EXCLUSIVE: “AI in Bloom” – Ed Maslaveckas, Bud in ‘The Paytech Magazine’

Ed Maslaveckas reveals how Bud Financial is delivering real and genuine AI use cases, for the banks who want in

AI is the buzzword of the moment, but some remain sceptical about the use cases in financial services. Fintechs and banks alike have been quick to flaunt their own ‘AI’ offering, to embrace the hype and attract funding, regardless of how complex their use of AI is.

One company that can make a claim to being ahead of the curve on this is Bud Financial.

“It’s been one hell of a journey,” says its CEO Ed Maslaveckas, who co-founded the company with George Dunning in 2015. Long before ChatGPT arrived on the scene, it was a “consumer app using what they believed was data science to understand customers and make recommendations to them,” adds Maslaveckas.

However, its offering was limited by the technology available to them.

“Now it’s much more scalable to build,” he says, and it’s well positioned to offer meaningful capability to banks themselves. On offer is increased productivity, the building blocks of a more compelling product, and greater efficiency. Others agree that AI tech could present the future of banking. According to McKinsey, “GenAI could add between $200billion and $340billion in value annually… through increased productivity.”

Whether or not banks are prepared to make that leap, is another matter.

“A lot of these organisations aren’t ready,” says Maslaveckas. “Some of the biggest banks are enabled by a very old structure, where they have hundreds of thousands of people performing manual tasks, such as data analytics, balance sheets, fraud reports, customer service etc.”

With Bud’s new Drive product, Maslaveckas claims it “can perform data analytics tasks on banking data in approximately 15 seconds; data processing that would otherwise take two weeks.

“There’s a huge disruption coming in banking, and it’s actually in how they operate. We’re focused on the people that want to make a change today.”

Disruption eruption

That disruption has been on the way for some time now. Challenger banks and wealth management apps have adopted a digital-only approach, onboarding customers in minutes and providing tailored and helpful services through an app. They’re using cloud technology by default and their market share is now growing.

In Europe and the UK, the likes of Monzo and Revolut now firmly have a seat at the table. The US is increasingly seeing huge success with Chime leading the way. In April 2024, Chime hit $1.5billion in annualised revenue and according to consumer research, it’s estimated roughly 22.3 million US consumers have an account. It’s a real statement that challenging norms in US banking can pay off. In August 2024 Monzo added two million new customers in 12 months, to cross the 10 million mark, the equivalent of one-in-five UK adults.

Rival firm Revolut recently received its UK banking license and gained a $45billion projected valuation, making it Europe’s most valuable startup, surpassing traditional banks NatWest and Lloyds Banking Group in the process. A relatively young founder himself, Maslaveckas represents a growing population of people who have no interest in branch-based banking. He’s frank about the change that is coming and those who will be left in the dust.

“We saw the first banks go into the cloud maybe in 2015 or thereabouts. But a lot of banks in the UK and the US are still on legacy on-prem systems.” The customer’s own aversion to change will ensure that many of these banks will remain established “for the next five, 10 years.”

“GenAI could add between $200billion and $340billion in value annually”

For the time being, it wants “to enable the people that are willing to try something out, the fintechs, but also bigger banks that have side projects where they experiment,” he says. “We want to be provocative in our communication given how big we think the shift is going to be. I think our technology is a little bit ahead of what people are comfortable with. And I think we’ll continue to do that.”

“We need to be a little bit more outspoken about the leadership position that we have because we’ve been working on some of these core technologies since 2018.”

Transforming customer service

Increasingly AI will be used to change customer experience, through transaction enrichment and data analysis, something Bud has been working on for years. Many banks are already using some kind of customer service chatbot but there is plenty of room for improvement and despite some hesitancy, we’re likely to see improvements across the board in the years to come.

“This next wave of personalisation is something we’ve completely lost in banking, which is finding new ways to serve customers,” adds Maslaveckas. Ironically, it’s the things that smaller institutions and building societies have offered, through proximity to the customer, for over 100 years, that could increasingly be delivered by multinational banks using LLMs.

Maslaveckas reminisces about letters to his parents from regional banks in the UK, like Midland Bank, that acknowledged a house move or change in marital status, offering services that may help in that transition. In other words, there is an opportunity for banks to go beyond offering the same products in the same rudimentary fashion they have been for years.

The role that AI plays in this, is manipulating data through transaction enrichment. “We focused on transaction enrichment when we were a consumer app. [it doesn’t have one anymore],” says Maslaveckas. “We wanted to do personalisation, in order to be a financial assistant for the customer, which I think every bank needs to become to maintain the time and attention of then customer going forward.

“The bank primacy is increasingly about engagement. If you can control the customer engagement experience, and be as helpful as possible, you have the right to distribute different products to customers.” The problem however is, he adds, “We didn’t know who the customer was because the raw data was hard to understand and process. So we did this whole enrichment thing, and went down the rabbit hole.”

Data enriched

“A lot of people say they’re doing data enrichment, but no one does it accurately enough to create good insight on the customer,” says Maslaveckas.

Even a relatively high accuracy of 86 per cent on transaction enrichment still represents a huge error rate across hundreds of thousands of transactions. By comparison, Bud’s transaction categorisation is greater than 97 per cent accurate. Getting to the smallest possible percentage error rate on transaction enrichment was the key to unlocking everything else.

“With data like income, outgoings, spend data and CRA data you get a full customer picture,” says Maslaveckas. This is where its Drive product comes in. “We can understand the who, what, where of every transaction. Then we add our insights layer, which helps them understand the customer based on the aggregate of those transactions. Drive sits over the top and finds insights across thecustomer cohort,” he says. “Our new AI products actually identify customer behaviours and patterns, inform the banker and suggest personalised offerings such as tailoring a credit card towards them.”

At the end of the day, “banks want outcomes” and analytics is only as good as the potential revenue it can increase.

The people problem

One concern around all of this is the impact it will have on jobs. It goes back to the numbers of people doing mundane back office tasks. According to a report from The Institute for Public Policy Research (IPPR), “entry-level, part-time and administrative jobs were most exposed to being replaced by AI under a ‘worst-case scenario’ for the rollout of new technologies in the next three to five years.”

Of course, this concerns real people’s livelihoods, but pioneers like Maslaveckas say it’s important to look at the bigger picture.

“The higher cause is banks being really efficient because you want lending to be as low interest as possible and you want banks to be able to offer competitive rates,” he says. “There’s going to be job destruction and job creation, like there always is, right? But I think there’s still a lot of need for humans to have oversight and take initiative. AI can only react to the input. They don’t have the agency to make decisions. So, I think there’s a huge cause for that. But ultimately I think more efficient banks are only a good thing.”

There will be a shift, and it may come sooner than people are prepared for, but new opportunities will also arise. The more optimistic outlook involves the augmentation of a human workforce, which according to the IPPR report would mean no jobs are lost and the size of the economy could be increased by four per cent, or about £92billion, a year. Maslaveckas’ prediction for the future is clear.

“In maybe three to four years, we’re going to see challenger banks or startups deliver a better model and create headlines. Share prices [at the big firms] will be hit and then those building the technology in the bank will be pulled into the boardroom.

This article was published in The Paytech Magazine Issue 15, Page 12-13