#274—The 6 challenges regional banks face

Also, when AI meets blockchain

Nov 13, 2023

Welcome to Yaka Stuff, our weekly newsletter that covers news, industry perspectives, and updates from the Hard Yaka ecosystem. Check out our last report here.

This week:

The 6 challenges regional banks face
Ecosystem: When AI meets blockchain
Speaking of FTX…
This week in tokenized money
Chart of the week: Paypal’s stablecoin searches for a use case
What people are watching: Homer Simpson mints a Bart NFT
Stuff happens

1. The 6 challenges regional banks face

Eight months after the collapse of Silicon Valley Bank, the environment for regional banks remains challenging, to say the least. Those challenges, according to Alex Johnson of Fintech Brainfood (via Jun Hiraga), include:

The rising cost of deposits
Lending (auto and housing) cooling off
The lack of credit card products
Sagging commercial real estate
The need for cost cutting
M&A and consolidation

Here’s Alex:

Regional banks can’t stay still.
I don’t even think cutting costs will be enough. The financial services industry has changed. The old playbook won’t suffice anymore.
If regional banks want to survive they’ll need to find lines of business and customer segments where they have a unique right to win and they will need to invest significantly in those opportunities.
As a wise bank investor once advised, “be greedy while others are fearful.”

The whole report is worth checking out. Also covered: How SoFi’s bank acquisition bet is paying off.

2. Ecosystem: When AI meets blockchain

Armed with a PhD in computer science and having specialized in machine learning, Victor Fang founded AnChain on day one as an AI company back in 2018. The mission? Bringing security and risk management to the next chapter of the internet.

Since then, AnChain has worked with government agencies in the U.S. and Japan, major companies like Salesforce and Korea’s Doosan, and the industry’s biggest players including Ripple and Solana.

Five years after its inception, Anchain finds itself at the intersection of three rising tides—AI, blockchain, and the evolving regulatory landscape around compliance and risk management of tokenized money and value exchange.

This isn’t just about crypto. I spoke with Victor last week, and he revealed that only 5 percent of their OFAC data revolves around crypto transactions.

Kyoto University recently invited Victor to Japan, where he presented a keynote on “How Artificial Intelligence Disrupts Status Quo of Web3 Security,” and shared the following AI solutions have played “a critical roles in Web3 security investigation and compliance”:

Large Language Model LLM / GPT / Vector Database for Smart Contracts analytics
Auto Trace Blockchains to improve investigation productivity
Machine Learning based Risk Scoring for Blockchain Entities At Scale

Here’s Victor:

FTX's $8 Billion fraud hit the global crypto market hard, except Japan, further demonstrating the criticality of regulatory compliance. AnChain.AI is honored to support leading global regulators like the Japan JFSA to bring the best artificial intelligence technology to regulate the web3 and crypto market.

We’ll be chatting with Victor early next year about their annual risk report, which will be published in January—stay tuned for the podcast.

Meanwhile, you can check out last year’s report here.

Relevant: