Banking on AI

Last year, we partnered with Microsoft to build and launch a gen AI tax assistant. Our model is trained on 70 years' worth of tax data and insights. It helps answer users’ questions as they file their taxes, so they can maximize their refunds and minimize their tax liability. But this is just a first step. Beyond tax, we are also working on ways AI can augment key corporate functions, like customer support and marketing.

Like many other companies, our biggest challenge is prioritization and figuring out where to focus our resources. We have so many opportunities to grow the company — the trick [to being successful] is having the discipline to focus on what really matters. I’d also add, as advice to early stage founders: figure out where you can have the biggest impact and focus your resources on that one area, versus being pulled in too many directions.

Based on all the internal consumer research we've done, people are willing to try out AI for things like tax, accounting, and legal services, but they are still nervous about relying solely on machines, given how new everything is. These are very important things to get right, because the consequences of a mis-filed return could be significant. This is people's money! My advice is to focus on how technology could enhance and augment human activity — how it could collaborate with humans to make the customer experience better. Also, think about how to help bigger companies like H&R Block do our job better… and get in touch if you can help!

The starting point for me was really founded in learning from companies that understand 0-to-1 [building from scratch] and 1-to-100. These are two different things, and they require two different types of teams and people. In the 0-to-1 world, you need more entrepreneurial types who have seen failure, have endurance, and understand product market fit. In the 1-to-100 or 1-to-a-million world, you're looking for people who understand growth, have a leadership mindset, and understand analytics. Using product as an example, because that's in my DNA, your 0-to-1 product manager is obsessed with customer experimentation so they can figure out product market fit, whereas your 1-to-100 product manager knows how to write query language and is looking at analytics every day.

In the AI world, that's exacerbated because you have to understand a different level of technology, a different scale, a different pace. There's a big, big learning curve. So, you have to figure out how to inject your company with talent that can infect the rest of the populace. You have to figure out how to drive transformation in a bigger way.

The bar for accuracy in fintech is extremely high, and unlike with open-ended generative AI, in fintech, when users ask a question they want a specific answer. I think fintech companies must think about how to put guardrails around the prompt or origination thesis so users can get a more specific answer. Additionally, as we're experimenting, we have a higher threshold of accuracy. We also have a high threshold on risk, brand, security, reliability — all those things. It's also tricky figuring out how to experiment at scale. I think the practice of perfecting early adopter programs, where you can work with power users who are more tolerant of things going wrong, is really hard to do in fintech. But it's incredibly necessary.

When you look at the mortgage industry as a whole, it's a massive, $1.5 trillion total addressable market — the vast majority of that being purchase transactions. If you take that and say, “Hey, 6% of that is what the realtors command,” that's a $90 billion market that is on the brink of disruption. So we're excited about that because fundamentally, our thesis is around value creation for the consumer, and this ultimately passes more value to them. Whether you're the buyer or the seller, you're either saving more money or you're making more money, and the commoditization of knowledge plays out. Then when you add AI on top of it to provide personalization and simplification, and add transparency to things like fee structures, appraisals, remodeling fees… I could go on and on. It's going to be a better world for consumers.

AI is especially powerful when it’s used to solve our clients’ most complex problems: the ones that involve market structure, client habits, and technical idiosyncrasies.

Here’s a great example: Our AI model, which has been trained on more than 200 million trades and factors in more than 15 attributes of a trade, can now predict with an accuracy rate of over 90% on the likelihood of the trade to settle by deadline, 24 hours prior to the deadline, for trades outside the U.S. Ultimately for our clients, access to data means agility, and access to data in real time means commercial advantage.

From the perspective of our software and data management platform, we see a huge opportunity to meet evolving client needs and demand for an innovative capital markets data management solution.

Our challenge is to ensure we can deliver this in an environment where technology and data ecosystems are becoming more complex, competitive, and cost-intensive for our clients. How we overcome that challenge is by staying ahead of disruptive forces impacting capital markets, such as connecting disparate pieces of the financial ecosystem, alleviating market complexity, and driving digitization and data as enablers of growth. We provide our buy side and sell side clients with a leading data management solution designed to offer deeper insights and actionable data that can help improve their investment performance, distribution reach, and risk management.

Don’t let the limits of what your product can do also limit what you offer your clients; you win by combining exceptional software with the right investment product. And remember: if your focus is on the software, you need to find partners who can bring the other part of the value proposition, and vice versa.

Roll all of this into a client experience that begins with great UX and includes an end-to-end level of support that promotes trust — ultimately, you are dealing with people’s money — and you’ll be amazed at what you can accomplish.