ACT Canada Driving Insights – June 2019
Welcome to the June 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
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.
July 9th: In the game of stakeholders, who benefits from tokenisation?
with Mike Vaselenak, VCS Technologies Inc.
August 13th: Open Banking - The Consumers' Point of View
with Jaime Cabrera, Market Strategy and Understanding at Ipsos
These meetups are to provide a regular meeting place for the payments community to discuss issues facing our industry - our July and August meetings are at the Duke of Westminster in Toronto from 4:30-6:30pm.
The format is a 15-20 minute discussion, led by a subject matter expert, followed by drinks and conversation about the topic. These meetups are open to anyone with an interest in payments and will involve many different stakeholder groups.
Members: $15 (+HST)
Non-members: $30 (+HST)
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. FACEBOOK TO LAUNCH LIBRA CRYPTOCURRENCY 'ECOSYSTEM' IN 2020
Source: SkyNews (6/19)
The company says it has taken a collaborative approach to its plans, which are expected to go live within the next 12 months. Facebook is to launch its own digital currency within the next year, saying its plans will deliver an "inclusive and open" financial ecosystem. The cryptocurrency, to be called Libra, forms part of a wider Calibra digital wallet package under development that will be available as a standalone app before mid-2020. It will initially only allow payments between users, via smartphones or other devices, but Libra will be "open source" - meaning it can be included in existing and other digital wallets.
Bank of England governor Mark Carney said he was keeping an "open mind" about the potential usefulness of the cryptocurrency, but warned it may face strict regulation if it takes off. Facebook says its Calibra services will be available via Facebook Messenger, WhatsApp and a standalone app. Facebook said Libra was to be included on trading exchanges - allowing for conversion to physical currency. But the US tech firm said it should be seen as a medium for payments rather than a Bitcoin-style cryptocurrency - largely unregulated and vulnerable to wild fluctuations in value. It explained that the value would be underpinned by real assets, including bank deposits and short-term government securities.
Libra 'different in many ways' from other cryptocurrencies
These would be managed by a string of big firms, under a not-for-profit umbrella organisation, with the aim of ensuring stability. It said the Libra Association, to be based in Switzerland, was aiming to attract 100, largely multi-national, entities by the time of the launch. Each firm must pay $10m (£8m) to get on board. Online magazines turn to cryptocurrency mining to generate revenue. The value of Bitcoin has fluctuated between 3,000 and more than 9,000 dollars over the past 12 month. There are currently 28 signed up, including MasterCard, Spotify, Paypal, Uber and Vodafone. Facebook said it would have "no special role" in governing Libra amid questions surrounding global regulatory oversight. David Marcus, who started exploring the blockchain-powered currency for the company a year ago, said central banks had given "general cautious support" so far.
He said: "Libra holds the potential to provide billions of people around the world with access to a more inclusive, more open financial ecosystem." Mark Zuckerberg was 23 when he made it onto the Forbes billionaire list
Facebook CEO Mark Zuckerberg is under huge pressure to protect users' financial and other data. Jorn Lambert, executive vice president for digital solutions at Mastercard, admitted "we might not launch" if there was too much opposition - agreeing with the sentiment that discussions with central banks and other bodies were at an early stage. Facebook said if the project progresses as expected, services available via the Calibra wallet would eventually be opened up to allow things such as payments for goods and services. It also moved to ease concerns about data collection - following a string of scandals - by saying account information would not be shared with Facebook except for "limited cases" where the data may be shared "to keep people safe, comply with the law, and provide basic functionality to the people who use Calibra".
Stefano Parisse, group director of product and services at Vodafone, said: "As a Founding Member of the Libra Network, Vodafone will extend its commitment to digital and financial inclusion by supporting the creation of a new global currency and encouraging a wide range of innovative financial services to be developed through its open-source platform.
"This has the potential to be truly transformative and will benefit those who have never used, or are struggling to access, financial services around the world."
- MasterCard is a member of ACT Canada; please visit https://www.mastercard.ca/en-ca.html
2. G+D MOBILE SECURITY AND IDEMIA INTEND TO CREATE THE WHITE LABEL ALLIANCE (WLA) TO DEFINE AN OPEN STANDARD FOR PAYMENT
Source: G+D Mobile Security (6/3)
Considering global market demand for independent and standardized payment solutions, G+D Mobile Security and IDEMIA announce their intention to create the White Label Alliance (WLA) to provide a new security solution for next generation payment applications. The solution will be based on White Label EMV specifications and will enable ready-to-deploy solutions for domestic payment schemes and closed-loop worldwide. The new alliance is a response to the growing global demand for new, next-generation independent payment solutions. By providing global open standards that are governed by an independent body, the White Label Alliance (WLA) ensures that commercial solutions can be built on these specifications enabling innovative and competitive offerings. The White Label Alliance (WLA) aims to enable ready-to-deploy solutions for domestic payment schemes and closed-loop worldwide.
The aim of the White Label Alliance (WLA) cooperation is to design and maintain an open, comprehensive and standardized framework to meet the requirements of open and closed payment systems. Based on the EMV standard, the White Label Alliance (WLA) solution ensures scalability for all technologies: for cards, terminals and mobile devices. Therefore the White Label Alliance is strongly committed to open standards to ensure additional value for the payment ecosystem. For these reasons, the White Label Alliance (WLA) initiative encourages an ecosystem that enables innovations and competitive offerings based on a worldwide standard. As the owner of the specifications, the White Label Alliance (WLA) will work on future-proof evolution of the solution being in line with demands of the members. In order to expand the network and to grow accessible payment schemes, the White Label Alliance (WLA) invites all interested payment stakeholders to join.
