Getting a hole-in-one on the golf course isn’t easy. Neither is specializing in automation fintechs, in which an investor must always be hitting metaphoric holes-in-ones.
Matt Carbonara can speak to both. Carbonara is managing director of venture investing for Citibank’s Citi Ventures, the $2 trillion bank’s venture investment firm and incubator.
Digital evolution is key at Citi Ventures, which counts BlueVine, Betterment and Plaid as current portfolio companies. Carbonara said his team spends much of its time watching the trend of “banking at the edge,” which pushes the group to innovate new ways to embed corporate and consumer banking services into everyday customer interactions through automation, APIs, digital data and AI.
Carbonara spoke to Bank Innovation about accelerating industry trends, the automation use cases he looks forward to this year, and some of the portfolio fintechs driving innovation at Citibank. What follows is an edited version of the conversation.
Bank Innovation: When it comes to automation, what are the key areas of focus for financial institutions? Where should institutions be investing their time and money?
Matt Carbonara: Automation is a broad area. I segment it in a couple of ways. First, I think about it with regard to the stage of automation — preparation for automation or the automation itself. Then I think about it with regard to where the automation is taking place, which is typically either back-office automation or front-office automation.
Given all the areas of opportunity for automation and the increasing shift to digital channels in the current environment, I think front-office automation should be a key priority for financial institutions. I would also say that one pitfall of accelerating digital practices is that many enterprises have jumped into automation without first understanding the processes that encapsulate their businesses.
BI: What are some of the challenges of integrating IT and what cutting-edge solutions are you eyeing from a venture investment perspective?
MC: At Citi Ventures, we see lots of opportunities to invest in category-defining startups that are pioneering new ways to solve common gaps large enterprises in every sector are facing.
Three challenges and solutions I have my eye on are: securing your cloud operations through cloud security posture management (CSPM) and infrastructure as code (IaC); building out your data infrastructure and ensuring it is operationally sound by managing your data quality, data lineage, and data operations; and driving automation throughout the enterprise via robotic process automation and process discovery. [The latter] is the concept of using computer vision to understand the process steps that users are performing at a single workstation, or across a series of workstations, and stitching those steps together to provide an end-to-end view of the process for optimization and automation.
Editor’s Note: Carbonara defines IaC as the potential to program the infrastructure of an institution — computing, storage and networking — the same way one would write code to set up and configure the infrastructure, making the system more flexible and agile. Alternatively, CPSM is the process of constantly ensuring the institution’s cloud computing resources, such as its IaC, are protected against security attacks.
BI: How is automation reshaping customer experience within financial services?
MC: Banks have always valued the relationships they build with their customers, and that is not changing. But, the format of the relationship — how banks and customers interact — is undoubtedly evolving as a result of mass digitization. While I think banks will continue to have a physical presence in communities around the world, there is so much opportunity to deliver banking services and build relationships with new and existing customers online and through new touchpoints.
A trend we’re watching is the evolution of technology-enabled customer experience (CX) improvements. Traditional investments in high-touch support have been costly, but recent advances in automation have created cost-efficient opportunities for businesses to enhance their CX.
For example, automated chatbots now offer robust interfaces that can be programmed to understand customer intent and sentiment, streamlining the escalation process to deliver quality service at speed.
Recognizing the predominance of mobile-first customers, Citi Ventures portfolio company Ujet is helping companies unify their CX capabilities by harnessing the tools and actions native to the smartphone: front-facing cameras, fingerprint identification, and media sharing, to name a few. By marrying those front-end interactions with back-end ticket logs and a history of service data, organizations can use automation to unlock a holistic CX ecosystem that not only improves customer satisfaction, but also streamlines internal workflows.
BI: What potential automation ventures excite you the most, and how do you see these playing out in the next several years?
MC: In 2020, the accelerated digital transformation of large enterprises — especially in the financial services sector — has simultaneously placed a greater focus on improving productivity. As a result, I’m really excited by opportunities in the process discovery space and the use of AI to reduce efforts and costs, increase productivity and profits, and free up employees for higher-value work.
Our Citi Ventures portfolio company Skan is creating a cognitive process discovery and operational intelligence platform that provides strong analytical visibility into end-to-end processes. With improved, smarter process discovery, enterprises will be able to visualize all the processes through their business and identify ways to drive simplification, standardization, operational efficiency and improve data quality upstream issues while also identifying automation opportunities.
BI: You have experience with holes-in-ones on the golf course, but what about at work? What is the hole-in-one financial institutions can offer to their customers?
MC: The “hole-in-one” is to provide interfaces that can be programmed to understand customer intent and sentiment, streamlining the escalation process to deliver quality service with grace and speed.
Organizations should use automation to unlock a holistic customer experience ecosystem that not only improves customer satisfaction, but also streamlines internal workflows. In an age where company perception, net promoter scores, and the most granular customer interactions are all on public display, proactive enterprises will be wise to make customer experience an investment priority.