RK Paleru

As the CFPB finalizes its rule under Section 1033, MX believes enabling secondary use cases in a way that balances consumer benefits with privacy and security is critical. Intelligent analytics and modeling of consumer-permissioned data are necessary for financial providers to deliver valuable, personalized experiences that help consumers build financial strength. Read MX’s point of view: https://lnkd.in/gZTVfCvN 

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False alerts in fraud and anti-money laundering (AML) systems, transaction screening systems and even disputes can be costly for banks. Despite being well known problem the scalable, explainable AI solutions to manage false alerts across fraud, AML, screening and KYC are far and few. Our estimate it could be over $20-30 billion problem for US banks alone. Quinte is launching its fraud management product and I will be glad to share our approach of better fraud detection and management along with false alert managment. I will be at the American Bankers Association conference in Seattle between 11th to 14th June 2024 and I will be sharing our approach to reduce fasle alerts in these AI models in fully explainable way. We estimate that false alerts in Fraud and AML could be leading to 1. High False Positive Rates: Over 95% of transaction monitoring alerts are false positives, leading to billions of dollars lost annually in investigations and operational inefficiencies. 2. Operational Costs: False positives waste analysts' time and increase operational costs, reducing overall efficiency. 3. Resource Allocation: Banks misallocate resources by pursuing non-AML risks, leading to financial losses and inefficiencies. 4. Compliance Impact: Delays in investigating genuine suspicious activities due to high false positive volumes can result in non-compliance penalties and reputational damage. 5. Analyst Fatigue: The high volume of false positives contributes to analyst fatigue and exacerbates the talent shortage in AML compliance. 6. Technological Investments: Banks are investing in advanced technologies like machine learning and AI to reduce false positives, which also represents a significant financial investment. In addition, Anomaly detection with LLMs is a promising area looking forward to engaging discussion on these topics at the conference.

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U.S. Financial Regulators Continue Focus on Bank-Fintech Partnerships through Guidance and Request for Information Quoted from the article On July 25, 2024, the Board of Governors of the Federal Reserve System (FRB), Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) issued a joint statement describing potential risks related to banks’ deposit arrangements with fintechs and other third parties. The agencies also published a joint request for information (RFI) seeking input on the risk management practices employed in a wider variety of arrangements between banks and fintechs. For eg, banks’ substantial reliance on third parties to manage deposit operations could weaken banks’ own internal controls and management over deposit functions. Similarly, the agencies noted that banks’ reliance on third parties to perform regulatory compliance could raise the risk of banks failing to meet those requirements. The agencies reiterated that banks retain ultimate responsibility for compliance obligations, regardless of whether functions (such as customer due diligence or suspicious activity reporting) are shared between banks and third parties. The Joint Statement reiterates that banks should adhere to key risk management principles, including: Risk Assessments. Banks should develop risk assessments to identify and evaluate the risks specific to each arrangement between a bank and third party. Defined Roles. Contracts between banks and third parties should clearly define the roles of each party. Banks should address the allocation of responsibility for key obligations, such as customer or end-user relationship management, risk management, due diligence and complaint handling, among others. Active Monitoring. Banks should develop ongoing monitoring practices that can detect issues and are commensurate with the level of risk involved in each arrangement. Risk Contingency Plans. Banks should develop contingency plans that address potential operational disruptions or business failures that could affect an end user or consumer’s access to funds. Oversight and Control Functions. Banks should have adequate policies in place to ensure compliance with applicable anti-money laundering (AML) and countering the financing of terrorism (CFT) requirements, as well as sanctions compliance. Managing Growth and Liquidity Implications. Banks’ deposit arrangements with third parties could result in the banks’ deposit business becoming highly concentrated. Establish processes to address concentration limits, diversification, liquidity risk management, exit strategies and capital adequacy. Minimizing Misrepresentations. In some instances, end users may not understand the type of account relationship that they’ve established through a non-bank third party, or that such party is not a federally insured depository institution. #riskmanagement #compliance https://lnkd.in/gkipEF35