“The close cooperation of companies such as G+D Mobile Security and IDEMIA within the framework of the new alliance demonstrates the effort to define new open payment specifications that ultimately benefit all end users." explains Gabrielle Bugat, Head of Financial Services Solutions at G+D Mobile Security. "We are also planning to gain more members for the new alliance later this year in order to put our plans on an even broader footing."
"Supporting open standards and delivering interoperable solutions has always been a key concern for our company. That is why we are very pleased to be part of this initiative," says Amanda Gourbault Executive Vice President for Financial Institutions activities at IDEMIA. "Based on our extensive experience in the development of EMV technology, we want to play a key role in creating an open alliance which will allow domestic payment networks, transport operators and closed loop retailers to deploy a truly independent solution based on proven technology, with a fast time to market.”
- G+D Mobile Security is a member of ACT Canada; please visit https://www.gi-de.com/en/ca/
3. ONTARIO’S TECH HUBS SHELTERED FROM ECONOMIC SLOWDOWN IN 2019
Source: Central 1 (6/6)
Central 1’s latest report provides a deep dive into current regional economic trends; innovative areas sheltered from economic slowdown. Ontario’s tech hubs and diverse economic regions will withstand the economic slowdown sweeping the rest of the province through to 2020, according to the latest Central 1 Credit Union (Central 1) report. Central 1’s Regional Economist, Edgard Navarrete, said areas with innovative sectors have blossomed while areas with high exposure to trade have been adversely affected.
“Regions such as Ottawa, Kitchener-Waterloo-Barrie and Muskoka-Kawarthas have experienced economic and employment growth due to strength in new and exciting sectors, and they will continue to grow in 2019,” said Navarrete. Ottawa’s high-tech sector will expand at a fast pace supported by employment growth of 1.1 per cent; Kitchener-Waterloo-Barrie’s booming tech-sector will be supported by robust employment growth of 2.4 per cent; and, Muskoka-Kawarthas’ service-based economy will be boosted with manufacturing in the aerospace industry, and by international companies such as Rolls-Royce and Siemens—supported by employment growth of 1.2 per cent. Kingston-Pembroke, while not a growing tech hub, has diversified its economy away from auto manufacturing and will also be insulated from the economic headwinds. The remaining seven economic regions will suffer the flow-on effects of international trade and geopolitical concerns.
“Regions dependent on resources or with close links to trade will continue to be affected by the ongoing tariff war between the U.S. and China,” said Navarrete. Economic uncertainty related to trade has dampened business and consumer confidence and consequently, consumer spending. Consumers have also halted home buying activity as evidenced by sharp sales declines and eroding prices.
Navarrete said that the federal mortgage B-20 stress tests have created notable declines in residential investments across most regions, especially those close to the Greater Toronto Area. Job growth in construction, finance, insurance, real estate and related industries has stalled as a result. Despite the current slowdown, the report predicts a recession-free future with growth in the economy, supported by population growth and consumer demand heading into 2020.
Highlights from the report:
- The economy in most regions in Ontario are expected to slow in 2019 with few exceptions before gradually recovering in 2020
- Mortgage credit rules will continue to put downward pressure on homeownership demand in several large markets particularly those in the GTA
- Population growth will remain supportive of future economic growth mainly through robust growth to immigration
- Trade and geopolitical concerns remain significant risks to the Ontario economy
- Business investment will decline or remain muted in most areas as businesses try to wait out the trade and geopolitical issues
- Central 1 is a member of ACT Canada; please visit https://www.central1.com/
4. MASTERCARD AND P27 NORDIC PAYMENTS PLATFORM TO BUILD A WORLD FIRST REAL-TIME PAYMENTS SYSTEM ACROSS THE REGION
Source: MasterCard (6/25)
Today P27 Nordic Payments Platform (owned by Danske Bank, Handelsbanken, Nordea, OP Financial Group, SEB and Swedbank) and MasterCard have announced a partnership to provide real-time and batch payments across the Nordic markets; building the most advanced, innovative and efficient payments system in the world.
By working together the partnership will connect people across the cluster of countries using multiple currencies. This bold ambition will transform how money moves for consumers, businesses, society, and the payments industry itself. This major investment programme is a world first in terms of a real-time and batch multi-currency platform and will replace the existing payment infrastructure, enabling instant and secure payments at lower costs and increased competitiveness. Participants will be able to send and receive funds immediately across the Nordic markets at a lower cost and with higher security.
Adding to the speed and convenience of bank account to account payments across the region this will not only offer people greater choice and opportunity, it will improve economic growth and employment by enabling new products, services and business models to develop. The underlying infrastructure is the first step that this partnership is establishing. Thereafter, there will be efforts in developing further common products and services based on the platform.
Javier Perez, President Europe, MasterCard comments: “This exciting partnership will build a world first in terms of a cross region and multi-currency faster payments area. It is also evidence of MasterCard's vision to drive real choice by being the trusted provider of new payment experiences and broadening our reach into fast bank account payment flows. The Nordic markets are global leaders in the development and usage of electronic payments and this new infrastructure will maintain their advantage over the rest of the world.” Lars Sjögren, CEO P27 Nordic Payments Platform comments: “This is change for real. By joining forces across the Nordics we will be able to develop instant payment solutions in a way that each country never would accomplish by themselves. By sharing the costs between the Nordic countries, we will get a state of the art payment infrastructure in the Nordics with the highest standard when it comes to security and efficiency; further boosting innovation and growth in the Nordics.
