Application Case Studies on How the Financial Services Landscape Is Changing

In the first of our two-part blog series, we explored the challenges financial institutions are facing with tighter regulations around algorithmic bias, rising systemic risk, Cyber prevention, and emerging ESG reporting requirements. In part II we’ll dive into three additional hurdles finance data and IT teams are facing, and how Pentaho can make it easier and safer to leverage data with confidence to overcome these issues.

Fraud Detection and Cyber Prevention

Challenges:

Cybercriminals develop new strategies through the combination of smart-contract exploits and account takeover techniques with off-chain coordination that traditional models cannot detect. AI-driven tactics from attackers drive faster changes, which makes instant detection and mitigation essential in real-time.

Milliseconds become critical when a security breach begins to unfold. Processing delays result in higher financial losses and more significant damage to the corporate reputation. Organizations require systems capable of ingesting massive amounts of streaming transaction logs while instantly identifying any anomalies.

How Pentaho Helps:

Pentaho’s pipelines deliver high velocity data handling, which enables on-chain and off-chain transaction streams to be consumed and harmonized within milliseconds while providing immediate evaluation of fund movements.

Through the integration of continuous learning loops, Pentaho gives ML models the ability to retrain using up-to-date threat signatures, which minimizes blind spots and maintains pace with rapidly adapting attackers.

Security analysts can also access a comprehensive view of suspicious activities through detailed drill-down visualizations. These interactive dashboards help security teams quickly initiate investigations by displaying both unusual wallet clusters and sudden withdrawal spikes.

Potential Industry Shift: Suppose you develop a proactive fraud protection strategy touted  as the most secure platform in the industry. It could help minimize losses and place the organization at the forefront of financial stability.

Data Sovereignty and Cross-Border Compliance

Its platforms struggled to adhere to disparate regulations that required cross-border processing of data.

Challenges:

Conflicting and confusing laws – Since data privacy policies vary by jurisdiction, this raises the compliance risk for global businesses, with different laws requiring different policies and thresholds that sometimes overlap and sometimes are in conflict. Being able to clearly demonstrate to different regulators how the organization handles and processes data is a challenge for even experienced teams, which many organizations are lacking.

Data communalization – Institutions must make sure that confidential data is kept within jurisdictional limits. With globalization and more commerce conducted cross-border, it is quite easy to stray into non-compliance when handling a customer’s data.

How Pentaho Helps:

• Pentaho enables organizations to automate data workflows according to the needs of the region, in line with the laws for localized governance.
• Teams can create compliance reports based on specific regulatory frameworks for multi-jurisdictional reporting.
• Data encryption and access controls help teams keep sensitive data secured and accessible only to authorized users in mapped areas.

Potential Industry Shift: What if banks and financial institutions could turn compliance into a benefit? By ensuring compliance with local data processing and data privacy, they might appeal to global users for safe cross-border finance.

Scaling AI Innovation Amidst Regulation

Fintech startups are typically not successful in scaling AI systems with intricate regulations. In 2024, a promising AI-powered company was heavily fined by the SEC and found in violation of the EU AI Act, prompting the company to shut down its robo-advisory in response.

Challenges:

Regulation Obsession – SMEs don’t have the resources to keep up with multifaceted regulatory environments, which increases their risk of non-compliance and heavy fines or distracts from core operations and siphons funding away from innovation.

Scalability – Developing scalable AI architecture and compliance is a daunting undertaking even for large organizations, and smaller ones lack the budget and cache to attract the right level of talent to build and maintain these solutions in-house.

How Pentaho Helps:

• AI compliance frameworks supported by pre-designed bias-detection, data governance, and transparency templates from Pentaho make compliance easier.
• Pentaho’s architecture allows a fintech to scale easily in the cloud while remaining compliant.
• Institutions may evaluate AI models in simulated environments with Pentaho to ensure they are compliant before they are published.

Potential Industry Shift: AI-ready technology solutions could themselves become an AI accelerator, letting startups focus on innovation instead of compliance. Consider a future where fintechs work under unified compliance standards, creating an ecosystem of innovation together.

One Last Thought: A New Era of Financial Services Is Here

As one famous recent book clearly states in its title – the Obstacle is the Way. While the fintech landscape is growing more complex, there is also great new potential for innovation and development.

This requires a shift in thinking—from reacting to a challenge to actively viewing it as an opportunity. If we do so, banks and financial services can become global leaders in the ways of responsible, data-driven finance.

Is your organization ready to experience the game-changing power of taking compliance from a regulatory requirement to a competitive advantage? The entire world economy is chasing you. Embrace bold leadership. Commit to ongoing innovation. It’s how to succeed in the future of financial services.  With Pentaho, financial institutions can become more transparent, innovate, and increase industry trust.

Learn more about how financial institutions are leveraging Pentaho for strategic advantage.