ACT Canada Driving Insights – July 2019
Welcome to the July 2019 edition of ACT News – Driving Insights. This complimentary service is provided by ACT Canada. Please feel free to forward this to your colleagues.
In This Issue
|1||FCAC TO MONITOR BANKS’ COMPLIANCE WITH NEW VOLUNTARY CODE OF CONDUCT TO PROTECT SENIORS
Features ACT Canada Member The Financial Consumer Agency of Canada
|2||BRIGHTERION AND ELAVON TO FIGHT FRAUD WITH ARTIFICIAL INTELLIGENCE|
|3||SWISS PRIVACY GROUP STILL WAITING TO HEAR FROM FACEBOOK ON LIBRA|
|4||ALIBABA ENABLES US SMBS TO SELL IN ITS MARKETPLACE|
|5||HERE’S WHY CONTACTLESS PAYMENTS ARE ABOUT TO EXPLODE IN THE US|
|6||NEW MIGRANTS TO BE TRACKED BY DIGITAL IDS POST-BREXIT, LEAKED HOME OFFICE DOCUMENTS REVEAL|
|7||IS IDENTITY VERIFICATION DRIVING SOCIAL MOBILITY?|
|8||VERIDOS DELIVERS MORE THAN 74 MILLION MEXICAN VOTER ID CARDS
Features ACT Canada Member G+D Mobile Security
|9||LIDL'S OWN PAYMENT SYSTEM TO CHALLENGE APPLE AND GOOGLE|
|10||PHISHING REMAINS A PERSISTENT PROBLEM|
|11||THE EMPLOYER’S VIEW OF EARLY WAGE ACCESS
Features ACT Canada Member MasterCard
|12||G+D MOBILE SECURITY SUPPORTS ESIM MANAGEMENT IN MICROSOFT WINDOWS ENVIRONMENTS
Features ACT Canada Member G+D Mobile Security
|13||AUTOMATED OPEN BANKING API TESTING SOLUTION LAUNCHED BY FIME
Features ACT Canada Member FIME
|14||AS FACEBOOK STRUGGLES FOR BLOCKCHAIN SUPPORT, A TRULY DECENTRALIZED CHALLENGER EMERGES|
|15||MASTERCARD AND EVOLVE BANK & TRUST HELP HOURLY AND GIG WORKERS GET EARLY ACCESS TO WAGES
Features ACT Canada Member MasterCard
|16||RETAILERS UP THEIR LOYALTY AND REWARDS GAMES|
|17||CAN GLOBAL TRADE WARS SPARK INNOVATION FOR TRADE PAYMENTS?|
|18||BANKS' INEVITABLE RACE TO THE CLOUD|
|19||THREE THINGS TO KNOW ABOUT AI AND INTELLIGENT PAYMENTS
Features ACT Canada Member WorldPay
|20||2019 THALES ACCESS MANAGEMENT INDEX FINDS ALMOST HALF OF BUSINESSES BELIEVE CLOUD APPS MAKE THEM TARGET FOR CYBER-ATTACKS
Features ACT Canada Member Gemalto
|21||FIME HELPS ID TECH ACHIEVE INDUSTRY’S FIRST EMV® CONTACTLESS INTERFACE 3.0 APPROVAL
Features ACT Canada Member FIME
|22||SEVEN COMMON CYBERSECURITY MISTAKES MADE WITH AI|
|23||EXPANDING USE OF CREDIT DATA DOESN'T HAVE TO BE CREEPY|
Payment Acceptance Solution Provider
Ingenico Group is the global leader in seamless payment, providing smart, trusted and secure payment solutions to empower commerce across all channels, in-store, online and mobile. With the world’s largest payment acceptance network, we deliver secure solutions with a local, national and international scope in 125 countries. For over 30 years, we have been the trusted world-class partner for financial institutions and for retailers, ranging in size from small merchants to several of the world’s best known global brands. Our smart terminal and mobile solutions enable merchants to simplify payment and deliver their brand promise.
Payment Network Partner
Interac Corp. operates an economical, world-class debit payments system with broad-based acceptance, reliability, security, and efficiency. The organization is one of Canada’s leading payments brands and is chosen an average of 16 million times daily to pay and exchange money. For more than 30 years, Interac Corp. and its predecessors, Interac Association and Acxsys Corporation, have facilitated secure financial transactions through the development of innovative and convenient debit and money transfer solutions. A leader in the prevention and detection of fraud, the organization has one of the lowest rates of fraud globally.
Looking For good people?
There is a lot of movement in the market, so if you are looking for new employees, we are always aware of some great people. Please contact ACT Canada for more details - email@example.com
Calendar of Events
1. FCAC TO MONITOR BANKS’ COMPLIANCE WITH NEW VOLUNTARY CODE OF CONDUCT TO PROTECT SENIORS
Source: Financial Consumer Agency of Canada (7/25)
Today, the banking industry adopted a Code of Conduct for the Delivery of Banking Services to Seniors (the code). The Financial Consumer Agency of Canada (FCAC) will monitor banks to ensure they comply with the code. The code is an important first step in guiding banks in their delivery of services to meet the needs of seniors. Banks who have signed on to the code must abide by its principles.
The code will come into effect by January 1, 2021. However, effective immediately, banks must abide by principles 5 and 6, which will require them to mitigate potential financial harm to seniors and take into account market demographics and the needs of seniors when proceeding with branch closures. Should FCAC find that a bank has breached a voluntary code, it will take appropriate action as outlined in its Supervision Framework.
FCAC will continue to engage with seniors’ groups, financial institutions and other public, private, not for profit and academic sector stakeholders on specific issues related to seniors and banking.
“As Canadians live longer, some seniors may face challenges that impact their ability to bank. This voluntary code of conduct marks an important first step in guiding banks in their delivery of products and services that meet the needs of seniors. FCAC will actively monitor banks’ compliance with this code and ensure its principles are upheld.” Werner Liedtke, Assistant Commissioner, Financial Consumer Agency of Canada
"Our Government is committed to making banking safer and more secure for seniors. As part of this commitment we called for the creation of a code of conduct to guide banks in their delivery of banking products and services to seniors. This code will contribute to a positive banking experience that meets the needs of seniors.” The Honourable Filomena Tassi, Minister of Seniors
- Voluntary codes are commitments that banks make to their customers. They outline obligations to which industries agree to adhere. They also provide clarity around key issues, and encourage federally regulated financial institutions to conduct themselves in ways that benefit them and consumers.
- The Fall Economic Statement 2018 issued by the Minister of Finance stated that “the Financial Consumer Agency of Canada will engage with banks and seniors’ groups to create a code of conduct to guide banks in their delivery of services to Canada’s seniors.”
- FCAC engaged with seniors’ groups, financial institutions and experts to identify banking challenges experienced by Canadian seniors. The Agency also conducted public opinion research.
- The code’s principles guide banks in their delivery of banking products and services to Canada’s seniors.
- FCAC’s Supervision Framework describes how the Agency fulfills its legislative mandate to promote, monitor and enforce compliance with financial consumer protection requirements.
- Seniors are a rapidly growing segment of Canada’s population. Canadians are living longer, which can bring health, mobility or cognitive changes that may impact their ability to bank.
The Financial Consumer Agency of Canada is a member of ACT Canada; please visit https://www.canada.ca/en/financial-consumer-agency.html
2. BRIGHTERION AND ELAVON TO FIGHT FRAUD WITH ARTIFICIAL INTELLIGENCE
Source: MasterCard (7/9)
Leading AI capabilities deliver more sophisticated and efficient fraud protection. While the global implementation of EMV chip technology has reduced fraud activity for card payments, the payment’s ecosystem is still battling the threat of new and emerging fraud payment schemes online. Brighterion, a MasterCard company, and Elavon, a global payments provider and subsidiary of U.S. Bank, have announced they will work together to integrate Brighterion’s advanced artificial intelligence (AI) platform into Elavon’s network to minimize fraud and manage risk.
“The explosion of ecommerce has been matched with a rise in digital fraud,” said Ajay Bhalla, president, cyber & intelligence at MasterCard. “AI has proven itself critical in managing the complexities of today’s evolving world. We’re pleased to collaborate with Elavon as they take a leadership role in fighting fraud in the industry.”
With the ability to analyze nearly 100 billion transactions annually, Brighterion will enable Elavon to better discover and identify transaction anomalies, which helps mitigate risk and maintain the integrity of Elavon’s global systems.
“The increasing sophistication of fraudsters demands smarter, more nimble and innovative fraud tools that allow us to stay one step ahead,” said Tim Miller, senior vice president, global credit and risk, Elavon. “We look forward to bringing the strength and flexibility of Brighterion’s AI platform to our fight against fraud.”
In addition to Brighterion’s AI capabilities, MasterCard's AI and machine learning technologies, such as AI Express, provide real-time intelligence across data sources regardless of type, complexity or volume. AI Express helps companies develop a tailored AI model and was designed to help address key business priorities, including anti-money laundering, fraud risk management, cyber security, credit risk prediction and operational efficiencies.
“Banks, processors and large merchants are rapidly adopting advanced machine learning technologies to combat fraud,” said Julie Conroy, research director for Aite Group’s Fraud and AML practice. “Our research shows that these technologies provide substantial lift in fraud detection compared to legacy rules-based systems, while at the same time reducing the false positives that can be so detrimental to the customer experience.”
The companies will work with merchants in the United States, Europe and Latin America to incorporate fraud monitoring into their systems.
3. SWISS PRIVACY GROUP STILL WAITING TO HEAR FROM FACEBOOK ON LIBRA
Source: PYMNTS (7/23)
The Swiss Federal Data Protection and Information Commissioner (FDPIC) said it still hasn’t heard from Facebook regarding its supposed oversight of Libra, the social media giant’s proposed cryptocurrency. The FDPIC said it is still waiting to hear back after it wrote a letter on July 17 asking for more details about the project, Reuters is reporting. The organization said the information is crucial if it’s going to figure out how to manage the oversight of the currency.