The demand from consumers and businesses around the world for instant and account to account payments is growing and this new payment infrastructure will put the Nordic markets at the forefront with an ecosystem that connects all bank accounts. Not too far in the future, family and friends might be able to pay each other using mobile devices, regardless of what service they use or which country they live in. Businesses can take advantage of access to a wider network of customers and suppliers, and the seamless movement of money when paying or getting paid. This one single interface will make it easier for banks to handle all payments – domestic, European and beyond.”
For banks, this introduction of a new platform will also provide a real-time view of the multiple schemes that are running, participant information, balances across schemes and the addition of a data-rich message set, empowering participants to explore new revenue opportunities. The new payment platform is subject to regulatory approvals and final investment commitments.
- MasterCard is a member of ACT Canada; please visit https://www.mastercard.us/en-us.html
5. FIME DISRUPTS PAYMENTS TESTING WITH INDUSTRY’S FIRST DIGITAL PLATFORM
Source: FIME (6/3)
FIME continues innovation and adapts testing in line with the rapid digital transformation of the global payments industry. The new FIME Test Factory 4.0 platform enables payment actors to accelerate the launch of fully tested and certified solutions without compromising on risk. It allows automation, digitalization and customization of the end-to-end testing process.
“Digital payments are evolving fast, driven by rising expectations for more seamless, transparent, and secure user experiences” comments Lionel Grosclaude, CEO at FIME. “The pace of innovation that requires almost weekly solution updates has left the traditional testing and certification infrastructure behind. This has forced the ecosystem to accept certain risks, rather than slow time to market. There is now a better way. The FIME Test Factory draws on the fundamentals of automation and intelligent data exchange at the heart of ‘Industry 4.0’. This is revolutionizing the way tests are developed, deployed and consumed." The platform has been designed as a ‘pick & mix’ of five modules connected to automated tools covering in-store, in-app and online payment solutions testing, all under one simple management layer.
- MyTestProcess creates a multi-domain white-label portal to offer digitized test and certification processes.
- MyTestStudio enables creation and customization of test plans to support quality assurance.
- MyTestManager delivers a centralized cockpit to plan and monitor automated tests campaigns.
- MyTestRecord manages record keeping rules across modules to cope with internal compliance needs.
- MyTestIntegration is a gateway to connect third parties’ test tools to maximize testing scope.
The first automated test services powered by the platform are API testing to support open banking requirements and Level 3 acquiring and issuing testing. The platform also supports EMV® 3DS services and has been submitted to EMVCo for access control server (ACS) component qualification, with additional component testing to follow. Other automated tools will be gradually added in the coming months.
“With FIME’s Test Factory 4.0, testing is no longer a necessary evil but an asset to help payment players to differentiate,” adds Grosclaude.
- FIME is a member of ACT Canada; please visit https://www.fime.com/
6. SHOPPERS DRUG MART TO USE BLOCKCHAIN TECHNOLOGY TO TRACK MEDICAL CANNABIS QUALITY
Source: Global News (6/17)
Ottawa is rolling out the next generation of cannabis products, but they come with some strict rules. Global's Tomasia DaSilva reports on what those are, and when the products will be available. The vice-president of business development at Shoppers Drug Mart says blockchain technology can provide a comfort level for doctors and pharmacists about the quality of medical cannabis.
Ken Weisbrod says his company has signed a deal with TruTrace Technologies for a pilot program to provide the software to track medical cannabis from seed to final product. Cannabis industry leaders are in Saint John to discuss how legalization worked and where there’s room for improvement. As Silas Brown reports, the congress is preparing for the next phase. He says the source of medical cannabis must be traceable and accountable for patients and practitioners to feel confident about it as a treatment. Weisbrod says when a patient takes medication, there is an expectation that it is standardized and has been proven with consistent clinical outcomes and results.
Shoppers Drug Mart currently provides medical cannabis to patients, but only online. The first phase of the pilot program is expected to be completed by July 31 with full implementation targeted for late November.
7. BANK OF ENGLAND GOVERNOR MARK CARNEY WELCOMES FACEBOOK'S LIBRA CURRENCY
Source: SkyNews (6/20)
The digital currency could improve financial inclusion and lower the cost of domestic and cross-border payments, says Mark Carney. Mark Carney has issued an unexpectedly warm welcome to Facebook's new global currency.
He said tech companies and non-banks could soon be given access to the Bank of England's balance sheet, according them the same privileges as the big banks. The Bank's governor said Libra, the digital currency Facebook unveiled earlier this week, could "substantially improve financial inclusion and dramatically lower the cost of domestic and cross-border payments". But he said that he approached the currency "with an open mind but not an open door". In what is likely to be his last Mansion House speech, Mr Carney said that in future non-banks could be allowed access to the Bank's balance sheet, allowing them to park money at Threadneedle Street overnight and potentially even borrow from the central bank.
This access is, at present, only accorded to registered banks, but Mr Carney said extending this access "can improve the transmission of monetary policy and increase competition". While the decision remains subject to consultation, it will be seen as a major signal, indicating the Bank endorses the growing competition between established banks and giant tech companies attempting to muscle in on the sector. Facebook announced its Libra currency earlier this week, while Apple recently announced the launch of its own credit card.
Libra 'different in many ways' from other cryptocurrencies
Mr Carney also announced that in future the Bank's Financial Policy Committee would stress test the financial system for the potential impact of climate change. He said: "The stress test will reveal the UK financial system's ability to withstand the financial risks from climate change that arise from the increased frequency of weather events and from the transition to a carbon-neutral emission economy."
