Fineco CEO says keeping technology in-house key as AI use grows

By Valentina Za

MILAN, Oct 21 (Reuters) - Fineco's mix of external cloud services and in-house capabilities will help the Italian digital bank to keep IT costs in check and better manage technology risks as its use of AI grows, its chief executive said.

Fineco, a pioneer in Italian digital banking, has built a business that spans online brokerage to asset management around its proprietary technology and a lean operating model.

"We run a hybrid infrastructure. Some elements are in the cloud, but wherever possible we keep critical components in-house and manage them directly," CEO Alessandro Foti told Reuters in an interview.

"We develop and train AI agents, build up the knowledge base, and then replace third-party proprietary models with open-source alternatives hosted on-premise," he said.

Regulators regard reliance on external providers as a major source of vulnerability for financial institutions.

On Tuesday an hours-long outage affecting cloud services provided by Alphabet's Google in the UK disrupted services such as card payments at British digital bank Revolut.

Foti said a cloud-based system carried risks also on the cost front: a model where "the more I grow, the more I consume and the more I pay: that is clearly a risk."

A hybrid model "gives us greater control over everything we do and leaves us less exposed to the pricing power of suppliers."

Asked about competition from Revolut, which this month said it had become Italy's fifth largest bank by number of clients, Foti said it takes time to gain the trust of savers.

"It's one thing to be a payments gateway, and another to manage people's money. They can get there, but it's a long process," he said.

"It's a process we know very well: when we started out people loved our services, but they would not trust us with their savings. More than two decades later we grow three times faster than the sector in private banking."

New clients at Fineco were up 26% in the first half of the year, with the pace of acquisition rising 51%.

Foti said Fineco's fair pricing model appealed to younger Italians who stand to inherit an estimated €200 billion ($225 billion) a year over the next 15 years, in a country where income growth has stalled.

"Those generations will increasingly depend on the efficient management of accumulated wealth rather than on income growth, making them much more focused on value for money."

($1 = 0.8908 euros)

(Reporting by Valentina ZaEditing by Keith Weir)