“The Federal Data Protection and Information Commissioner has noted the remarks made by Mr. David Marcus at his hearing before a U.S. Senate committee,” the watchdog said in a statement. “The FDPIC stated in his letter that as he had not received any indication on what personal data may be processed, the Libra Association should inform him of the current status of the project so that he could assess the extent to which his advisory competences and supervisory powers would apply.”
Marcus is the head of the project, as well as the company’s blockchain initiatives, and he said at a July 16 Senate hearing that the FDPIC commissioner would be Libra’s regulator because the currency would be housed in Geneva. Libra has already faced stiff scrutiny from regulators and policymakers all over the world. Both U.S. Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell have expressed “serious concerns” about the proposed cryptocurrency, citing issues related to money laundering, stability and regulation.
Many in the Senate Banking Committee talked about privacy concerns as well. Marcus said the FDPIC would handle privacy concerns, and that the Swiss Financial Markets Supervisory Authority (FINMA) would regulate it financially. FINMA told CNBC that it had been in contact with people from the Libra project.
Marcus also said the Libra Association was going to be headquartered in Switzerland “not to evade any responsibilities of oversight,” but because that’s where other international financial groups are headquartered, like the Bank for International Settlements.
4. ALIBABA ENABLES US SMBS TO SELL IN ITS MARKETPLACE
Source: PYMNTS (7/23)
US Merchants Can Now Sell On China’s Alibaba. Chinese eCommerce giant Alibaba Group Holdings Ltd is welcoming small businesses in the U.S. to sell on Alibaba.com. Alibaba is hoping to become the marketplace platform of choice in the U.S. by offering smaller businesses the opportunity to sell globally, Reuters reported on Tuesday (July 23).
“You get to compete and act like a multinational company in a way you’ve never had the tools or technology to be able to do,” John Caplan, head of North America B2B at Alibaba Group, told the news outlet. Alibaba is hoping to win over U.S. businesses as it faces new competitive challenges in addition to navigating the U.S.-China trade war. About one-third of its customers are from the U.S.
Although the U.S. is Alibaba’s first global target, Caplan told Reuters, Alibaba has a “very clear approach to other markets.” To get an online store running on Alibaba will cost U.S. sellers approximately $2,000. By contrast, Amazon charges third-party sellers by the month or per item, Reuters said.
This is the first time Alibaba has extended an invitation to U.S. sellers. Participating merchants will be able to reach potential buyers from China as well as India, Brazil and Canada. Unlike competitor Amazon, Alibaba does not sell inventory of its own, and hopes to attract manufacturers, wholesalers and distributors.
Alibaba hopes to have 40,000 global brands over the next three years. In June, the company rolled out a merchant-focused English language website for its Tmall Global marketplace. The company recently formed a joint partnership with Russian eCommerce giant Mail.ru and mobile company MegaFon. The new venture, AliExpress Russia JV, will cater to Russia and the surrounding countries of the Commonwealth of Independent States (CIS). It’s estimated to be worth about $2 billion.
The company is also reportedly mulling raising $20 billion in a second Hong Kong listing. Its market capitalization currently stands at $400 billion.
5. HERE’S WHY CONTACTLESS PAYMENTS ARE ABOUT TO EXPLODE IN THE US
Source: Global Payments (7/26)
Visa payWave, MasterCard PayPass, Apple Pay, Samsung Pay and Android Pay are just some of the newest ways to pay that rely on the convergence of contactless payments via a chip-enabled card or activated mobile phone and near-field communication (NFC) technology. The combination allows shoppers to hover their phone, or their credit or debit cards, over the point-of-sale and complete a secure, encrypted transaction, fast.
In the US today, most consumers are used to paying with cash or pulling out his or her wallet, grabbing a card, and either swiping or inserting the card into the point-of-sale terminal. But contactless payment usage is on the verge of taking off in the US, similar to the trend happening around the world. In the US, three factors will contribute to the tipping point, whereby the use of contactless payments will become ubiquitous: 1) card issuers and US banks get more contactless cards into the hands of consumers, 2) a strong push for contactless payments by US businesses and 3) consumer demand.
- Contactless Card Availability
Card issuers and banks hold the lion’s share of power to swing the pendulum in the US. When more consumers have contactless cards, more transactions happen contactlessly. Currently, contactless card penetration in the US is among the lowest in the world. In the UK, for example, nearly 60% of credit and debit cards are contactless and in South Korea, that percentage is even higher at almost 96% compared to only about 3.5% in the US, according to recent research by ATKearney.
Recent statements by Visa and other US card issuers indicate that they will increase the availability of these cards to US consumers in the near future. Visa estimates there will be 300 million contactless cards issued in the US by the end of 2020, up from the predicted 100 million at the end of this year as announced on its 2018 Q4 earnings call. MasterCard is also bullish on the influx of contactless cards it will produce in the coming years. President and Chief Executive Officer Ajay Banga said, “We have received commitments from issuers representing approximately two-thirds of our total US consumer volume to issue contactless cards within the next two years.”
A.T. Kearney reports that there will be a massive effort on behalf of US banks to rollout contactless cards in 2019, with the top 10 banks launching contactless by 2020. It estimates that by 2022, 56% of the cards in the US market will be contactless.
- Business Adoption
As global evidence proves, business and infrastructure conditions are large influencers in consumers’ adoption of new payment choices. For example, adoption of contactless cards in the UK was hastened when London’s public transit system migrated to contactless payments as the preferred payment method in 2014. Over time, UK consumers became accustomed to tapping and paying at a point of sale. Now, 53,000-plus new contactless mobile or card payments are made each day through that transit system alone.
In the US, the recent news that NYC’s subway system, the Metropolitan Transportation Authority (MTA), will now accept contactless credit and debit cards resembles how the contactless payments evolution began in the UK. Additionally, Apple is now developing methods for Apple Pay users to tap their phones at parking meters and on Bird scooters. Many US businesses are already enabled to accept contactless payments today. Of the top 50 merchants in quick-service restaurants, 79% are contactless-enabled, 77% of drug stores and pharmacies and 61% of grocery stores in the US can accept contactless transactions. Increased US business adoption presents a strong case for the acceleration of a shift to contactless.<
- Consumer Demand
Chances are you have had customers ask if you accept mobile payments. That’s the demand for contactless payments talking, and it’s about to get even stronger. Consumers report that they are ready for the enhanced security that contactless payments provide as well as quicker transaction times garnered through a simple “tap and pay” motion.
A recent AT Kearney study mentions that US consumers see contactless payments as “secure, simple, and fun.”
By simply tapping to pay, consumers can cut down their wait time at checkout. A contactless transaction is much quicker than any other method of payment, allowing consumers to make the most efficient use of their time and businesses the ability to generate more transactions in the same amount of time.
Contrary to popular belief, contactless payments are more secure than other forms of payment. Although not visible, when a contactless payment transaction occurs, the account data is tokenized into a one-time code and passed from the card or the mobile device to the contactless reader. In a contactless payment transaction, the consumer’s card details are never revealed, unlike in a typical card payment, making the contactless transaction safer and more secure.
Many consumers love to experiment with new tech that puts them on the cutting edge. Today’s digitally-savvy generation has no problem trying out the latest technology innovations and won’t hesitate to tell their friends and family about their experiences. Adopting contactless payments is another way for them to stay ahead of tech trends.
The tide is shifting in favor of contactless payments in the US. Every business owner should make it a priority to be well versed on contactless payments. Global Payments offers contactless EMV solutions like the iCT 250, which enables swipe, dip and contactless options for business owners to offer their consumers. It also portable so you can use its flexibly in your business. A product like Mobile Pay supports contactless payments, cash, and swipe/insert transactions from your mobile phone, giving you the ability to do business while you’re on the go. The speed, security, and convenience of contactless payments is a leap forward in payment technology. Once consumers start building new muscle memory, we’re going to see increased evidence of retailers and service providers providing fast, secure transactions to further facilitate the seamless customer experience expectation. Prepare now for this change; you’ll be ahead of the curve, and ready to grab a piece of the next wave of commerce.
6. NEW MIGRANTS TO BE TRACKED BY DIGITAL IDS POST-BREXIT, LEAKED HOME OFFICE DOCUMENTS REVEAL
Source: SkyNews (7/20)
Leaked documents from the Home Office reveal how migrants will be tracked across the border using technology and digital IDs. New migrants moving to the UK to work after Brexit will be given unique digital identities and have their visa applications filtered by "automated checks", according to a leaked Home Office presentation seen by Sky News.
Each migrant will be given an "individual immigration status" from the moment they apply for permission to travel to the UK, which the presentation says will be "digitally 'stamped' as they cross the border".
The individual immigration status, which will replace the current biometric residence permits, will be "checked by employers and public service providers to establish rights to work and access services and benefits in the UK".
People who have seen the 16-slide presentation, which lays out the Home Office's plan for dealing with the extra work created by the end of free movement with the European Union, say the system resembles a "digital ID card".
"It's digital identity right now for Europeans but you'll see it much more for other people coming to live here," says Ian Robinson, who worked for the Home Office for eight years before becoming a partner at law firm Fragomen, where he leads on UK immigration and government strategies. Each migrant will have an 'individual immigration status', the presentation states. MPs and campaign groups warned it could be used for government surveillance.
"Digital ID cards have been rejected by the people of this country," Labour MP Chi Onwurah told Sky News. "You have opportunities for monitoring, for tracking, for people hacking it - but then you also have issues with the data that's being used to create that and whether it's biased."
"It looks like the Home Office dumped the idea of a physical ID card, but retained the giant database behind it," said Phil Booth, who led NO2ID, the campaign group formed in 2004 to protest the government's plans to introduce UK ID cards. In many cases, the government does not understand how its systems work, because it has subcontracted their operation to private companies
"Given landlords and employers face stiff penalties for renting to or hiring 'the wrong person', how long before everyone is forced onto the system if they want to rent or buy a house, or apply for a job?" The measure is part of a sweeping technological reform of the immigration system, designed to ease the huge workload created for the Home Office by the end of freedom of movement from the European Union.
Key to this shift is what the leaked Home Office presentation calls "automated checks of government data". That is, algorithms filtering visa applications.
According to Mr Robinson, the checks will use applicants' data to assess applications automatically.