8. GEMALTO IDENTITY MANAGEMENT SYSTEM TO EMPOWER THE WORLD’S CITIZENS WITH SECURE AND UNIQUE IDENTITIES
Source: Gemalto (6/12)
New Identity Management System enables governments to guarantee all citizens online and offline access to public services and civil rights. Users retain full control over their private and personal data.
Gemalto, a Thales company, is launching its Identity Management System (IDMS) that can help governments address the challenges posed by a world in which over one billion people have no official ID. Using the latest biometric capture and identity verification techniques, Gemalto's solutions enable public authorities to empower citizens with a fully secured and trusted Foundational Identity. This system supports people identification and authentication so they can securely access online and offline services such as education or healthcare, and proves their right to participate in elections, apply for a passport or open a bank account. Users retain full control over their personal data, choosing how and when it is shared with service providers.
UN targets universal provision of ID by 2030
The staggering number of citizens rendered invisible to public agencies by the absence of an official ID includes one out of three children worldwide. Most international financial institutions are supporting Digital ID schemes in many countries over the next ten years. These initiatives are also backed by the UN, which has itself set the target of everyone on the planet having a legal identity by 2030.
Mobile, biometric-based registration can reach remote and isolated areas
Gemalto's IDMS provides authorities with a fully integrated, end-to-end solution which can adapt to existing identity schemes and orchestrate its interactions. The process starts with registration of a person and capture of their biometrics, with easy-to use mobile technology ensuring coverage can reach even the most remote regions. Registration is followed by entry onto a central database or civil registry and the creation of a unique individual identifier.
Reaping the benefits of Foundational ID
This Foundational Identity can provide the basis for issuance of digital and physical ID credentials, and subsequent registration with numerous different public bodies and services. All these processes can be verified beyond doubt using the individual's biometrics and unique identifier. Gemalto's approach also offers citizens outstanding protection, and assurance that their data will not be used for commercial gain.
Promoting inclusion, fighting fraud
For governments, a universal ID program facilitates accurate planning of public services, and comprehensive social inclusion strategies. Robust protection against the threat of fraud is also provided, as part of the digital ID platform to further boost efficiency, convenience and adoption of eServices. The Foundational Identity also eliminates the need for individual bodies, such as those responsible for health and welfare, to continually repeat enrollment procedures.
"A unique legal ID is a basic human right that can unlock access to many more – including education, welfare and participation in the democratic process," said Frédéric Trojani, senior vice president Identity and Biometric Solutions for Thales. "Our Identity Management System leverages unrivalled experience in delivering Digital Identity solutions that empower citizens, defend their personal data, and ensure unhindered access to the rights and services."
- Gemalto is a member of ACT Canada; please visit https://www.gemalto.com/
9. UK CHALLENGER BANKS STUMBLE ON STRESS TESTS
Source: PYMNTS (6/16)
Stress tests haven’t been kind to so-called challenger banks in the U.K., according to a Financial Times report. It stated that the “Bank of England has found widespread weaknesses among the UK’s challenger banks in stress tests that showed new lenders cutting corners in an aggressive pursuit of growth.” Not only that, but “a senior regulator at the central bank wrote to chief executives this week, ordering them to tighten standards and correct ‘overly optimistic’ risk modelling.”
The main problem reportedly stems from challenger banks’ failure to support “assumptions in their stress test models,” according to the news outlet. As well, those upstart financial institutions also are operating with an “aggressive focus on growth,” according to regulators, and “tend to make risker loans.”
The recent news about challenger banks — which are striving to ride the wave of payments and financial services innovation sparked by such factors as the rise of smartphones and regulatory encouragement for new products and services — follows a scandal at Metro Bank, the report noted. The financial institution had to “slash growth plans and turn to investors for a £375m emergency share issue after admitting it had misclassified loans and did not hold sufficient capital.”
The ongoing regulatory focus on challenger banks also reflects the push from authorities since the financial crisis to “break the monopoly of high street banks as part of efforts to boost competition and avoid having institutions that are “too big to fail,” according to the report. It said the stress test assumed the following conditions: “A 4.7 per cent drop in UK gross domestic product, with a 40 per cent drop in commercial property prices and a 33 per cent fall in residential property.”
10. SMBS SMALL BUSINESS OPTIMISM RISES TO HISTORIC HIGHS
Source: PYMNTS (6/16)
New data showed that small business optimism rose 1.5 points to 105 in May, surpassing pre-shutdown levels. According to the National Federation of Independent Business (NFIB), six factors in the Small Business Optimism Index improved, three were unchanged, and one fell. Capital spending plans increased along with actual outlays, while expectations for sales, business conditions, and expansion all saw a boost. In addition, earnings, job creation, and compensation stayed strong.
“Optimism among small business owners has surged back to historically high levels, thanks to strong hiring, investment, and sales,” NFIB President and CEO Juanita D. Duggan said in a press release. “The small business half of the economy is leading the way, taking advantage of lower taxes and fewer regulations, and reinvesting in their businesses, their employees, and the economy as a whole.” The index showed an increase in capital outlays by six points to 64 percent — the highest level since February 2018. And 30 percent of small business owners anticipate capital outlays in the next few months, with plans to invest in transportation (45 percent), manufacturing (39 percent), professional services (39 percent), and construction (31 percent) coming out on top.
“Small business owners are demonstrating a continued confidence in the strength of the economy and are betting capital spending dollars on it,” added NFIB Chief Economist William Dunkelberg. “This solid investment performance is supporting ongoing improvements in productivity and real wages.” The data also showed that a net nine percent of all owners reported higher nominal sales in the past three months, while the net percent of owners expecting higher real sales volumes rose to 23 percent. A net 16 percent expect better business conditions, up three points, and 30 percent say now is a good time to expand, which is a five-point increase.
