chief operations officer of Queensborough National Bank & Trust Company, and Ryan Hildebrand, chief innovation officer of Bankwell Bank.

How banks' 'hidden' AI could cause problems

Article by Miriam Cross

Artificial intelligence seems to be everywhere. Sometimes it is even hidden in plain sight.

Technologies and processes that banks rely on, including customer service call transcription, marketing tools, credit decisioning, cybersecurity tools and fraud prevention, may incorporate AI in ways not every user or employee at the bank understands. Other products are in a gray or "it depends" area, such as chatbots, which can be static with pre-programmed questions or more conversational.

The way generative AI burst onto the scene fewer than three years ago means "anyone with access to the internet today can get access to tools like ChatGPT or Google's Gemini, for free and with tremendous processing power they couldn't have had before," said Chris Calabia, a senior advisor to the Alliance for Innovative Regulation. "It's possible your staff is experimenting with ChatGPT to help them write reports and analyze data."

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Adobe Stock

MoneyLion stock slides despite positive second-quarter earnings

Article by Carter Pape

A quarterly earnings report from MoneyLion on Aug. 6 showed the challenger bank performed on par with its expectations for the second quarter and outperformed analysts' predictions.

Despite the positive results, the company's stock price ended 18% lower at $48.99. The poor share price performance comes even as similar credit issuers, including neobanks Dave and LendingClub and AI lending platform provider Upstart, saw modest to strong stock gains.

MoneyLion achieved $131 million in revenue during the second quarter — higher than the $125 million to $130 million to which it had guided. It also made $18.5 million in adjusted earnings before interest, taxes, depreciation and amortization, in line with the $17 million to $20 million it expected.

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Logan Cyrus/Bloomberg, Rafael Henrique/Adobe Stock, Jeenah Moon/Bloomberg

Truist, TAB Bank, Wells Fargo shuffle technology leadership

Article by Carter Pape

Truist and TAB Bank announced on Aug. 8 changes to their chief information officers in a multi-bank leadership shuffle.

Truist named Steve Hagerman as its new CIO. He will start Oct. 28 after five years with Wells Fargo, most recently as the bank's CIO for consumer technology. Previously, Hagerman held senior leadership positions at JPMorgan Chase and served in the U.S. Marine Corps. He is a graduate of Franklin University and the Wharton Executive Education Program.

"I'm delighted to welcome Steve Hagerman to Truist as chief information officer," Chairman and CEO Bill Rogers said in a press release. "Steve has deep experience serving clients, inspiring teams, and driving business results through technology innovation and modernization. His purposeful leadership, broad expertise and focus on client experience aligns with our strategy and our culture. He is the ideal leader to enhance and leverage our technology capabilities to drive growth and performance."

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Ian Yamey (left), chief technology officer of Retirable, and Andres Santos (right), CEO and co-founder of Comun.

Fintechs navigate a choice: BaaS middleware or go direct?

Article by Miriam Cross

Fintechs spooked by the Synapse bankruptcy may conclude that integrating directly with banks to achieve their financial services ambitions is the way to go.

But the choice between using a banking-as-a-service middleware provider or "going direct" is not that simple. Especially for an early-stage startup, a middleware provider can offer a speedier path to market and employ engineering talent that may not exist at the startup, or even at a number of the community banks in the broader BaaS space. A provider such as Unit or Synctera has connections to multiple sponsor banks, which could make it easier for a fintech client to double up, or switch over if its original sponsor bank leaves the business.

Jesse Silverman, counsel at law firm Troutman Pepper, has firsthand experience with the growing pains of nonbanks seeking bank partnerships. He has served as general counsel for fintechs including LendUp, Highline and Steady.

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Incoming Starbucks CEO Brian Niccol

Robin Marchant/Photographer: Robin Marchant/Get

Starbucks' new CEO faces plenty of payments challenges

Article by Joey Pizzolato

Starbucks' payments business has for years been integral to its ability to drive customer loyalty and reduce customer acquisition costs. Payments will likely remain a focus for the retailer when incoming CEO Brian Niccol takes the reins in September, and payment experts say there's room for innovation at the coffee giant.

Starbucks on Aug. 13 said Niccol would succeed Laxman Narasimhan, who is leaving the coffee chain's top job. Niccol will assume the role on Sept. 9, with current CFO Rachel Ruggeri serving as interim CEO.

Niccol's tasks will include boosting digital payments and mobile commerce, which has become more competitive than in the early days of mobile apps when Starbucks took a quick lead in using the technology. The Seattle-based coffee retailer has reaped numerous benefits from customers' use of its app to deposit funds and place orders, said Richard Crone, chief executive and founder of Crone Consulting, an independent advisory firm for the payments industry.

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Personal information to shop online. Filling electronic form on

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In AI-based lending, is there an accuracy vs. fairness tradeoff?

Article by Penny Crosman

As banks, fintechs, regulators and consumer advocates debate the benefits and risks of using artificial intelligence in lending decisions, one point of contention has emerged: Does there have to be a tradeoff between accuracy and fairness?

That point came up in the course of an independent analysis of AI-based loan software provider Upstart Network, but it nonetheless applies to all banks, credit unions and fintechs that use AI models in their lending decisions.

From 2020 through 2024, law firm Relman Colfax monitored Upstart's fair lending efforts at the behest of the NAACP Legal Defense Fund and the Student Borrower Protection Center. In a final report published earlier this year, Relman Colfax said Upstart made a lot of effort to ensure its lending models are fair.

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