"It will focus on particular biographical features of visa applicants: their age, nationality, whether or not they are working and the type of work they are doing and the salary they are paid," he told Sky News.
"If you had a visitor from a less economically developed country but were themselves a very economically established, so a businessman from China or India, they would probably flag for an extra check but as soon as [the Home Office] could see that they are working, they have a home life, they have a family, that person wouldn't be an issue.
The checks will replace in-person interviews. "If you were looking at a single man from an entirely undeveloped economies or less developed economies that's when a flag would be raised."
According to the presentation, this system will factor in trade deals struck by the UK after Brexit. As a slide titled "Key Principles" puts it: "Not all nationalities will be treated the same. As now, we will differentiate on risk and/or trade deals."
The checks will also use government data on tax and benefits to check whether the applicant meets the criteria for remaining in the UK - such as the requirement that skilled migrants earn over £30,000 a year.
According to the presentation, these changes will help reduce the time it takes to process "the majority of skilled work applications" for visas from six months to two-three weeks, a huge boost for a department expecting to deal with millions of additional visa applications once the UK leaves the European Union.
"That is a huge weight on their shoulders, so they are using technology to fix this," says Mr Robinson.
Single unique identifiers would effectively be digital ID cards which could be used to link individuals' data across databases. Last month, the Financial Times revealed that the Home Office was secretly processing visa applications using a streaming algorithm, which grades visa applications red, amber or green according to their level of risk. This result is then forwarded to an immigration caseworker.
The new scheme is expected to be a more sophisticated version of the same system, raising concerns it could bias visa decisions against some applicants based on nationality or race.
"I think it's absolutely horrifying," said Ms Onwurah, who is chair of the all-party group for Africa.
"The algorithms will be automating all the biases that are packed into the data that's being used. People can make judgements about the validity of data, algorithms can't and that is the key difference." Yesterday, the all-party group for Africa warned that the UK visitor visa system is "broken", saying it was "widely perceived as biased or even discriminating against Africans".
Speaking in Parliament, Minister for Immigration Caroline Nokes said the streaming algorithm was "used only to allocate applications, not to decide them," describing it as "an automated flowchart". The presentation is based on the Immigration White Paper, which was published at the end of 2018. It is expected to be put before Parliament in early 2020, so that the new visa system can go into force on 1 January 2021.
"This is an old version of a presentation being given as part of our year-long engagement programme around the future immigration and border system," the Home Office said in a statement.
"So far, we have engaged with more than 1,500 stakeholders at over 100 events across the UK and will continue this work before we finalise the system next year."
7. IS IDENTITY VERIFICATION DRIVING SOCIAL MOBILITY?
Sources: Forbes (7/23)
Arguably, the sharing economy may have shrunk our ‘small worlds’ even further. We can now easily book ourselves a stay in the home of ‘trustworthy’ strangers, pick up someone else’s ‘off-the-road’ car to do our weekly grocery shopping, or find someone to pick up our dry-cleaning – all merely a few swipes away.
The only seemingly missing piece – thus far – has been our ability to transact across borders without incurring eye-watering currency conversion and international transfer fees. That also may now be changing, with Facebook announcing the launch of its new digital currency, the Libra, spanning countries and continents. Already dubbed ‘a Bitcoin killer’, it will be pegged to a basket of major currencies, designed to handle large volumes of transactions. The idea sounds promising from the start – already being backed by a consortium of 28 big firms. If Facebook’s 2.4bn users adopt Libra as their digital currency of choice to transact and shop, it could genuinely become one of the world’s globally accepted currencies, disrupting the financial system as we know it today, helping to boost social mobility and even potentially alleviate world poverty…
Not so fast. With reports of fake news and fake profiles online not slowing down anytime soon, verifying digital identities is a must to ensure safety and security when transacting in Libra. The notion is applicable to all e-commerce and sharing economy innovations that we can no longer imagine our lives without. While there are still more questions than answers when it comes to the new digital currency – one thing is certain: it will have to comply with stringent Anti-Money Laundering Directives (AML4/AML5) and PSD2, requiring anyone making a payment larger than the ‘contactless’ limit to double-authenticate themselves.
The cure for the sharing economy’s identity crisis
As well as providing unparalleled levels of freedom, the sharing economy and e-commerce are going some way to enhancing social mobility. The IPOs of ride-sharing companies like Lyft and Uber are a testament to the sharing economy being officially a global mainstay. While some may argue that their market valuations look inflated for asset-light entities, investors seem certain. They are clearly banking on steady growth and rising profitability of both ride-hailing firms.
There are an estimated 1.4 million Lyft drivers and three million Uber drivers worldwide. Meanwhile, Airbnb has an inventory of four million properties in 65,000 cities and 191 countries across the world. All three are testaments to the stunning growth in the sharing economy. Yet, the sheer scale of these platforms lays bare the difficulties associated with confirming the identity of everyone who accesses or provides services.
Being in the limelight for a while, these companies also highlight one of the biggest problems with the sharing economy, which is that of trust. Both buyers and sellers depend on knowing precisely who they are dealing with. Consumers have the right to be comfortable in the knowledge that they can instantly ‘trust’ a stranger with their own and their family’s safety. And the sharing economy platforms have the duty of care towards their users to provide a safe and fair marketplace for all.
Where platforms like Airbnb or Vrbo are concerned – the homeowners need to be reassured that they’re renting to legitimate people, and that any damages would be covered if things go wrong. For holidaymakers, it’s crucial to know exactly whose home you’re staying in, so having their identity and credentials verified is significant. Luckily, identity verification technology comes to the rescue – which Airbnb is now successfully deploying to enhance user experience – increasing the level of trust between all sharing economy users. Sometimes, virtually overnight.
Sharing is ‘caring’.. or ‘carrying out verification checks’?
Sharing is based on trust, and the present difficulty of establishing who someone says they are could to become the industry’s Achilles’ heel, slowing down expansion. The difference between waiting for reviews to come through to verify someone’s identity and trustworthiness and being instantly credible as a government-issued ID is digitally verified, will be huge. This will no doubt increase the appeal of transactions on sharing economy platforms. And, from the perspective of the sharing economy companies themselves, this move will send a strong signal that they genuinely care about their users, and that they are there to provide truly safe online spaces.
Car sharing platforms are just one example where digital identity verification can be both an opportunity and a challenge. In addition to such well-known companies as Uber and Lyft, there are also players that provide a marketplace for those would-be drivers who want to rent cars for use as peer-to-peer ridesharing. These car sharing platforms usually rely on purely digital users and can face issues in on-boarding, as well as reducing fraud and keeping track of those actually using their cars for insurance purposes.
It is paramount for these companies to ensure that their drivers always assume their responsibilities in case of car accidents, customer complaints and other potential road-side issues. This is where digital identity verification helps drive social mobility – quite literally. All that is required for would-be drivers is to take a photo of their government ID and a selfie. Then, their identity can be verified in near-real-time with the help of their smartphone. The solution is not only bound to support the rise in overall annual car rentals and peer-to-peer sharing volumes – but it is also designed to build trust around ride-sharing applications and the entire ecosystem around the likes of Uber and Lyft, propelling the sharing economy even further forward.
The sharing economy can continue to revolutionise our lives and give us all access to more resources, exactly when we need them – affordably priced and available instantly. However, in order to further evolve and grow, the marketplace needs to solve the challenge of establishing trust.
As with so many things today, the answer lies in our pockets: it’s our mobile devices. And as we hear about password and identity leaks and hacks, we can be secure in the notion that our ID documents can be changed if stolen, lost or compromised – as opposed to our biometric data or social security numbers. Which, by extension, lends more ‘protective’ options to our ‘digital identity’, too. If we can combine confidence and convenience through simple, intuitive and secure digital ID verification, then the sharing economy can truly live up to its promise of changing our world for the better. This could even go so far as driving social mobility upward for those craving to be modern citizens of the world – without too many, if any, dangers ‘attached’.
8. VERIDOS DELIVERS MORE THAN 74 MILLION MEXICAN VOTER ID CARDS
Source: G+D Mobile Security (7/25)
- The Mexican Instituto Nacional Electoral awarded Veridos the design and production of Voter ID cards
- The solution includes a personalization site to produce 90,000 ID cards a day, a scrap material recycling plant, and a special service for Mexicans abroad
- This project will enhance identity protection through high-resolution printed security features and mobile verification
- World-leading identity solutions provider Veridos has announced the acquisition of a major contract with a long-standing customer; the Mexican Instituto Nacional Electoral (INE). This project is expected to deliver a minimum of 74 million identification documents to Mexican citizens during the contract duration of five years. The highly-secure, durable ID cards will ease verification processes and enhance national security.
This complete service for INE will enable secure production, personalization, and verification of Mexican Voter ID cards. At a production rate of 90,000 ID cards per day, these identity documents will include 14 preprinted security features, both forensic and invisible to the naked eye. Thanks to the high-resolution printing at 12,800 DPI, the ID cards are very difficult to forge. The personalized documents will include two encrypted QR codes that contain biographic and biometric information about the citizen. A special ydeveloped smartphone-based application will enable a smooth and secure verification process. Furthermore, Veridos will provide a fulfillment service that will enable Voter IDs to be sent in a security envelope to Mexicans living abroad.
Rene Miranda, Executive Director at the Federal Register of Voters, stated: “Veridos’ implementation will allow INE not only to protect the citizen’s identity, but also to enhance security levels. We are creating added value for the environment and society in general; through new and better production and verification technologies and taking care of the entire production process, assuring every step of the production, and considering recycling scrap material processes”.
- Rolando Colchado, Managing Director of Veridos Mexico, added: “Thanks to multiple security features and state-of-the-art verification methods, our identity solution is highly reliable and trustworthy. We are delighted to continue this partnership with INE that has already started in 2013 and excited to see our voting identity solution implemented in Mexico”.
G+D Mobile Security are a Member of ACT Canada; please visit https://www.gi-de.com/en/ca/
9. LIDL'S OWN PAYMENT SYSTEM TO CHALLENGE APPLE AND GOOGLE
Source: Forbes (7/18)
The popular German discount retailer Lidl, which operates in numerous EU states is developing its very own payment system. While much of the details remain unknown as the pilot scheme is currently being tested in Spain, the system will use the existing mobile app Lidl Plus, which is already available in a number of countries including Austria, Germany and Poland.
Once rolled out, Lidl Pay is expected to raise a few eyebrows in the headquarters of companies such as Apple and Google. Both have invested heavily into entering the global and European payment space with their respective products.
Moreover, in Germany, Lidl is hoping to offer an additional upgrade to its new system by allowing for Direct Debit payments. This will make it possible for the company to lower its costs, as it would no longer have to pay transaction fees to the credit card providers.
Another advantage of having a unique payment system rests in Lidl’s ability to collect valuable data on its customers and their shopping patterns. The data can then be used towards optimizing the chain’s operations and in delivering better service to customers. And because the company would generate its own data, it will not have to rely on any third party for storage or processing, cutting its costs further still.
But while on surface it seems that Lidl Pay will bring noticeable benefits to the company, the ultimate litmus test of success will depend on the extent to which Lidl’s own customers will be prepared to embrace it. To that end, Lidl will have to invest time and money into winning the hearts and minds of the increasingly surveillance-weary population.
10. PHISHING REMAINS A PERSISTENT PROBLEM
Source: PYMNTS (7/25)
Because of the huge number of emails sent daily – by some estimates, 3.7 billion people send around 269 billion emails every single day – this type of online communication is vulnerable to phishing attacks. Recent research indicates 30 percent of targeted attempts are made via phishing emails, and that 15 percent of victims are repeat targets. Phishing is nothing new, despite emerging iterations with new names like spear-phishing (which targets members of a specific organization to gain access to proprietary information) and whaling (spear phishing that focuses on a high-ranking target within an organization).
“Attackers are constantly evolving,” said Yinglian Xie, CEO and co-founder of DataVisor, in an interview with PYMNTS.
Amazon Prime Day, which was earlier this month, brought out waves of fraudsters trying to capitalize on the barrage of promotional emails related to the shopping event. Companies like 16Shop were selling kits to create phishing attacks. Cybercriminals could use the kit to build emails that looked legit and included a PDF with links to malicious sites designed to look like Amazon log-in pages, where users were solicited to send personal information. The latest Digital Fraud Tracker explores why fraudsters are still relying on phishing as a major strategy even as they increase their use of new technologies and techniques.
An uptick in fraud also means a growing online fraud prevention market. Globally, it is set to increase 20 percent between 2019 and 2025.
Humans as Weak Links
According to Accenture, the average number of security breaches in 2018 grew by 11 percent, from 130 to 145.
And digital fraud is increasingly being targeted at the weakest links: humans. Ransomware attacks increased 21 percent from 2017 to 2018, and malicious insider attacks increased 18 percent during that same timeframe. As much as companies are committed to innovation, criminals are, too. Much of the problem stems from the rush to adopt new technology. More than three-fourths (79 percent) of executives say new business models introduce technology vulnerabilities faster than they can be secured.
Removing Humans from the Equation
While humans are vulnerable to attacks, they are also increasingly taking a backseat in fraud detection. Many are putting their faith in automation to reduce the impact of fraud and mitigate human risk.
Developers can use AI to perform advanced data analytics on millions of user accounts simultaneously and to detect suspicious connections between malicious accounts.
“Combining supervised and unsupervised machine learning approaches with big data architecture and global intelligence enables holistic data analysis and contextual detection at both account and transaction levels. [The right solutions] can surface correlated patterns, identify anomalistic behavior, expose coordinated fraudulent activity and determine whether an application is legitimate by taking a holistic view,” said Fang Yu, co-founder and chief technology officer at DataVisor. Using automation, advanced analytics and security intelligence can also manage the rising cost of discovering attacks.
According to Accenture, security and threat intelligence has the largest financial impact on an organization, resulting in a net technology savings of 67 percent. This is the area where organizations spend the most as well ($2.26 million).
Automation, AI and machine learning may be costly, but they get results. Businesses spent $2.09 million on these implementations in 2018, and consequently gained 38 percent in net technology savings. BNY Mellon has been investing in AI and data analytics to better identify legitimate fraudulent transactions and effectively fight cybercrime. But with fraudsters changing techniques quickly, organizations need to be one step ahead at all times.
“It’s likely that fraudsters will become more sophisticated at the same rate that banks implement smarter fraud detection methods. The AI solutions being used for data analytics must always be at the top of their games to keep cybercriminals at bay,” said Joseph Sieczkowski, head of technology architecture and data at BNY Mellon.
“[We] do testing constantly to retrain our models to be able to pick up on different types of fraudulent activities,” he noted.
11. THE EMPLOYER’S VIEW OF EARLY WAGE ACCESS
Source: PYMNTS (7/25)
Employers-look-at-payday-advances. There is a new normal in the workforce: a younger generation of professionals that prioritize flexibility and technology. Giving rise to the gig economy and a new face of freelancing, these professionals are changing the way employers work, too, including how they pay these workers. In PYMNTS’ latest analysis, Pay Advances: The Gig Economy’s New Normal, a collaboration with MasterCard, research reveals some of the more dramatic impacts the gig economy has had on payroll.
The option to access pay advances can be essential to gig workers that often live paycheck-to-paycheck. According to PYMNTS research, nearly 44 percent of gig workers in the U.S. have received either full or partial advance payment for their services — and are willing to pay fees for that advance payment, too. Last year, employers paid out $236 billion worth of advance payments to their gig workers, the report revealed, with the market expecting that figure to continue climbing.
It’s possible that this trend could spill out into the traditional workforce, too, as more FinTechs introduce ways for full- and part-time employees to receive a portion of their paychecks before payday. According to PYMNTS analysis, $245.1 billion in wages could be issued in advance to unskilled workers — if that option were more readily available. Driving the possible end of the two-week pay cycle, these solutions are supporting financial wellness and cash flow strength for employees, while promoting talent retention for employers.
Employers Jump In
FinTech solutions are popping up to promote this trend.
Walmart inked a deal with Even in 2017 to provide real-time access to wages for the retailer’s employees, while last year, payroll firm ADP announced DailyPay, a new solution allowing its merchant customers to provide access to daily earned wages via the ADP Marketplace — both of which are initiatives signaling corporates’ interest in offering such an incentive to their staff.
And earlier this year, Visa and PayActiv teamed up on a solution that allows employers to access earned wages in real-time, noting in their announcement of the collaboration that “the demand for instant access to earned wages has now extended to batch payroll.”
“This is not a loan,” clarified Visa Direct SVP and head of North America push payments Cecilia Frew in a subsequent interview with Karen Webster. “It is money owed to the worker that they are choosing whether they want to access it early or not.” That’s a critical distinction considering the rising controversy over predatory payday loans.
While FinTechs and payment technology firms are exploring ways to wield technology to connect employees with their wages on-demand — often with a focus of helping workers avoid the sometimes detrimental trap of payday lending — these solutions can also help employers avoid similarly dangerous risks. A recent report in the Associated Press warned of the dangers of employees providing loans to their employees in an effort to promote cash flow strength and loyalty among their staff.
“Many small business owners lend money to staffers who are short of cash before payday or who have unexpected expenses or crises,” the publication wrote. “The risk bosses face is not getting paid back.”
According to reports, current labor laws makes the ability for employers to recover funds they lent to employees very difficult. The AP pointed to one business owner, Matthew Ross, co-owner of mattress review site Slumber Yard, who agreed to provide a $15,000 loan to one employee to purchase a new car, and another $10,000 loan for a down payment on a condo. Both agreements were interest-free with the borrowing employees making their payments out of their future paychecks.
“It’s a big financial risk for my business partner and me but we feel like keeping our employees is one of the best things we can do for the overall health of the business,” Ross told the publication.
Yet reports emphasized the importance of developing written agreements with employees to ensure everyone understands what scenarios can make them eligible for such a loan, as well as repayment plans. Insperity consultant Rick Gibbs told the AP that turning to other financial resources can help employers promote the financial well-being and satisfaction of their staff without taking on the risks themselves.
As FinTech solutions explore how to connect gig workers and other professionals to portions of their paychecks ahead of payday, the industry is also certainly going to continue exploring new methods of offering employees affordable and fair financing that use future paychecks in their repayment plans — both to help employees avoid the threat of predatory payday loans, and to help employers avoid the risk of nonpayment.
MasterCard is a member of ACT Canada; please visit https://www.mastercard.ca/en-ca.html
12. G+D MOBILE SECURITY SUPPORTS ESIM MANAGEMENT IN MICROSOFT WINDOWS ENVIRONMENTS
Source: G+D Mobile Security (7/29)
Microsoft links its Enterprise Mobility Management solution Intune with the eSIM Device Enablement Service (eDES) from G+D Mobile Security. This enables IT departments to centrally manage the mobile connections of eSIM-enabled end devices in their companies. Mobile contracts for Windows devices with eSIM can be activated, modified and managed online by IT departments without burdening employees with these processes. By eliminating manual processes from eSIM connectivity through this "zero touch" management, companies save costs and shorten the time to deploy new mobile contracts.
G+D Mobile Security presented the eDES to the public for the first time at the Mobile World Congress 2019 in Barcelona. The service is a holistic solution for companies that want to benefit from fully digitized mobile device management and also offers mobile operators the opportunity to monetize corporate solutions.
“G+D Mobile Security is excited to extend our eDES solution to support Microsoft Windows customers to ensure their enterprise connectivity is seamless and transparent,” commented Edgar Salib, Head of G+D Mobile Security in the Americas. “Our best-in-class features for eSIM device enablement are a great fit with the support structure for Microsoft.” Shai Guday, Partner Group Program Manager, from Microsoft said, “We are always excited to see more customers taking advantage of eSIM capabilities on Windows devices. G+D Mobile Security’s eDES solution makes access to data connectivity more available to the enterprise, providing corporate IT with the ability to seamlessly deliver connectivity for their enterprise users.”
The solution is available for commercial deployment from August 2019.
G+D Mobile Security are a Member of ACT Canada; please visit https://www.gi-de.com/en/ca/
13. AUTOMATED OPEN BANKING API TESTING SOLUTION LAUNCHED BY FIME
Source: FIME (7/16)
FIME has announced the availability of TrustAPI, a fully automated test tool for open banking APIs. Banks and Third-Party Providers (TPPs) can now quickly verify APIs against PSD2-compliant standards, fast-tracking the launch of open banking services.
The test suites are powered by the newly-launched FIME Test Factory 4.0, enabling automation, digitalization and customization of the open API testing process.
TrustAPI supports testing in-line with the STET - a major European automated clearing house - open-access API standard. Work is also underway to incorporate other standards into the test library, including the Berlin Group’s NextGenPSD2 and the Open Banking UK (OBUK) API standards. Fully customizable and user-friendly, the tool enables players to quickly test APIs in-line with specific needs and business requirements. Users can also validate against multiple API standards and PSD2’s third party access to account (XS2A) requirements.
“Open banking API standards are proving increasingly popular to efficiently achieve regulatory compliance, interoperability and safe data transfer,” comments Reza Rahmani Fard, Head of Payments Marketing at FIME. “This industry-first test platform is smoothing the path to open banking. Harnessing the power of these standardization efforts, we’re enabling stakeholders to deliver new open-access services quickly and cost-effectively - without compromising on quality.”
FIME’s experts are supporting several open banking standardization initiatives. FIME is helping STET create its standard open-access API and participating in the Berlin Group’s NextGenPSD2 task force. It’s also working with banks and TPPs across the world to define, design, deploy and validate their open API strategy. Find out more about how we can support your projects here.
FIME is a member of ACT Canada; please visit https://www.fime.com/
14. AS FACEBOOK STRUGGLES FOR BLOCKCHAIN SUPPORT, A TRULY DECENTRALIZED CHALLENGER EMERGES
Source: Forbes (7/17)
As Facebook Blockchain Lead David Marcus tries to simultaneously use his testimony in front of U.S. lawmakers to restore trust in the company, and convince them that Facebook will not always be the driving force of its Libra project, it is easy to see why some of its key blockchain competitors are enthusiastic about the company’s entrance in the space.
The prevailing belief is that at some point the inherent contractions in Facebook’s blockchain strategy and the Libra project are going to become too much to overcome. Of course, this assumes that the project launches at all, which is not certain given the regulatory scrutiny it faces around the world. This creates an opportunity for companies and projects like Celo, which are building pure blockchain-based financial services aimed at linking the nearly 2 billion people in the world that do not have access to bank accounts or the ability to verify their identity.
To the point, it is interesting that some of Libra’s first members, including venerated venture capital firm Andreessen Horowitz and crypto-unicorn Coinbase, have invested in Celo. Some of Celo’s other high-profile investors include LinkedIn founder Reid Hoffman and Twitter/Square CEO Jack Dorsey.
So, what is Celo? In a similar fashion to Libra, Celo is at its core a stablecoin platform. This means that the key value proposition of the assets running on top of the platform is that they are immune to the wide swings in volatility that have plagued leading crypto assets in recent years. Many are designed to mirror the price movements of traditional currency, and most have names that reflect their fiat brethren, such as the Gemini Dollar. This is a critical need for the industry, as no asset will be able to serve as a currency if it does not maintain a consistent price.
However, rather than being a centralized issuer that supports the price pegs with fiat held in banks, Celo has built a full-stack platform (meaning it developed the underlying blockchain and applications that run on top), that can offer an unlimited number of stablecoins all backed by cryptoassets held in reserve.
Furthermore, Celo is what is known as an algorithmic-based stablecoin provider. This distinction means that rather than being a centralized entity that controls issuances and redemptions, the company employs a smart-contract based stability protocol that automatically expands or contracts the supply of its collateral reserves in a fashion similar to how the Federal Reserve adjusts the U.S. monetary supply. In this vein, Celo co-founder Rene Reinsberg told me that the company actually “Maintains overcollaterization via a multi-asset crypto reserve composed of Celo’s native asset, Celo Gold, and a basket of other crypto assets, such as bitcoin.” This overcollateralization is important, and common in crypto lending and stablecoin platforms, because it serves as a buffer against potential volatility.
Additionally, a key differentiator for Celo from similar projects is that for the first time its blockchain platform allows users to send/receive money to a person’s phone number, IP address, email, as well as other identifiers. This feature will be critical to the long-term success for the network because it eliminates the need for counterparties in a transaction to share their public keys with each other prior to a transaction.
And now today, Celo is open-sourcing its entire codebase and design after two years of development. Additionally, the company is launching the first prototype of its platform, named the Alfajores Testnet, and Celo Wallet, an Android app that will allow users to manage their accounts and send/receive payments on the testnet. This announcement and product is intended to be just the first of what will be a wide range of financial services applications designed to connect the world.
A Bright Outlook But Significant Question Remain
With all of that said, the company’s near and long-term success will depend on its ability to navigate and address some key hurdles. Three in particular immediately come to mind:
- Stability of the Network. There are currently no algorithmic/smart-contract based stablecoins in circulation today that have seen widespread adoption. There are multiple reasons for this. First, it is simpler to issue stablecoins on a 1:1 basis for fiat kept in reserves. Second, it is nearly-impossible to design a complex system that can account for and overcome any threat or challenge. It is likely that at some point the future the network’s governance structure will be challenged or that a critical flaw will be discovered in the underlying code. The platform’s ability to rebound from these challenges without compromising its decentralized nature will be a key determinant of its future. Ability to Adapt to Highly Volatile Fiat. A key differentiator between Celo and other stablecoin issuers is that anyone that participates in its governance function can propose a new currency. The intention is that the platform will support a wide range of global, national, and local currencies. Given that it is first targeting users in the developing world, where the currencies are notoriously volatile, there is a chance that the system could be strained as it seeks to maintain constant pegs across the network. It is worth noting that the company has given great thought and care to ensure that it is anti-fragile, and part of this strategy involves using a diverse basket of collateral to support all assets on the network.
- If the Libra hearings in front of Congress proved nothing else, lawmakers are very concerned about crypto being misappropriated for illicit uses. All issuers will need to comply with existing AML/KYC laws. I asked Rene about this challenge and whether or not their ability to comply will be hindered by the firms ability to onboard users with little more than a phone number or some other numerical identifier. His response was, “Yes, we’ve had conversations with regulators both in the US and around the world. We think regulation is critical for this space, particularly when it comes to protecting consumers. We will absolutely comply with US laws and laws around the world. We’re looking forward to sharing more on this at a later stage, closer to mainnet launch”
There is a saying “nothing worth having comes easy”, and that certainly applies to Celo and its diligent approach to development. Additionally, the irony of its launch’s juxtaposition with the Libra hearings underscores the need for a decentralized approach to connecting the world.
15. MASTERCARD AND EVOLVE BANK & TRUST HELP HOURLY AND GIG WORKERS GET EARLY ACCESS TO WAGES
Source: MasterCard (7/10)
Branch uses MasterCard Send to push funds instantly to U.S. debit cards. People who support themselves and their families with incomes from gig and hourly work often have to stitch together earnings from various sources to pay bills, budget for savings and manage financial emergencies. MasterCard today announced that it is using MasterCard Send, the company’s push payment solution to enable pay advances and blend stability with flexibility for those working without traditional paychecks.
“Gig workers provide just-in-time services that help both consumers and businesses fulfil real-time needs,” said Jess Turner, executive vice president, Product and Innovation, North America, MasterCard. “But when it comes to getting paid, they are stuck in a traditional model of work now, get paid later. With MasterCard Send, we want to provide a new wage system – one that is in tune with the workforce of today.”
MasterCard is partnering with Evolve Bank & Trust (“Evolve”) to support companies such as Branch, which work with large organizations to provide interest-free, pay advances to their hourly workers and gig workers. Working with employers, Branch provides early wage access so that employees can manage any lag between when bills are due and when the paycheck is received. With MasterCard Send, Branch can push funds in near real time to U.S. debit cards.
“At Evolve, we understand that the workforce in the U.S. is changing,” said Scott Stafford, President and CEO, Evolve. “With MasterCard Send, we were able to create a payment infrastructure that serves a new generation of workers and helps them manage income volatility.”
Research indicates that one-third of total US gig workers received approximately $236 billion through pay advances in 2018, in contrast to loans that come with unclear terms and fees. These advances help alleviate the stress of living paycheck to paycheck and provide an opportunity to plan ahead and stabilize finances. With MasterCard Send, senders can reach virtually all U.S. debit card accounts while receivers obtain funds typically within seconds.
“As hourly workers’ schedules tend to fluctuate, so do their earnings and their ability to meet day-to-day financial needs,” said Atif Siddiqi, CEO, Branch. “Branch helps increase financial stability among hourly workers by providing them instant access to earned wages, budgeting tools, and the opportunity to pick up more shifts.”
MasterCard's commitment to helping people improve their financial lives in meaningful ways over the long term is a key pillar of its inclusive growth program in North America, which offers specialized products and services for gig workers and next-generation workers. The program leverages MasterCard technology and expertise to address the challenges of the digital economy, such as financial security, economic development and the changing nature of work.
MasterCard is a member of ACT Canada; please visit https://www.mastercard.ca/en-ca.html
16. RETAILERS UP THEIR LOYALTY AND REWARDS GAMES
Source: PYMNTS (7/25)
When Loyalty Innovation Is On The Menu At QSRs. Recent days have brought new evidence of the importance of robust loyalty and rewards programs in retail – an area of ongoing innovation, and where merchants of all types can stand apart in a fiercely competitive industry.
That latest evidence comes from Chipotle Mexican Grill, which recently beat analysts’ expectations for second-quarter earnings. CEO Brian Niccol said the company’s rewards program, which rolled on March 12, “has exceeded our expectations with over five million enrolled members.” Early results indicate that members are increasing frequency after joining the program. “The rewards program gives us a currency that we can use to incent behaviours, and is a key enabler of our digital ecosystem moving forward,” Niccol added. (Through the program, diners receive 10 points for every dollar they spend and earn a free entrée when they accrue 1,250 points.)
Retail Card Programs
The push toward better loyalty and rewards power in retail is also being seen outside the world of QSR operations.
Citi, for instance, recently announced it would launch a new feature that allows qualifying card members to shop and receive real-time alerts to redeem their ThankYou Points for eligible purchases. This new Pay With Points feature allows Citi Prestige, Citi Premier, Citi Rewards+ and Citi ThankYou Preferred card members to redeem their ThankYou Points immediately for everyday purchases. Starting next month, ThankYou members can choose to receive push notifications after an eligible purchase – or on a real-time, daily or weekly basis – as well as set a minimum dollar amount of a purchase to get an alert.
Citi ThankYou card members can also redeem their ThankYou Points for eligible purchases online, including pending transactions.
This launch follows other recent enhancements to Citi’s ThankYou Rewards Program, such as the addition of numerous Points Transfer partners, including Avianca LifeMiles and JetBlue TrueBlue, and new Shop With Points merchants, including Best Buy, Expedia and Amazon. Another effort that underscores the importance of better loyalty and rewards programs involves Trax, a global technology company based in Singapore. The company recently acquired U.S.-based Shopkick, a rewards app that tracks customer behavior.
The move adds to Trax’s stable of retail tech. Shopkick users can earn rewards and gift cards by watching videos, browsing offers, traveling to stores or scanning items on shelves. It was not disclosed how much Trax paid for Shopkick, but the company was acquired by SK Telecom in 2014 for $200 million. Shopkick has clients that include eBay, General Electric, Unilever and Lego, and it tracks customer usage and loyalty for those companies.
Large brands, including Coca-Cola and Nestle, use Trax’s technology to track their products on retail shelves. The company has 175 clients in 50 countries. Warburg Pincus, the largest shareholder in the company, became aware of Trax when team members kept hearing the company’s name. It was a similar experience for shareholder Boyu.
Value of Location
Meanwhile, mobile card services are working to turn location into loyalty opportunities.
In a recent interview with Karen Webster, Vaduvur Bharghavan (VB), president and CEO of Ondot Systems, noted that his firm has seen at least some embrace of mobile card services. Based on empirical data across several banks (“we do this on a periodic basis,” he told Webster), as much as 15 percent of cards may be “turned off” from those services. However, of those who do opt to use those service options, about 30 percent have set controls on transaction amounts or monthly spend.
Here’s another data point the executive offered: “By far, the highest number of the fraction of controls [used] is location-based. It’s over 70 percent.” Since Ondot launched such location-based offerings in 2015 – which enable FIs to help consumers control each card separately, set maps where they can be used and set transaction limits – they have been the dominant set of features used, especially among safety-oriented consumers.
Increased adoption could be spurred by a proactive mindset on the part of FIs, VB said. Rather than let consumers “accidentally stumble” across the offerings, they could make mobile card services front and centre right when consumers download the apps, especially in a setting where card-focused and banking apps are decoupled.
VB listed key points for extracting value in location-based services: “I want my card to ‘follow’ me so I can use it where I am. I want to get offers … where they matter, based on where I am, and based on my past purchase history. And when I see transaction details, it should be clear where I have made purchases.” That might mean prompts that span all of the above, which might ask users if they’d like to enable location settings on their cards, with the explanation that a key benefit exists with such an opt-in – namely, as VB said, “that the card works where you are – and we’ve made sure it does not work where you are not.”
Retailers and other players continue to put loyalty and rewards front and centre to entice more consumers.
17. CAN GLOBAL TRADE WARS SPARK INNOVATION FOR TRADE PAYMENTS?
Source: PYMNTS (7/25)
Today’s exercise in intentional payments- and commerce-related understatement: International trade is not for the faint of heart. Sure, the import and export of goods is ancient practice, but that doesn’t make it any easier, even if such a vital economic activity is going digital. Funds are often held up, shipments are stuck in red tape, and trade wars add extra cost and hassle to already complex transactions.
In a new PYMNTS interview, however, Flexport Vice President Dan Glazer discussed how to mitigate at least some of those problems via a new financing tool that launched Thursday (July 25). The discussion took place as more attention focused on a possible global recession, one that could be fuelled, at least in part, by ongoing global trade disputes, not the least of which is between the U.S. and China.
The increasing tariffs being attached to global trade are causing pretty much everyone involved in exports and imports to take serious notice and revise their plans. “Businesses are either uncertain about what comes next, or have been affected by [tariffs],” Glazer told PYMNTS. And those current developments come on top of the long-existing complexities and challenges of trade. “Trade is complex and logistics are really difficult,” he said. “It can take 18 different companies to move a container from China to the U.S.”
As Glazer told it, one of the ways to smooth out all those bumps is to offer what he called incremental financing to companies involved in trade, via the newly-launched product called Flexport Capital. It is meant to deal with the gap of working capital often experienced by buyers and sellers in the global trade process. Exporters might ship products before receiving full payment, for instance. Importers might be caught with restricted cash flow until they sell their goods, a situation that can be made even more risky in the midst of a trade war. “When your available capital is being funnelled to higher duty payments or your landed costs are increasing by 30 percent year over year, having flexibility is super important,” he said.
As he told PYMNTS, the service differs from financing offered by a bank because Flexport underwrites first instead of sending over a term sheet. The company also offers payment terms that can be customized by the recipients of the financing. According to Glazer, Flexport offers capital while inventory is still on the boat, allowing the company to provide larger lines of credit than a traditional bank because Flexport knows how much inventory financing recipients have on hand or in transit.
The stakes can be significant. In anticipation of the U.S.-China trade war, companies stocked up on inventory. And according to The Wall Street Journal, that has led to some $3.4 trillion of working capital being committed to that inventory by the end of 2018, which compares to $2.7 trillion for the year prior. “We can free that cash currently tied up in the supply chain,” Glazer said.
The new capital product represents not only a fresh way to do payments when it comes to global trade, but the latest growth effort in the field of logistics, and for Flexport specifically. Earlier this year, for instance, global investment firm SoftBank’s Vision Fund led a $1 billion funding round for Flexport. The Vision Fund, which has capital of around $100 billion, has been investing in companies that use new technology to innovate old industries, including Uber, DoorDash and WeWork.
Flexport, a self-described “modern freight forwarder,” moves packages and handles customs issues by air, sea, truck and railway. The company’s tech also gives data to customers that can aid in handling costs, track supply chains and illuminate issues like emission and container usage.
The company also supports less than full container options, which other companies treat as a lower priority. Flexport has said it doubled its revenue in the past year to nearly $500 million, and it now has 11 offices around the world with 1,000 employees. Flexport will use the new capital to expand and grow its customer base.
Among the main keys to success in this field — besides having enough working capital, of course — is being able to make better use of real-time data, and then tying that data to cloud-based infrastructure, or even machine learning or artificial intelligence down the line, Glazer said. “You need to be able to log in and access a product anywhere in time,” he said when talking about some of the ongoing and future areas of focus for the company along with the industry as a whole. Over time, in fact, with more data that is accumulated and analyzed, that can open up new areas where such trade-related financing makes sense, and will be profitable.
No doubt more such innovations will come to the global trade arena, especially if these trade wars continue.
18. BANKS' INEVITABLE RACE TO THE CLOUD
Source: Forbes (7/22)
In an article titled Banks’ slow progress to cloud’s promised land, the Financial Times writes:
America’s top banks talk a good game about their efforts to put their systems on to the cloud where they will be more resilient, cheaper and better able to handle spikes in usage. But the reality often lags behind their ambitions. 'Banks are still in the aspiration mode--even those that are noisy in the press about it aren't even a fraction of where we are in terms of cloud adoption,' according to Steve Randich, chief information officer at US financial regulator Finra." The irony of that statement is precious, considering the prevalence of financial institutions blaming regulators for their lack of cloud adoption (i.e., citing security concerns, etc.).
Clearing The Fog Surrounding Cloud Computing
Is Mr. Randich's perspective accurate? It seems to reflect the conventional wisdom:
“Research shows that banks have been slow to embrace the cloud.” (Source: Information Week)
“Increasingly, banks are competing in terms of tech-driven innovation, but their slow adoption of cloud technology may impede their progress.” (Source: Investment Executive)
These soundbites don’t capture the true picture, however. A survey of banks conducted by Accenture found that just 3% of respondents didn’t have a cloud strategy and had not started to think about it.
That's not to say the rest have a mature cloud strategy: Only a quarter of the firms surveyed said they have cloud-based practices and tools with ongoing efficiency measures in place. Whether they realize it or not, banks will need to kick their cloud strategies into hyper gear in the next three to five years.
Are The Security Concerns Valid?
Conversations with anti-cloud bank IT executives typically focus on the security aspects of cloud computing. Bank executives may be not aware that cloud vendors don’t keep the data in the cloud, however. In an enterprise-class cloud environment, the computing resources will be multi-tenant, but the data will not. In addition, although various types of attacks can be perpetrated against cloud deployments, they can often be mitigated with proper controls, like with intrusion detection and prevention systems, encryption, and proper secure socket layer (SSL) configuration.
Security concerns are legitimate, but don't fit the hype usually found in the press. For example, according to David Marsh, CIO at People's United Bank: In the beginning, security holes in Office 265 had to be fixed or addressed in order to actively use it. Today, it’s quite safe and secure today. But the architectural model requires you to rethink the legacy data center perimeter model to adapt to the new types of perimeter security implementation you see in an Office 365 product.”
Bill Glasby, Chief Technology Officer, Heritage Bank offers another perspective: "The issue around security isn’t about the technology—it’s about operators' ability to configure the tools. The problem is that it’s all home-brew today.”
Are The Benefits All They're Cracked Up to Be?
On the other hand, the purported benefits of cloud computing don't live up to all the claims. A National Bureau of Economic Research (NBER) working paper asserts: "The growth of cloud computing has its roots, at least in part, in the competitive advantage the cloud offers customers in terms of cost, flexibility, and scalability.”
Are the cost savings really there?
Financial Insights estimates that the biggest global banks are saving $15 billion from cloud adoption, cutting technology infrastructure costs by 25%. Executives at mid-sized US-based institutions are more skeptical. According to Frank Wasson, CEO of First Entertainment Credit Union (and a former CIO, as well as COO): "It’s a myth that it’s cheaper. We’ve found that sometimes it’s more expensive than what we can do it for ourselves. But it makes you spend what you should have been spending all along. Do it because simplifying the environment makes it easier to scale.”
And the agility claims? Heritage's Glasby says: "Speed-to-market depends. If you’re comfortable building apps to a single cloud platform, then you can leverage their capabilities overnight, and take advantage of tools that would take years to build in-house. But a highly virtualized on-premise shop can do many of the infrastructure things on par with cloud providers.”
The Race to the Cloud
Rational arguments for cloud computing won't convince cloud opponents to change their minds. As one bank Chief Information Officer told me, “It’s a different model than what people are used to and comfortable with.” In the absence of an imperative to change—either from competitive pressures or changing strategic directions or priorities—that reluctance to change won’t be broken down. Three trends in banking, however, will make a race to the cloud inevitable for banks:
- The assimilation of AI. Artificial intelligence-based technologies are having a major impact on banks’ capabilities in areas like fraud, risk management, marketing, and service delivery. But without a sufficient quantity and quality of data, AI tools and technologies are pretty much useless. Banks will—by necessity—turn to and rely on data sources from third parties, partners, and vendors to feed their AI appetites. Bringing all that data in-house will not be a feasible option, and in many cases, won’t be an option at all. As AI is assimilated into banks’ technology stacks, cloud computing will become more inevitable and necessary.
- The platformification of banking. According to Cornerstone Advisors, more than half of mid-sized financial institutions say that fintech partnerships are important to their business and IT strategies. One-off partnerships are time-consuming and hard to scale, however. The path to ecosystem development in banking will be accelerated by the emergence of firms pursuing platform business strategies. For financial institutions to participate and benefit from these platforms, however, their ability to be in the cloud will be a requirement.
- IT costs. According to Finra's Randich, "it's not in the culture of Amazon to turn the screws on pricing.” This is a misreading of the company. Amazon won't increase prices because of the law of supply and demand. Amazon's cloud computing services prices declined at roughly 5% annually between from 2009 through 2013. When Microsoft entered the space in 2014, Amazon's price decline for computing and storage services doubled over the following two years. The need to rein in IT expenditures will put more pressure on banks to adopt cloud computing.
Columbus and the Cloud
When Christopher Columbus set sail for the New World in 1492, many people at the time believed the earth was flat (even though Greeks had demonstrated that the Earth was a sphere back in the 6th century). Columbus' success didn't succeed in changing peoples' minds, however. It was until nearly 100 years later, when Magellan proved the world was round that popular opinion changed. That's kind of where we are today with cloud computing in banking. Despite proof and evidence of the benefits, scepticism remains. But rest assured, it won't take 100 years for popular opinion to change.
Even if we are talking about bankers.
19. THREE THINGS TO KNOW ABOUT AI AND INTELLIGENT PAYMENTS
Source: Worldpay (7/8)
How AI and machine learning boost conversions—and revenues. eCommerce continues to grow at impressive rates around the world. Worldpay’s 2018 Global Payments Report projects that the global eCommerce market will surpass $3.6 trillion in 2019, growing to a remarkable $4.6 trillion as soon as 2022.That’s great news for eCommerce merchants everywhere.
That enthusiasm is tempered by inefficiencies around conversion. Shopping cart abandonment, fraud, and false declines present complex challenges that erode profits. These complex conversion challenges exist on a continuum and can be most effectively managed in an integrated way. The transformative power of machine learning and AI are helping propel payments data to the forefront of the conversion discussion. Today’s eCommerce requires adaptation that leverages transaction data at global scale. The more sophisticated approach is to identify and adjust to patterns using machine learning and AI.
ONE—Global complexity demands next-generation conversion solutions
The global payments ecosystem is an incredibly complex heterogeneous mix of merchants, merchant acquirers, card networks, issuing banks and issuing processors. That universal breadth creates inefficiencies that are felt in higher fraud rates, lower authorization approval rates and checkout friction that drives cart abandonment.
The system is driven by data, data that tells us a story about the value as well as the legitimacy of every transaction. A static approach to submitting payments transactions is increasingly insufficient in the context of global eCommerce. The complexity and diversity of the payments ecosystem demand dynamic intelligence and tools that adapt quickly to new information and changing conditions in essentially real time. And since eCommerce is borderless, the tools need to leverage transaction data at global scale. With this much change and scale, the ability to identify patterns and adjust demands machine learning and AI.
The transformative power of machine learning and AI are helping propel payments data to the forefront of the conversion discussion.
TWO—Data is critical to creating less friction and converting more sales
Merchants are constantly reassessing how they can improve the consumer experience to reduce card abandonment and increase conversion rates. Reducing friction requires continuous adaptation to the rapidly shifting eCommerce landscape, to ensure that customers complete their transactions.
Global eCommerce merchants are constantly innovating to attract new customers and grow their markets beyond their core demographics. When penetrating new geographies there are many assumptions made about buyer preferences, and in particular, their preferred payment method. In eCommerce that alternative product or service is just a click or tap away. Reducing friction is essential. Sophisticated merchants conduct A/B testing on every word that’s on the page, every color, every placement of every item in the shopping experience. Ultimately, the data can reveal customer preferences in each market and result in higher conversion rates.
The complexity and diversity of the payments ecosystem demand dynamic intelligence beyond any single set of static rules.
THREE—AI fuels efficient account updating and recycling
With intelligent account updating and authorization retry/recycling, AI and machine learning are helping merchants reduce friction, boost authorization rates and optimize revenue. Recurring payments can be the optimal business model for many businesses, whether selling services or physical goods. Not only do recurring payments provide revenue predictability, they represent the best return on the investment in customer acquisition as they maximize customer lifetime value.
The challenge with recurring payments is that “leakage” can occur. Recurring payment transactions are unattended and fail for any number of reasons: account credentials expire or change, a balance may have insufficient funds, a network connection may not be available, etc. These things happen, but the impact is huge if you lose not just that payment—but the customer relationship and all subsequent expected payments.
Account updater services lift recurring revenues just by keeping card information current. Most merchants obtain updates in advance of an expected payment transaction. However, if the transaction is declined you shouldn’t give up. Intelligent account updater systems respond to the decline by checking for more current information, and then applying that update with a retry. Interestingly, the retry pattern – number of days after the decline, number of times to retry, time of day to retry, etc. -- matters a great deal. Different retry patterns yield different approval rates based on the combination of initial decline reason, issuing bank, card product, etc. This is where data science and machine learning come in as the optimal approach is to develop algorithms for managing account updating and the recycling of initially declined transactions.
Payments intelligence is being put to use to improve conversion outcomes. The lift in incremental approval rates account-updating services offer makes it the biggest no-brainer in eCommerce payments.
"The biggest no-brainer in eCommerce payments". Account updating services are widely seen as a sure-fire way to increase recurring revenue, and now they are finding utility beyond the recurring business model. For merchants who stored card information on file for their consumers who very frequent but nonrecurring purchases, card changes can result in payment friction and potential cart abandonment. The introduction of real-time account updating services put the power of dynamic learning to work in the service of reducing checkout friction for this growing segment.
Take Gaming, which features many in-game purchases. Multiple purchases can trigger overly-aggressive fraud filters to cause declines. That adds unnecessary and destructive friction at the most important customer touchpoint.
Payments intelligence improves conversion outcomes for ride-hailing services, food delivery and any business where customers make frequent transactions. The lift in approval rates account updating services offer makes it the biggest no-brainer in eCommerce payments. AI and machine learning are being actively applied to the inefficiencies that matter to merchants most. Combined with real-time data sets of sufficient scale, AI and machine learning are helping enterprise and eCommerce merchants achieve greater reach, drive incremental revenue and become more responsive to their customers.
Worldpay is a member of ACT Canada; please visit https://www.worldpay.com/global
20. 2019 THALES ACCESS MANAGEMENT INDEX FINDS ALMOST HALF OF BUSINESSES BELIEVE CLOUD APPS MAKE THEM TARGET FOR CYBER-ATTACKS
Source: Gemalto (7/9)
- Four in 10 (38%) organizations appoint a CISO due to concerns over the number of breaches occurring in the last 12 months
- 75% of organizations rely on access management to secure their external users’ logins to online corporate resources
Paris La Défense - According to new research from Thales, almost half (49%) of businesses believe cloud apps make them a target for cyber-attacks. Surveying 1,050 IT decision makers globally, Thales' 2019 Access Management Index revealed that cloud applications (49%) are listed in the top three reasons an organization might be attacked, just behind unprotected infrastructure such as IoT devices (54%) and web portals (50%).
Cloud services are targets for cyber attacks
With cloud applications now a crucial part of day-to-day business operations, the majority (97%) of IT leaders believe that cloud access management is necessary to continue their cloud adoption. However, despite four in 10 (38%) organizations appointing a CISO due to concerns over data breaches in the past 12 months, and 79% of IT decision makers stating that CISOs are responsible for selecting the solutions their company has in place, just one in 10 (14%) are given the final decision on cloud access management. In fact, companies are more likely to put their faith in a traditional IT role, CIOs (48%) when dealing with this, suggesting a disconnection between the decision-making and implementation surrounding cloud security.
"Thales protects our customers' business by enabling them to securely access and use cloud applications. The 2019 Thales Access Management Index findings clearly show concerns surrounding cyber-attacks when deploying cloud applications. Trusted access to the cloud is key to our customers' digital transformation, but without adequate investment in a dedicated CISO office, organizations will lack the leadership required to implement the correct security strategy or solutions to keep them secure in the cloud," says Tina Stewart, vice president market strategy for cloud protection and licensing activity at Thales.
Breaches bringing changes
Positively, the growing awareness of consumer data breaches has led to organizations taking action; almost all (94%) have changed their security policies around access management in the last 12 months. What's more, the biggest areas of changes have focused around: staff training on security and access management (52%); increasing spend on access management (45%), and access management becoming a board priority (44%).