The May NFIB Jobs Report also revealed that small business owners added a net addition of 0.32 workers per firm. However, 25 percent said that difficulty in finding qualified workers was their biggest business problem, with 54 percent reporting few or no qualified applicants for open positions.
11. RIVERPAY’S CHINA UNIONPAY MOBILE INITIATIVE GAINS TRACTION
Source: PYMNTS (6/18)
Integrated payments and marketing platform RiverPay revealed that its staged merchant acquisition initiative with China UnionPay is growing in the North American retail industry. Since the launch of the partnership earlier this year, RiverPay has been expanding its payment portfolio by adding UnionPay QR code payments to all its merchants in the region, with hundreds of new merchants registering through RiverPay to accept UnionPay QR code payments in their offline stores. As a result, merchants are reporting an increase in foot traffic and sales revenue.
“The convenience of the mobile app, combined with UnionPay’s deep-rooted financial relationship with Chinese consumers, is helping make it a preferred payments option for visitors to North America. We have seen a significant uptick in demand by our merchant partners to enable payments through UnionPay mobile app platform, and we are pleased to so see many taking advantage of the easy-to-install and quick-to-settle benefits RiverPay can bring to their retail operations,” said Ryan Zheng, CEO and co-founder of RiverPay, in a press release. Launched in December 2017, UnionPay’s mobile app now has more than 150 million users.
“As we launched our mobile app and promoted QR code payment solution[s] globally, UnionPay International has been committed to offering safe and smooth payment experience to hundreds of millions of UnionPay cardholders and app users, wherever they are in the world,” said a senior executive of UnionPay International.
They continued, “The strides we have made in the North American markets are definitely uplifting, with high customer acceptance rate and satisfaction. The credit also goes to our capable payment enabler partners like RiverPay, [which] has worked closely with us to expand UnionPay International’s presence and added tremendous value, by leveraging its abundant payment integration experience and ability in bringing merchants on board. This partnership will not only make one of the most convenient payment options available for Chinese outbound tourists in their travel destinations, but also unlock the next chapter for the large base of U.S. and Canadian merchants in tapping into the lucrative Chinese consumer market.”
With this latest integration, merchants such as Toys R Us, Sporting Life, Swarovski, Colton’s Couture and JCY House can now accept payment by scanning QR codes generated on the UnionPay app.
- UnionPay International is a member of ACT Canada; please visit http://www.unionpayintl.com/en/
12. IN UK, FINTECH ALLIANCE LAUNCHES
Source: PYMNTS (6/18)
Collaborative efforts between FinTech firms and traditional financial firms continue to gather steam. In the U.K., the FinTech Alliance debuted with more than 500 members. Elsewhere, Monzo crosses the Pond, and APIs make inroads into real estate. Movement to foster collaboration between FinTech firms and traditional financial firms continues to gather steam across the globe, aided by government encouragement and initiatives.
In one recent example, the U.K. FinTech Alliance debuted this week, with a roster that tops 500 members. Crowdfund Insider reported that the alliance was created in partnership with the Department for International Trade, and looks to strengthen what is being termed as the FinTech “ecosystem” in the country, where about 76,000 individuals are employed. A release from the alliance noted that among the current members are Level39 and Virgin StartUp. The alliance said individuals or companies can build profiles on the FinTech Alliance, where users will be able to access and share information across the platform, connect with investors, receive updates on the latest policy and regulatory changes, and find employees.
Monzo Across The Pond
In an example of U.K. efforts making tracks on a more global scale, Monzo, the U.K. digital bank, has set up shop in the U.S. As reported, the company is rolling out apps linked to checking accounts and debit cards. The firm said it will be holding sign-up events for consumers in cities that include Los Angeles, New York and San Francisco. Among the account features are no minimum balances and no monthly fees, nor will Monzo pay interest on deposits. Monzo, which has 2 million customers and the equivalent of about $793 million USD on deposit, has also applied for a U.S. banking license in partnership with Sutton Bank.
As Monzo CEO Tom Blomfield said in an interview with The Verge, “Initially, it will be a partnership with Sutton Bank, as we’re not a regulated bank in the U.S. yet. But, in parallel, we will be applying for a U.S. banking charter. … The main thing that will be removed is lending. We’re not a bank [in the U.S.], so we won’t be lending customers money.” Other features will make the leap from the U.K. to the U.S., such as payments notification and tap-to-pay functionality.
Property Management (And Payments), APIs Included
In an example of API-driven B2B developments, InventoryBase, a platform that offers property inspection services to management companies, said this past week that it is adding B2B payment services. The payments will be geared toward the third parties that conduct property visits, according to reports. Third-party suppliers can integrate into the InventoryBase platform via API, which allows stakeholders to connect back-end systems, the company noted. Through the firm’s rollout of its InventoryBase Workstreams module, property managers can submit a job to the platform to receive bids from potential vendors. The company further illustrated that once a supplier is chosen, the job is conducted and the vendor provides their report.
“Payments have always been a burden to the property services supplier industry, and InventoryBase aims to simplify how clients pay suppliers in a more speedy, secure and protected way,” InventoryBase said in its release. The company added that the B2B payments feature, as described above, ensures that both property manager and supplier agree over a contract and payment.
