Finance Everywhere

‘Legacy institutions have the scale, but not the agility’: How Google wants to help banks digitize their processes

  • Cloud computing, embedded finance and self-service tools will be the main areas of focus for the finance industry this year, according to Zac Maufe, head of retail banking at Google Cloud.
  • Google wants to continue to be a technology partner for the finance industry, helping established banks and fintechs with digitizing their processes.

Email a Friend

‘Legacy institutions have the scale, but not the agility’: How Google wants to help banks digitize their processes

With its Plex project now gone and no plans on becoming a bank, Google is now focusing on applying its technology to solving banking problems for both legacy financial institutions and fintechs. 

Going into 2022, Zac Maufe, head of retail banking at Google Cloud, considers cloud computing, embedded finance and self-service tools to be the main areas of focus for the finance industry.

Maufe spent over 20 years in financial services before coming to Google. After working for HSBC for a couple of years, he moved to Wells Fargo where he took on a number of leadership roles, including head of digital and innovation and chief data officer. His experience informed him of what large financial institutions really need in terms of technology.

A crucial step for legacy players is migrating to the cloud. Google is one of the main cloud service providers on the market, and Maufe expects cloud adoption to grow in the next year – especially in key areas like security, fraud detection, and anti money-laundering.

Another piece of this puzzle is self-service at scale. Operating on the cloud will increase user access and trading scale, allowing for new analytic tools, services and products for risk mitigation, he told Tearsheet.

Maufe also expects this year to mark a new stage in embedded finance, especially in small business loans and mortgage lending. These are areas that Google is eyeing to deploy its technology and help financial institutions streamline outdated processes. 

Head in the cloud

Banks have generally been slower adopters of cloud computing than other sectors, according to reports. But the pandemic forced an acceleration of this process as incumbent banks aim to fend off fintechs and challenger banks who use the cloud to advance quickly into new market opportunities.

Moreover, as most of the innovation is happening in cloud ecosystems, banks are going to get cut out of new technologies if they don’t have access to these cloud environments, Maufe argued. 

Despite having lots of data, financial institutions are struggling to extract value out of it. It’s difficult to generate insights from large amounts of data, and it requires an enormous amount of computing power.

“Most legacy financial institutions went on the data lake journey. There are two massive problems with that. The first is that unless you clean up the data and make a single taxonomy, it becomes a data swamp very quickly. Simply having it physically in the same technology doesn’t mean that it’s more accessible,” he said.

Google is a top provider of cloud computing services for (and not only) financial services, along with Amazon Web Services and Microsoft Azure. 

Capital One works with Amazon Web Services, while Bank of America is collaborating with IBM for cloud services. Morgan Stanley announced it would use Microsoft’s cloud services for its digital transformation.

But while some banks are opting for one cloud service provider, another common approach is to choose a multi-cloud strategy for their digital infrastructure, rather than be tied to one vendor. 

For example, Wells Fargo opted for this multi-cloud approach. It announced last September its strategy to work with Microsoft Azure as its primary cloud provider, with Google Cloud providing additional business-critical cloud services.

Beyond the cloud

As financial services are becoming more embedded in our lives, Maufe expects to see small business loans and mortgages become more dynamic and ingrained in the transaction process in 2022.

“I think the big thing in lending is an API-led strategy, making lending embedded into the processes that people ultimately want to accomplish. Another is automation, as there’s a huge amount of paperwork still in lending. This will be around for a while in my opinion, but people are getting a lot more familiar and comfortable with signing documents online,” he said.

There are many lengthy processes that will require time to migrate fully online. Take mortgage lending, a process that can take months to finalize and that involves lots of paperwork and multiple entities, from banking to real estate to legal. This segment would benefit tremendously if all the actors involved could process all the information digitally in a seamless way, especially as consumer expectations are forming around seamless online home buying experiences as well. 

It’s very difficult now to turn PDF documents into structured data, for example, but companies like Google that have big technology capabilities want to continue developing apps and tools to help the banking market with this transition. AI has the power to transform many aspects of the lending and loan management process, Maufe says. 

“We have started to work with customers on one piece of this where we are processing borrowers’ income and asset documents using a set of specialized machine learning models, which can then be used to automate routine document reviews and reduce processing time and streamline data capture,” he said. 

Self-service at scale

Maufe also expects self-service technology to become more and more sophisticated, as customers are expecting the ability to service their loans and their interactions in a much more seamless way. This is an area where technologies like natural language processing through chatbots or voice assistants can enhance the customer experience.

“Most fintechs have been born with a self service mentality first, empowering the customer to do things on their own easily. At many legacy institutions there’s a degree of self service, but I think there are too many times where you end up having to go into a branch or calling customer support, because they’re not truly engineered end to end from a self service perspective,” he said.

But while fintech players have the agility to start reimagining experiences and build new capabilities much faster, what they lack is scale. Conversely, legacy institutions have the scale, but they don’t have the agility. 

“Both sides need to learn from each other to be successful,” Maufe concluded.

0 comments on “‘Legacy institutions have the scale, but not the agility’: How Google wants to help banks digitize their processes”

Business of Fintech, Finance Everywhere

‘The industry believes that poor credit scores are self–inflicted’: A new wave of fintechs is giving the underbanked access to credit

  • New fintechs are targeting underserved communities that don’t have credit histories, using new methodologies to help them build credit scores.
  • As more Millennials and Gen Zers navigate their financial journeys, their participation in the credit system could increasingly be aided by such fintechs.
Iulia Ciutina | January 26, 2022
Finance Everywhere, Member Exclusive

Embedded Finance Briefing: What’s going on at Marqeta?

  • In this week's Embedded Finance Briefing, we take a deep dive into Marqeta's performance in Q3 2021. We review analyst discussions and the key takeaways from the recent earnings call.
  • We also look at the potential for embedded finance offerings in serving SMBs, and how incumbent banks might be under threat.
Subboh Jaffery | January 21, 2022
Business of Fintech, Finance Everywhere

Stripe inks e-commerce and payments deal with Ford

  • Ford and Stripe have entered a five-year agreement to modernize the carmaker’s e-commerce and payments experience.
  • This marks another partnership looking to transform cars into e-commerce hubs, as both banks and fintechs have been collaborating in recent years on bringing new technology to vehicles.
Iulia Ciutina | January 18, 2022
Finance Everywhere, Podcasts

‘It’s a lot more fun battling over 150 basis points than 10 basis points’: Tern’s Brion Bonkowski

  • Tern is an embedded finance platform run by Brion Bonkowski.
  • He joins us on the podcast to discuss the platform's roots in cross border debit payments and where the platform is headed in the future.
Zachary Miller | January 12, 2022
Finance Everywhere, Member Exclusive

Embedded Finance Briefing: 6 trends for 2022

  • For this week's Embedded Finance Briefing, we look 6 specific tailwinds powering the industry forward.
  • We also explore the opportunities in personalization that embedded finance opens up.
Zachary Miller | January 04, 2022
More Articles