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Eric Schmidt's recent commentary on the future of AI offers a glimpse into where the industry is heading—and it’s not what most people expect. His perspective, shaped by decades of experience at the highest levels of tech, challenges many of the assumptions driving today’s AI discussions. 1. The Decline of Open Source in AI: Schmidt believes the gap between the leading AI models and the rest of the field is widening, not narrowing. He’s increasingly skeptical that open-source efforts can keep pace with the immense costs required to develop top-tier AI. Mistral, a promising AI startup, is reportedly considering closing its third model due to these overwhelming costs. If Mistral’s shift to a closed model materializes, it could mark a turning point in the AI industry, where the financial demands of staying at the forefront force companies to reconsider the open-access model that has fueled innovation for so long. 2. AI as a Geopolitical Weapon: He views the race between the U.S. and China for AI dominance as more than just a competition between tech giants—it’s a national security imperative. With the U.S. holding a 10-year lead in chip technology, Schmidt underscores the importance of maintaining this advantage. The AI race, in his view, is as much about global influence as it is about technological advancement. 3. Canada’s Critical Role: While much of the AI conversation focuses on the U.S. and China, Eric Schmidt highlights Canada as a key player due to its abundant hydroelectric power and strong AI research community. He suggests that Canada could become a crucial partner for the U.S. in maintaining its AI infrastructure, especially as the demand for energy-intensive AI models grows. 4. The Financial Realities of AI: He points out that the capital required to develop and maintain cutting-edge AI models is astronomical. This is leading to a shift where even companies with a history of supporting open source may have to turn to closed ecosystems to sustain their operations. The sheer scale of investment needed could fundamentally change the dynamics of the software industry. 5. NVIDIA’s Unique Position: Schmidt explains that NVIDIA’s dominance isn’t just about their hardware—it’s the entire ecosystem they’ve built around CUDA. This software ecosystem, optimized exclusively for NVIDIA’s architecture, has made it difficult for competitors to catch up. In Eric Schmidt’s view, this gives NVIDIA a near-monopoly on the tools needed to push AI forward. Thoughts?

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A “small” 23 BILLION dollar US bank was hacked after replacing American experts with H1B guest workers, losing over 1.5 MILLION sets of customer data. What could have caused this and why would a 23 BILLION dollar bank risk cutting funding from IT and hiring foreign labor to RUN A BANK? First the how. They illegally fired American US Citizen experts in IT and replaced them with H1B guest workers and may have falsified salary reports for the H1Bs. Their guest workers reported their salaries to be as low as $36,000, but the official documentation said $108,000 to $290,000. Even if the higher numbers were true, they would still be less than 1/4 to 1/2 a living wage where housing prices exceed $800,000 to over $950,000. It is illegal to replace American workers with H1Bs, but virtually every company does it because the law is rarely enforced. Living wages for domestic workers must be at least 50% of the average home price before tax, 25% post all taxes, which usuall add up to 35% to 52% for all taxes combined, state, local, federal, sales, fuel, utilities, social security, Medicare, property, vehicle, etc. H1Bs are notorious for falsifying credentials and orchestrating computer hacking from inside companies. The bank mentioned no indication that the breached data had been sold, leaked, or misused. However, Flagstar didn’t disclose whether the security incident was due to an internal vulnerability or was a third-party breach, which usually means the breach came from inside the bank as most hacks do. The bank was hacked previously because their H1B team implemented insecure file transfer data updates using unencrypted FTP technology from the 1970’s, which is considered new in India. Secondly, the why. Greed and suppression of 78% of the workforce that is female or minority. After making billions using American labor, the bank tried to fire all American labor and cut labor costs as much as 97%. Greed defeats all reason and common sense. Congress should require a company’s workforce to match the demographics of the US before granting guest worker visas.