13. MASTERCARD LAUNCHES BID TO LET TRANSGENDER PEOPLE USE CHOSEN NAME ON CARDS
Source: CBC News (6/17)
MasterCard said it is working with Canadian banks to launch a new card that would allow transgender and non-binary people to use their chosen name on the credit card. MasterCard is launching a new credit card called True Name that will allow transgender people to use their chosen names on their card. A MasterCard spokesperson said the company is working with bank partners in Canada to offer the card here. The card is an effort to combat discrimination at the cash register for transgender and non-binary people, the company said in a release.
About a third of transgender people report have negative experiences when they have shown a credit card with a name that did not match their appearance, MasterCard said. They also run into problems such as harassment or denial of service if they give a name that appears to be different from what is shown on other ID. People who are in transition often don't have ID with their new names, though Canada is now allowing alternative gender ID on travel documents. MasterCard said it plans to issue the True Name card with "a sensitive and private process free of personal questions that will allow for true names, not dead names, to appear on cards without the requirement of a legal name change."
Canadians will soon be able to ID gender as 'X' on their passports.
It is up to the banks that issue the cards to actually implement the change and on Monday, MasterCard called on those banks to do so. MasterCard spokesperson Hyunjoo Kim said the True Name card is being launched in the U.S., but will be available industry-wide.
"MasterCard is committed to easing this pain point for the LGBTQIA+ community by creating a product that enables them to reflect their true identity," she said in an email to CBC News.
- MasterCard is a member of ACT Canada; please visit https://www.mastercard.ca/en-ca.html
14. INTERNET-OF-THINGS NETWORKS LEAD TO MORE SECURITY ISSUES THAN YOU MAY THINK
Source: Be In Crypto (6/17)
You probably didn’t think that installing the latest smart fridge would leave your home open to hacks. However, these and other devices plugged into the Internet of Things (IoT) economy are exposing home networks more than you might think. More specifically, smart security cameras are the biggest risk in many homes. Cybersecurity company SAM Seamless Network reports that these devices are hacked into more than any other smart device. The group found that these cameras make up 47 percent of the most vulnerable devices when it comes to home networks, with smart hubs such as Alexa or Google Home following close behind. The company also notes that a majority of these attacks come from China and the United States. Conversely, these two spaces are also the biggest targets of these attacks. In fact, citizens with smart devices suffer an average of five attempted attacks per device per day.
Not So Smart After All
It appears that the cameras most vulnerable are IP cameras — or cameras that act as their own server — reports ZDNet. Of course, this heightened visibility leaves them even more open to attack. The real threat, however, is to any additional devices on the network. Since everything connects via the internet, access to one device leads to access to all devices.
Network centralization is the real problem here. Unless you’re a widespread enterprise that can afford the latest in network security, your group of smart devices won’t be well-protected. But adoption is very real, with more and more people bringing in Alexa and other devices into their homes every day. Blockchain-based Internet of Things networks are one solution that could benefit both small homes and big business. Famously “unhackable,” a decentralized smart device network — courtesy of the blockchain — would keep your smart devices safe from threats. (That’s not to mention scalability for enterprise use and high-level encryption for data transfers.)
A Decentralized Solution for the Internet of Things
Say that you build a smart contract network on Ethereum (ETH). You run a big office building full of smart lights, fridges, and more. Thanks to smart contracts, on/off phases, temperatures, and more could all be automated — and immutability means there’s always an activity log to look back on and see what happened. Replacing a cloud network is no easy task, but companies would save on high network costs in the long run. While not a perfect solution, it would prevent exposed homes and ensure users don’t have to pay for top-of-the-line smart devices just to keep their information secure.
15. DATA SURVEILLANCE POWERS UNLAWFULLY WIDE, COURT TOLD
Source: BBC (6/17)
Powers used by the security services to "Hoover up" communications data from most people in the UK, even those not suspected of an offence, are "too wide" and invade privacy, a court has heard. Civil rights group Liberty is challenging the government at the High Court over how the Investigatory Powers Act (IPA) - dubbed the "snoopers' charter" by critics - is being used. It says it is incompatible with the European Convention on Human Rights. The government denies the claim. Liberty's lawyers say that "bulk" data gathered by the security services and other agencies, under warrants granted by a judge or the home secretary, can include:
- intimate data including an individual's internet browsing history
- which apps they have downloaded to their phone
- their usernames and passwords
- and even cell site data that can pin-point a person's location at a given time
Even if a warrant has been granted for the data to be gathered, they argue, the searching of bulk data - sometimes known as secondary data - is not governed by any warrant. They also say the data can still be searched even if the warrant, that allowed for it to be seized in the first place, has expired. Liberty's barrister Martin Chamberlain QC told the court: "These powers permit the interception or obtaining, processing, retention and examination of the private information of very large numbers of people - in some cases, the whole population.
"They also permit serious invasions of journalistic and watchdog organisations' materials and lawyer-client communication." Last week, in a preliminary hearing, it emerged that the storage and handling of large amounts of data gathered by the security service MI5 is "undoubtedly unlawful" according to the government watchdog - the investigatory powers commissioner.
Safeguards over the storage, retention and deletion of data were not being adhered to by the domestic security service the watchdog said in a ruling. In court, the lawyers for Liberty maintained that the government's oversight of the operation of the IPA was inadequate in the way it failed to properly supervise the interception of communications data - who sent what to who and when - and the way in which that data can be subsequently searched. The court action has been joined by the National Union of Journalists which says the current regime for data interception does not adequately safeguard journalists from interference from the state. Government lawyers are expected to argue the gathering of massive amounts of private data - in what has been compared to a "soup" of information - does not pose any meaningful risk of an invasion of privacy because the vast majority of it will never be examined by investigators.
