The Israeli tech industry is facing unprecedented challenges in the wake of ongoing conflict in the region. However, despite the turmoil, there is a sense of resilience and adaptability within the sector. The recent Fintech Junction 2024 conference held at the Tel Aviv Stock Exchange shed light on the industry’s outlook and the role of artificial intelligence (AI) in financial services.
Fintech junction 2024: A beacon of hope
Fintech Junction 2024, a gathering of over 250 attendees from the local fintech industry, provided a platform for discussions on the state of the fintech sector in Israel. The event featured key players, including unicorns like Pagaya and Melio, as well as established banks and startups at various stages of development and fundraising. The conversations at the conference revolved around the maturation of fintech, the potential of traditional and generative AI in financial services, and the strategies to adapt to the ongoing conflict.
Fintech’s evolution from disruption to collaboration
Over the past decade, fintech has evolved from being a disruptive force to becoming a collaborative partner with traditional financial institutions. Gal Aviv, Founder and CEO of Blender, noted this shift, saying, “In 2013, [banks] thought ‘I’m building to sell and do an exit’; then they thought ‘I’m planning an IPO.’ Now there seems to be a better understanding of the role fintechs play.”
Aviv’s discussion with Or Kaplinsky from Amdocs highlighted the challenges faced by startups in collaborating with banks, particularly in terms of integrating with their IT departments. Fintech companies are seen as the intermediaries, bridging the gap between core banking operations and cutting-edge innovations in the financial sector.
Generative AI in financial services: challenges and opportunities
One prominent topic of discussion at the conference was generative AI and its potential applications in financial services. Tal Shahar, World Wide Data & AI Delivery Leader at IBM Security Trusteer, emphasized the importance of tailoring language models for the specific needs of the financial sector. While acknowledging the capabilities of models like GPT (Generative Pre-trained Transformer), Schahar noted, “GPT is great for generating poems and homework, but it can’t cover everything.”
A panel of experts echoed this sentiment, highlighting the challenges of implementing generative AI when dealing with sensitive financial data. Shiri Schneider, the CTO at PayU, pointed out that in hardcore payments and fintech, there may not be much need for generative AI at the moment. However, she recognized its potential to improve efficiency, especially within development teams.
Schneider cautioned that generative AI may not be suitable for every developer, stressing the importance of senior staff members having a deep understanding of how to work with these language models effectively.
Machine learning: The current reality
While generative AI holds promise for the future of financial services, the present is still dominated by more traditional forms of AI, particularly machine learning. Schneider presented two significant use cases for machine learning in the financial sector: increasing transaction approval rates and detecting anomalies.
The first use case focuses on optimizing transaction processing by selecting the best pathway within the financial ecosystem. The second use case involves identifying irregular patterns and behaviors to help firms detect and prevent breaches.
The Israeli tech industry finds itself in a challenging and uncertain environment due to ongoing conflicts. However, the resilience and adaptability displayed at the Fintech Junction 2024 conference reflect a commitment to overcoming these challenges.
While generative AI shows promise for the financial sector, it is essential to recognize its limitations, particularly in handling sensitive financial data. Machine learning continues to be the driving force behind many of today’s innovations in financial services.
As the industry navigates through these turbulent times, one thing remains clear: Israeli tech remains strong and determined to build a brighter financial future, no matter the circumstances. In the ever-changing landscape of finance and technology, yesterday’s buzz is indeed becoming today’s reality.
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