🌟 Excited to share my keynote from the Real-Time Analytics Summit! 🌟 Real-time analytics has transitioned from a "competitive-edge" to a "must-have to stay relevant" over the past few years. In my talk, I address the three most commonly asked questions: - Do I need real-time analytics? - Is it Expensive? - Is it complicated? Check out the keynote here: [https://lnkd.in/gKVRUdna] #realtimeanalytics #apachepinot #startree

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a new #FINTECHTALK podcast is out Agentic AI: Revolutionizing Banking, Wealth and Commerce Separate conversations at Money 2020 with FINTEL leaders 🚀 🔥 Mike Conover CEO of Brightwave 🚀 🔥 announced $15M Series A 🚀 🔥 Shri Santhanam EVP/GM at Experian 🚀 🔥 launched the Experian Assistant platform https://lnkd.in/ggcFrZX2 "As embedded finance merges with Agentic AI, we’re likely to see increasingly autonomous, hyper-personalized, and needs-based solutions. The innovators who master this fusion will lead the next generation of FINTEL unicorns. For established financial institutions, the challenge will be to build competitive solutions to maintain customer relationships—otherwise, they risk being relegated to the role of "dumb pipes" or another model." Subscribe to be Always in the Know

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Eric Schmidt's recent interview at Stanford University got lot of attention due to his comments on Google's WFH policy. He mentioned Google is effectively slipping in AI because of their WFH policy. There were lot of people taking sides in this conversation and bashing WFH vs In-office. I would have expected his interview to start healthy discussion around this topic rather than continuing the long running debate on this. Unfortunately, we live in an environment where everyone need to take sides rather than finding positives on both sides. I have worked both in WFH environment (which everyone is forced to during the Covid lockdown) and in-office environment equally over my career so want to write my thoughts on this topic. I have benefitted immensely during the initial days of my career working closely with team in office and having face to face interaction. It certainly offers easier collaboration and provides opportunity for spontaneous discussion(water cooler/tea time). The thing I hated most about working in office is the commute time and the associated stress it adds to the daily life. If you don’t have a team or leader that understands the necessity to have meetings you might be stuck in unproductive/unwanted meetings while in office.    I enjoy the clear separation between work and personal life offered in the office work environment, where you have the chance to log off after your work. Unless you set clear timing/work space in WFH, it is really difficult to separate the two and end up mixing both. WFH offers better work-life balance since there is no commute time and can plan your day better.   But I personally think Hybrid model offers the best of both world and might be what the future workplace would look like, I doubt if we are ever going back to full time in office model or fully remote Covid model. I certainly enjoy the days I am in office and enjoy collaborative discussion with my team. I plan my week to maximize collaboration while in office and do more of my individual planning work during the days I work from home.    I have benefitted from working in all the models and each offers valid arguments to be the de-facto model for a company. Every company/team should try out the different models and choose what works for them. I have seen successful companies in each of the working categories, it is because of the team and the model they choose which worked for them.   It would be great if we have productive discussions to understand why someone chooses a particular model and better understand why it works for a particular team or a company so we can learn from it.  

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In the rapidly evolving digital world, managing secure identities has become more critical than ever. From preventing credit card fraud to protecting personal information, the stakes are high! 🔗 Read the article by Kavitha Kanaparthi, Founder & CEO, Soulverse, exclusively on Express Computer about how biometrics and blockchain are transforming digital identity verification. Discover how these cutting-edge technologies are enhancing security and giving individuals more control over their digital identities : https://lnkd.in/dmnzqiMX #blockchain #biometrics #digitalIdentity #cybersecurity #innovation #expresscomputer #digitalidentity #future #news #exclusive #guestblog

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From Celestial AI to Taalas, these startups are seeking to challenge Nvidia’s AI computing dominance or find other areas ready for disruption in the semiconductor industry.

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We live more on a URL than in IRL. We have a duty as a digital citizen. On a recent podcast, Manoj Deshpande Neha Deshpande and I discussed digital civics - the rights and duties of a digital citizen, with a strong focus on good behavior and responsibilities. That discussion was all about extracting good civic behaviors from everyday life like being good to your neighbors, keeping your vicinity clean, showing respect, etc., and drawing a parallel to behavior on the internet. But the nature of the internet itself requires a new framework that looks at all the nuances of chatting and sharing, gaming, phone use, scams, misinformation, etc. To address that, I've extended a new psychological framework loosely based on original work done by Estelle Clements https://lnkd.in/dSx2qUzu