Sir James Eadie QC, representing Home Secretary Sajid Javid and Foreign Secretary Jeremy Hunt, submitted that the powers provided by the act "strike an appropriate balance between security and individual privacy". He added that there was "a variety of strong safeguards" built into the act to protect journalistic material. The trial is expected to last all week.
16. THREE SURPRISING WAYS THE APPLE CARD IS CHANGING THE CREDIT CARD MARKET
Source: Forbes (6/17)
The Apple Card announced in late March is about to come to market and like many Apple products, it has generated a strong response long before consumers have had a chance to use it. The card may seem similar to other “affinity” credit cards, which are typically backed by a major issuer and leverage a strong, consumer-facing brand, but Apple’s foray into credit cards has already impacted consumers, banks and credit card issuers. Here’s how it’s changing the credit card market:
Big Tech Has Shown a Better Experience is Possible
The official Apple Card site says it’s “a new kind of credit card.” Unlike some cards that try to win customers with a low APR or robust rewards program, Apple has focused on providing a digital-first experience that puts the customer front and center. Features include a frictionless mobile user experience, state of the art security, a seamless rewards program and interactive tools that help users manage spending and debt payoff. It’s free of the fees credit cards often charge for missed payments or international transactions. Real-time customer service support is just a text message away.
Apple Card has already made a splash by giving customers an experience consistent with the rest of the brand: it puts them in control. Consider that in 2015, just 22 percent of respondents to FIS’ Performance Against Customer Expectations (PACE) report called mobile their preferred channel for managing their financial lives. By 2019, that number jumped to 42 percent of respondents. Big tech didn’t unearth a truth about changed customer behavior. It simply designed a card around it. Now, banks and credit card issuers have to deliver the same frictionless experience.
Additional Credit Card Innovations Will Emerge
Execution of an affinity card program is complex. The card issuer and the affinity brand must leverage sophisticated data and analytics to maximize the value of the card portfolio, target the exact right mix of prospective customers to reasonably predict which are most likely to respond and qualify for an affinity card offer. The affinity card relationship deepens customer relationships and cultivates loyalty—and the affinity brand gets a cut of each cardholder transaction.
Most consumers, however, don’t understand how affinity programs work. The brand on the front of the affinity card doesn’t decide who has the credit worthiness to be approved for a card; the issuer does. Forbes recently reported that more than one in five millennials intend to apply for the Apple Card. Yet, of those who intended to apply, one in five have never had a major credit card. That doesn’t mean they won’t get an Apple Card—but brand enthusiasm doesn’t guarantee a person will. Credit card issuers won’t sleep on the chance to appeal to those who may not be approved for the Apple Card. Expect to see more compelling affinity cards with a frictionless experience and user-friendly terms to emerge very soon.
Consumers should also seize this time of a renewed industry focus on empowering cardholders. People should take advantage of this moment to compare the rates, terms, rewards potential and other features on a number of different credit cards and choose the one that best suits their long-term financial goals.
Traditional Card Issuers Will Re-evaluate Their Processes and Programs
Big tech has challenged the status quo in nearly every major industry; Apple’s entrance to the credit card market will too. Banks and credit card issuers will revisit lending practices, application flows, fraud management processes and policies around fees. They’ll explore new offerings that ensure rewards programs are seamless and competitive and will introduce innovative products that stand out in the market. They’ll reconsider entry-level credit products to specifically attract first-time or subprime credit card applicants, too. The credit card industry is notoriously competitive, but banks and credit card issuers have plenty of room to respond and reinvent the rules of the game. Those that leverage the fintech tools and partnerships that enable them to quickly pivot can create their own variety of frictionless products that put the customer first.
17. AMAZON'S NEXT BIG THING MAY REDEFINE BIG
Source: BBC (6/15)
"I see Amazon as a technology company that just happened to do retail," begins Werner Vogels, Amazon's chief technology officer. "When Jeff [Bezos] started Amazon, he wasn't thinking about starting a bookshop. He was really fascinated by the internet.” Only "mortal humans", he tells me in an interview, ever saw Amazon as merely a retailer. So the question now is: what will Amazon become next? And are mere mortals ready for it?
Its recent Re:Mars event in Las Vegas demonstrated clearly - through presentations about machine-learning, robotics and space - that the firm is going through a transition phase that, if successful, will redefine its relationship with the public. Amazon's incredible, sophisticated systems are no longer being used just to serve up good deals, fast delivery times, or cheap web storage. Its big data capabilities are now the tool of police forces, and maybe soon the military. In the corporate world, Amazon is positioning itself to be the “brains” behind just about everything.
In short, New Amazon could make today's Amazon look quaint in both scale and power.
Next major phase
Amazon, of course, knows this. Which is why, for an entire week earlier this month, the firm, typically reluctant to engage too deeply with the press, did so with enthusiasm: dinners, interviews, and remarkably frank discussions about its ambitions. Among the Re:Mars speakers was Mr Vogels. He’s considered - alongside Mr Bezos - one of the company's true visionaries. That's in part thanks to his involvement with building the IT architecture behind Amazon Web Services, and helping the division's chief Andy Jassy convince thousands of organisations to adopt it. As of now, AWS accounts for most of Amazon's profits. It essentially meant companies that couldn't or didn't want to buy big servers of their own now could buy just the computing power and storage that they needed - and that their virtual server space would grow (or shrink) in accordance with their needs. As a result, Amazon provides the infrastructure backbone for major firms such as AirBnB and Netflix, as well as more than one million other clients who collectively give Amazon "control" of large swathes of the web. When AWS suffered a technical glitch in 2017, tech site Gizmodo said it simply "destroyed the internet". There are competing major cloud platforms - from Microsoft and Google - but AWS is on top.