Obstacles blocking access management
In spite of the updates to security policies, the majority of IT leaders (95%) believe ineffective cloud access management is still a concern for their organization. In fact, their biggest concerns are its impact on security (48%), IT staffs' time (44%) and on operational overheads and IT costs (43%). Worse, when it comes to implementing access management solutions, they cited costs (40%), human error (39%) and difficulty integrating them (36%) as the biggest obstacles.
When it comes to cloud solutions, three-quarters (75%) of organizations already rely on access management to secure their external users' logins to online corporate resources. In particular, two-factor authentication is the most likely (58%) tool to be seen as effective at protecting cloud and web-based apps, followed by smart single sign-on (49%) and biometric authentication (47%).
Stewart concludes: "While organizations are getting to grips with access management solutions, IT and business decision makers must ensure they understand the risks to their cloud solutions in order to implement the relevant ones. These solutions must be perimeter-free, compatible with a zero-trust model and flexible and adaptive in order to make the most of the latest technologies such as Smart SSO. Without effective access management tools in place organizations face a higher risk of breaches, a lack of visibility and incur extra costs from poorly optimized cloud."
Gemalto is a member of ACT Canada; please visit https://www.gemalto.com/
21. FIME HELPS ID TECH ACHIEVE INDUSTRY’S FIRST EMV® CONTACTLESS INTERFACE 3.0 APPROVAL
Source: FIME (7/8)
ID TECH has received the industry’s first EMV®* Contactless Interface v3.0 approval for its ViVOpay line of contactless payment devices. FIME’s services were instrumental in certifying ID TECH’s contactless product with EMVCo’s updated EMV Level 1 Specification.
The enhanced specification addresses the latest interoperability and communication needs of EMV acceptance devices and contactless payment form factors.
“ID TECH has once again shown its leadership role in the payment industry, and particularly with NFC. Our expertise in contactless technologies has allowed us to be the first payment company with a product that meets the much improved and rigorous EMVCo 3.0 contactless L1 specification. With this new implementation and certification, our customers can be confident that our products are ready for the future,” comments Eric Lecesne, VP EMV Strategy and Platform Engineering at ID TECH.
“ID TECH and FIME have collaborated very successfully for more than 15 years,” adds Stephanie El Rhomri, VP Services at FIME. “Our expertise, comprehensive services and proximity to ID TECH have been fundamental in helping them achieve this first approval, quickly and cost effectively. The market now has an acceptance solution that delivers increased interoperability, reducing false declines in-store.”
The availability of leading testing tools brings flexibility to FIME customers worldwide. Product development and debugging can either happen in-house at the customer’s site or at FIME lab ahead of formal approval. FIME’s experts also offer training and set-up assistance on the tools to ensure consistency between in-house testing processes and formal approval conditions.
FIME is a member of ACT Canada; please visit https://www.fime.com/
22. SEVEN COMMON CYBERSECURITY MISTAKES MADE WITH AI
Source: Forbes (7/25)
Your company has started to use artificial intelligence (AI), but are you effectively managing the risks involved? It's a new growth channel with the potential to boost productivity and improve customer service. However, particular management risks need to be assessed in cybersecurity. Start by considering AI trends to put this risk in context.
Why is AI an emerging cybersecurity threat?
Artificial intelligence is a booming industry right now with large corporations, researchers, and startups all scrambling to make the most of the trend. From a cybersecurity perspective, there are a few reasons to be concerned about AI. Your threat assessment models need to be updated based on the following developments.
Early cybersecurity AI may create a false sense of security.
Most machine-learning methods currently in production require users to provide a training data set. With this data in place, the application can make better predictions. However, end-user judgment is a major factor in determining which data to include. This supervised learning approach is subject to compromise if hackers discover how the supervised process works. In effect, hackers could evade detection by machine learning by mimicking safe code.
AI-based cybersecurity creates more work for humans.
Few companies are willing to trust their security to machines. As a result, machine learning in cybersecurity has the effect of creating more work. WIRED magazine summarized this capability as follows: "Machine learning's most common role, then, is additive. It acts as a sentry, rather than a cure-all." As AI and machine learning tools flag more and more problems for review, human analysts will need to review this data and make decisions about what to do next.
Hackers are starting to use AI for attacks.
Like any technology, AI can be used for defense or attack. Researchers at the Stevens Institute of Technology have demonstrated that fact. They used AI to guess 27% of LinkedIn passwords successfully after analyzing 43 million user profiles in 2017. In the hands of defenders, such a tool could help to educate end users on whether they're using weak passwords. In the hands of attackers, this tool could be used to compromise security.
The Mistakes You Need To Know About
Avoid the following mistakes, and you're more likely to have success with AI in your organization.
- You haven't thought through the explainability challenge.
When you use AI, can you explain how it operates and makes recommendations? If not, you may be accepting (or rejecting!) recommendations without being able to assess them. This challenge can be mitigated by reverse-engineering the recommendations made by AI.
- You use vendor-provided AI without understanding their models.
Some companies decide to buy or license AI from others rather than building the technology in house. As with any strategic decision, there's a downside to this approach. You can't trust the vendor's suggestions that AI will be beneficial blindly. You need to ask tough questions about how the systems protect your data and what systems AI tools can access. Overcome this challenge by asking your vendors to explain their assumptions about data and machine learning.
- You don't test AI security independently.
When you use an AI or machine-learning tool, you need to entrust a significant amount of data to it. To trust the system, it must be tested from a cybersecurity perspective. For example, consider whether the system can be compromised by SQL injection or other hacking techniques. If a hacker can compromise the algorithm or data in an AI system, the quality of your company's decision making will suffer.
- Your organization lacks AI cybersecurity skills.
To carry out AI cybersecurity tests and evaluations, you need skilled staff. Unfortunately, there are relatively few cyber professionals who are competent in security and AI. Fortunately, this mistake can be overcome with a talent development program. Offer your cybersecurity professionals the opportunity to earn certificates, attend conferences and use other resources to increase their AI knowledge.
- You avoid using AI completely for security reasons.
Based on the previous mistakes, you might assume that avoiding AI and machine learning completely is a smart move. That might've been an option a decade ago, but AI and machine learning are now part of every tool you use at work. Attempting to minimize AI risk by ignoring this technology trend will only expose your organization to greater risk. It's better to seek proactive solutions that leverage AI. For instance, you can use security chatbots to make security more convenient for your staff.
- You expect too much transformation from AI.
Going into an AI implementation with unreasonable expectations will cause security and productivity problems. Resist the urge to apply AI to every business problem in the organization. Such a broad implementation would be very difficult to monitor from a security point of view. Instead, take the low-risk approach: Apply AI to one area at a time, such as automating routine security administration tasks, and then build from there.
- You're holding back real data from your AI solution.
Most developers and technologists like to reduce risk by setting up test environments. It's a sound discipline and well worth using. However, when it comes to AI, this approach has its limits. To find out whether your AI system is truly secure, you need to feed it real data: customer information, financial data or something else. If all this information is held back, you'll never be able to assess the security risks or productivity benefits of embracing AI.
Adopt AI With An Eyes-Wide-Open Perspective
There are certainly dangers and risks associated with using AI in your company. However, these risks can be monitored and managed through training, proactive management oversight and avoiding these seven mistakes.
23. EXPANDING USE OF CREDIT DATA DOESN'T HAVE TO BE CREEPY
Source: Forbes (7/22)
Since my Google days, I’ve always said that more data is better. That goes double for banks and fintechs using data to build models to make financial decisions on behalf of their customers. More banks are taking advantage of cheap computing power to build powerful machine-learning (ML) models that consume hundreds or thousands of data variables to predict borrower risk better than a logistic regression model that maxes out at a few dozen variables. With today’s horsepower, there’s no reason not to go big.
But then a lot of people naturally ask: What is all that additional data and where does it come from? That’s where things get unnecessarily controversial. Enter the vortex known as alternative data.
The financial services industry typically considers “alternative data” that which sits outside the three main consumer credit bureaus. But that definition is so broad that it, unfortunately, lumps a lot of responsible data use in the same category as those who want to measure your creditworthiness through social media likes, app downloads and how often you order pizza online.
Alternative data as a category includes lots of data that is not off-putting at all. Our definition of alternative data is what’s buried deeper in the bureaus’ credit files but not being used by lenders who already subscribe to their service. Or data that comes from reputable services such as LexisNexis. I’m talking about how long you’ve been at your address, or how long you’ve been employed, or the mileage of the car you’re looking to finance. This is pretty conventional stuff and very much what I would consider “credit-adjacent.”
Banks don’t have to wandering off to find useful signal. A major U.S. credit card issuer we worked with increased its loan approval rate by 10% without any increase in risk simply by using more of the transaction and CRM data it already had. One auto lender realized that the alternative data it was considering contributed little to the model’s performance. The deeper bureau pull made all the difference.
Expanding the range of credit-adjacent data we use would help a lot of so-called “credit invisible people” who have a hard time getting fairly priced loans when they need them. Rent history is not typically in consumer credit reports (except when you don’t make the rent), but a solid history of making rent on time can make a real difference if included in an applicant review.
Others are getting on board with the fair use of credit-adjacent data. Experian is offering to let consumers voluntarily add their monthly utility and cellphone payments to help boost their credit scores. FICO is doing the same with checking and savings account data. Expanding use can help borrowers get credit when they couldn’t before because they had a so-called “thin credit file.” Good all around.
If we care about extending credit to more people and taking bias out of the credit process, then we have to engage in this exercise of using inclusive data. More lenders are going to adopt machine learning for improving their risk predictions, and they’re going to need more data to make those better decisions. The Consumer Financial Protection Bureau estimates that 45 million Americans lack the data that the bureaus use to create a credit score. And 20% of Americans have material errors on their score, which makes building a broader profile for each borrower that much more important.
But we don’t need to go digging through social media profiles to lend people money safely. Banks pretty much have all the data they need already.
ACT Canada helps members understand complex issues and filter truth from market noise for current and emerging commerce trends. Through a consultative approach with all stakeholder groups, the association provides knowledge and expertise to help members leverage opportunities, confront challenges and advance their businesses. Please visit www.actcda.com or contact our office at 1 905 426-6360.
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