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I write for indianexpress.com outlining reasons why the #AI boom seems to have plateaued all of a sudden. https://lnkd.in/giykXwQ4 #AI #BigTech #GenAI #LLM #OpenAI #ChatGPT

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How can Financial Institutions combat AI Cybersecurity and Fraud threats from Cybercriminals who are using Professional + AI approach? Extremely insightful press event among Deborah Guild @FS Sector Coordinating Council (FSSCC) & Head of Tech & Security at PNC, Todd Conklin, Chief AI Officer @ Head AI for US Treasury Office, Paul Benda, Risk, Fraud & Cyber @ABA. FIs have been early adopters of AI. However, Fraudsters are leveraging AI and knowledge of regulations (Expedited Fund Act, Check 21), FI’s tech debt (Batch process with core deposit ledger from Teller, ATM etc.) to stay few steps ahead. For example, some of the new pattern of use cases are: 1.     Deep Fakes and Identity theft – Fraudsters stole the identify of top executives, recreated the faces using deep fake tech and provided instructions for money transfer in a video call. 2.     Identity theft of Payee – Cybercriminals impersonated the receiver, opened a mule account, and informed the sender/ account holder to send the money. 3.     Business Email Compromise (BEC) – Spoof an email account, send spearphishing mails, use malware to capture invoice payments information and send the instructions for wire transfer at the right time to Finance staff. 4.     Check Fraud in Branch – Stole checks from the mail, forged and altered them, deposited them into various bank (mule) accounts, and then quickly withdrew the funds before the banks could void the checks or close the accounts. 5.     Double Tap – Deposited the check into an ATM or RDC and then walk into a branch to “double tap” check’s monetary value. FIs need to gear up to stay ahead of these professionals through multi-layered defensive mechanisms across CX, Fraud, Cyber, BSA/AML Groups: 1.     Strengthen controls at all Customer Touchpoints across all Channels (online, Conference call, Phone, Branch Teller, Customer Care, Investment Advisor– Multi Factor Authentication with call back or induce delay in processing 2.     Authenticate everyone (Customer, Beneficiary etc.) and Perform action based on transaction confidence score & Customer Risk Score – RAG flag with stop for RED but real time customer communications. Do not let good customers down. 3.     Enhance capability with Network capability, Digital signatures, Behavioral biometrics & analytical environment with real time data refresh – Mule account & fail fast models. 4.     Ecosystem centric data management – Connect the dots and identity “ring activity” with data exchange across Banks and beyond at aggregate level. 5. Finance Education – To all the personas facing customers and customers itself. Need to take dynamic decisions based on the biometrics and signals. #AI #Fraud #RiskManagement #Cyber #CX

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I recently spoke to Sri from Rocketlane about the massive opportunity AI presents for the services industry. We also covered: Fast-Track Adoption of AI: AI is driving tech adoption at an unprecedented pace. Services companies must adapt quickly or risk being left behind. This rapid shift offers huge growth opportunities. Building a Winning Services Ecosystem: Leveraging AI to solve real business problems, not just following the hype. How Mindtree’s early adoption of digital tech set the stage for long-term success. The importance of positioning your company as a leader in AI services. The Future of AI Services: AI services could surpass the current $300B IT services market. Success will hinge on focus and strategic partnerships. Now is the time to prepare for the coming AI wave. If you’re building in AI services or planning to, this could be of use to you. Here’s a sneak peek into the episode. https://lnkd.in/esXXd3cy #AI Services # Mela Ventures #Category Creaters # Fearless Entrepreneurs

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AIM Research has released a latest research report in collaboration with USEReady: "Modernizing Legacy Systems: A Strategic Imperative for Today’s Enterprises." This comprehensive survey sheds light on the ongoing transitions within major enterprises and underscores the urgent need for modernization. Key Points from the Report: ✧ 82.8% of organizations recognize the urgent need to migrate due to enhanced capabilities of modern systems supporting real-time analysis and dynamic reporting. ✧ Most enterprises prefer a phased approach to migration, ensuring business continuity while gradually adapting to new technologies. ✧ Enterprises report an average of 33% reduction in annual operational costs post-migration, coupled with anticipated productivity improvements of 26-50%. ✧ Each sector exhibits unique preferences and challenges in migration, from data security concerns in BFSI to the demand for managing extensive data volumes in Life Sciences. ✧ Key vendors are advised to adopt a phased migration approach, focus on enhancing decision-making capabilities through advanced analytics, and prioritize long-term cost benefits. Read the full report here: https://lnkd.in/gP-P8BzA #ModernAnalytics #DigitalTransformation #BI #AIMResearch #USEReady

