Banking Perspectives: The state of innovation and technology adoption in the banking industry

In the Banking Perspectives blog series, we invite senior leaders from across Moody’s Banking to share their insights on technology at Moody’s and the wider banking industry.

Omar Akkor is a Senior Director Manager for Banking Product Strategy at Moody’s. Based in Dubai, he has over twenty years of deep experience designing, operationalizing and executing growth and customer-centric strategies across Moody’s.

In this edition, Omar Akkor sheds light on the current state of technology and innovation in the banking industry, including the impact of GenAI and how Moody’s is leading the charge with its rapid evolution.
 

Q: Thank you for your time, Omar. Let’s begin by discussing the state of technology and innovation in the banking industry. Whilst banks have previously been at the forefront of innovation, it seems now that technology is evolving faster outside of the industry. What do you think is precluding banks from adopting technology as fast?

O: The financial sector continues its journey to adopt new technological advances. However, this adoption is more cautious. The increasing demands of regulatory compliance, operational resiliency as well as data security and residency have pushed banks to moderate their pace of technological development.
 

Q: Interesting – why are we now seeing an impetus for technological adoption in the industry?

O: The emergence of the FinTech world has encouraged traditional banks to increasingly turn to technological innovations in order to maintain their competitive edge. Digitization through API integration, AI and Machine Learning have created new avenues for the modernization of banking platforms. Historically, AI was predominantly used by a selective group of organizations like FinTechs, Digital Banks, and perhaps major banking institutions with substantial resources.

However, the emergence of GenAI presents a unique opportunity for banks and financial institutions to leverage this cutting-edge technology. GenAI is simpler, easier and it requires less resources than traditional AI. With AI, you need modelers, data scientists, and a large amount of data. This is not something every institution can afford or have the resources and time to embrace it. GenAI is an opportunity for these institutions to jump into the wagon and tap into its benefits.
 

Q: I see. How do you think the emergence of GenAI has transformed the banking industry in the last 12 months, and what key learnings have you drawn from these changes?

O: GenAI has unlocked significant potential in the financial sector, fueled by increased curiosity and creativity. Financial institutions have explored its uses, focusing on improving operational efficiency, enhanced customer experience, and product innovation. Many organizations experimented in areas that could provide them with quick wins.

This journey has yielded critical lessons. A key learning point has been the ethical implications and biases inherent in AI systems. Financial institutions have recognized the importance of establishing robust guardrails and risk controls to mitigate these issues, emphasizing the need to handle data security meticulously and control the tendency of AI to generate hallucinated content.

Another lesson is around transitioning from experimentation to production. It demonstrated the necessity for a comprehensive process, including the definition of governance structures and committees to manage AI risks effectively. A final lesson is about staffing these initiatives. Dedicated and focused squads are essential to accelerate the development cycle.
 

Q: How would you describe Moody’s GenAI strategy? How has Moody's adapted its strategies to keep pace and lead the charge with the rapid evolution of GenAI in banking?

O: Our strategy reflects a comprehensive and structured journey that involves everyone in the firm. Our CEO Rob Fauber has called upon our 14,000 innovators to codrive this important initiative. Initially, Moody's developed technology partnerships with key technology leading firms – a move that broadens our access to cutting-edge platforms.

We established a Central Intelligence Group that streamlines the integration of GenAI across the firm and develops the platform and common components. On the other hand, various Moody’s franchises and product teams utilize this platform and components to tailor specific use cases to their needs.

Moody’s granted Copilot access to all employees, to encourage a culture of continuous learning and adaptation. We centralized the capture and triage of more than 500 ideas efficiently. We established a process of prioritizing the use cases that provide high impact and value to our internal and external customers. 

In the next edition of the Banking Perspectives blog series, Omar will delve into the testing process of applications and initiatives at Moody’s, and how we’re strengthening our solutions with new technologies.