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I had the incredible opportunity to attend a class with Barry Nalebuff, author of “Why Not?”, at ISB, and it was truly enlightening. Barry’s teaching style is exceptional—he has a remarkable ability to distill complex concepts into simple, relatable insights that resonate with everyone. One highlight was his discussion on problem-solving tools, particularly the distinction between "Problems in search of Solutions" vs. "Solutions in search of Problems." This perspective shift encourages us to focus on real customer needs rather than forcing solutions onto undefined problems. Here are a few key takeaways: 1. Customer Motivation: Understanding why customers buy is crucial—it's not just about features, but the real problems products solve. 2. Fresh Perspectives: New ownership can uncover overlooked opportunities, reminding us that innovation thrives on questioning the status quo. 3. Passion + Luck + Economic Theory: This winning formula can lead to breakthroughs. Embracing serendipity is essential! 4. Know Your Audience: Tailoring offerings to who is buying and why creates deeper connections. 5. Identify Product Violations: Spotting areas for improvement can spark growth. 6. Purpose and Profit: Aligning business with social missions enhances loyalty and trust. 7. Craft Your Brand Story: A compelling narrative differentiates your brand and builds emotional connections. This class reinforced that business is about more than transactions; it’s about understanding and addressing real human needs. Thank you, Barry, for an inspiring session, and a special thanks to Prof. Bhagwan Chowdhry for arranging this wonderful lecture for ivians! What are your thoughts on blending passion and strategy in business? 💬  #ISB #ivi #BarryNalebuff #BusinessStrategy #CustomerExperience #BrandStory #SocialImpact #problemsolvingtool #Entrepreneurship #businessskills

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AC Hsu's speech is tour de force level in terms of zeroing in on a very wide-ranging set of critical policy initiatives facing the banking system, fintech partnerships, and giving a heads up on the potential fate for the OCC preemption rules following the DFA. Look for: -- a number of important policy initiatives underway for the largest banks (capital, liquidity, operational resilience, and recovery planning), noting their continued growth trends (with a nod to "simple, dispassionate math"). -- the importance of additional granularity on approaches and engagement between FBAs and nonbanks and a first-time reference to Synapse/Evolve. AC Hsu revisits his frustration with increasing gaps between state money transmitter licensing and federal bank oversight, noting the need for prudential supervision of MSBs at the federal level and calling (again) for tailored federal payments regulation and supervision. --OCC history on the "wildcat banks" (with a visual to boot; not lost on this nerd). But what's superinteresting: "Increasingly banks are being asked by states to pick a side in service of performative politics rather than deliberative policy." **Cue national bank preemption and the live issue (post-Cantero and post-Loper Bright) on the fate of the OCC's preemption rules.** --> "We must fortify and vigorously defend core preemption, and we must embrace and develop more nuanced analysis when applying Barnett..." "Preemption [regarding safety and soundness and compliance with federal laws and regulations] is legally absolute and non-negotiable, and the OCC will act accordingly to defend that." "We need to develop a more nuanced and balanced approach to Barnett..." Kudos to Dan Awrey who is footnoted and has thought so deeply on banking and payments issues. More on some of these points in a future post. #payments #fintech #bankreg

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While everyone is talking about AI and its potential to transform businesses, there will be significant job losses in the medium term, leading to chaos. Geoffrey Hinton's article highlights not only the risk of job losses but also the threat of extinction. Uncontrolled development and use of AI could have negative long-term effects, similar to how social media has been used to spread hatred and negativity. Government intervention will be necessary at the right time to manage these risks.

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