The firm is now looking to have a similar impact with the next major phase in computing: machine-learning and artificial intelligence. ML and AI, for short.
“There's only a certain set of problems for which you need to build new algorithms,” Mr Vogels tells me, suggesting for everything else, companies should just use Amazon. “The use of machine-learning will greatly explode if everyone can do it.” He wants to offer companies access to technologies they could not create themselves, such as Textract (“automatically extracts text and data from scanned documents”) or Lex, which uses the same technology as the Alexa voice assistant to turn voice recordings into text.
‘Not my decision’
Among the tools it is offering, Amazon’s image recognition product is the most controversial. For a per-minute fee of a few pence, Amazon Rekognition can scan video footage and, for example, pick up people’s faces that can then be checked against a client’s database. Civil rights groups have called it “perhaps the most dangerous surveillance technology ever developed”, and called for Amazon to stop selling it to government agencies, particularly police forces. City supervisors in San Francisco banned its use, saying the software is not only intrusive, but biased - it’s better at recognising white people than black and Asian people.
Mr Vogels doesn’t feel it's Amazon’s responsibility to make sure Rekognition is used accurately or ethically. “That’s not my decision to make,” he tells me. “This technology is being used for good in many places. It’s in society’s direction to actually decide which technology is applicable under which conditions.
“It’s a societal discourse and decision - and policy-making - that needs to happen to decide where you can apply technologies.” He likens ML and AI to steel mills. Sometimes steel is used to make incubators for babies, he says, but sometimes steel is used to make guns.
‘Add a comma’
One non-Amazon guest on stage, the AI pioneer Andrew Ng, gave a pretty scathing review of the technology industry’s reputation - and food for thought for his hosts.
“Even as we lead the world through multiple waves of technological disruption, we’ve not always provided the best leadership. “With the rise of the internet, we’ve created tremendous wealth, but we also contributed to wealth inequality. “Let’s make sure that this time, with the rise of AI, we take everyone along with us.”
18. VISA ENTERS THE $125 TRILLION GLOBAL MONEY TRANSFER MARKET WITH NEW BLOCKCHAIN PRODUCT
Source: Forbes (6/11)
Visa is launching a blockchain product to help businesses transfer money faster and more cheaply. Visa seems to do everything on a massive scale. Last year, it moved $11.2 trillion over its payment rails across more than 200 countries for purchases ranging from cups of coffee to cars. Now it’s eyeing an even bigger market: cross-border, business-to-business (B2B) transactions, where banks transfer money on behalf of corporate customers. Visa says it’s entering a $125 trillion market and using distributed ledger technology—software where transactions must be confirmed by multiple computers on a network to be considered final—to make these payments faster, cheaper and more transparent.
Most cross-border payments are done through the Society for Worldwide Interbank Financial Telecommunication, or Swift, a Belgian organization started in 1973 that counts 11,000 financial institutions as members. But its legacy system has inefficiencies. Because few banks are connected directly to each other, a payment that originates in Kansas City and is bound for Nairobi might have to stop at banks in New York and London before reaching its final destination, with each bank extracting a fee. It’s also difficult to track the transfer’s progress and predict how much it will cost, including what foreign exchange rate you’ll get. In 2017, Swift launched a new service, gpi, to speed transactions and transparency. With this product, nearly all transactions settle within 24 hours, says Harry Newman, head of banking at Swift. So far, 3,500 banks have signed up, and they move $300 billion a day over the service, roughly half of Swift’s total daily volume.
Visa B2B Connect
Visa's new product aims to connect banks more directly, lowering the cost of money transfers. Visa is also making transactions faster and more transparent with its newly launched B2B Connect product, says Kevin Phalen, Visa’s global head of business solutions. Its newly launched distributed ledger software facilitates direct bank connections. Financial institutions can also see payment fees upfront. Transactions settle quicker, in one to two days. The B2B Connect rails are new, so Visa isn’t leveraging the ubiquitous credit card rails it has spent decades building and maintaining. But it is leveraging its vast experience in areas like complex payments, cybersecurity and compliance.
Phalen’s team created Visa B2B Connect using distributed ledger technology because it provides more transparency and traceability than a typical state-of-the-art database, he says. They used Hyperledger Fabric, the blockchain software developed in part by IBM and hosted by Linux, to build it, and it has taken two years to launch. Unlike cryptocurrency-based blockchains including Bitcoin and Ethereum, Visa’s product isn’t decentralized, since the payments giant has complete control over it. Visa made Forbes’ first-ever Blockhain 50 list earlier this year.
Visa B2B Connect is focused on facilitating high-value B2B transactions of about $15,000 and up, which represents a roughly 10% chunk of the $125 trillion cross-border market, Phalen says. It’s partnering with FIS, a Jacksonville-based payment processor and financial technology provider to more than 20,000 financial institutions. That will give Visa access to FIS’ rich set of bank clients, who can choose to use B2B Connect for payments if they wish.
Why doesn’t a company like FIS, with its valuable distribution network, want to build a product like Visa B2B Connect on its own? “FIS has at times looked at introducing new networks into the market, but in most cases, we play the role of the integration partner that helps financial institutions participate in networks,” says Raja Gopalakrishnan, FIS’ international head of banking and payments.
19. THE ROLE OF DIGITAL IDENTITY IN GROWING THE HEALTHCARE SERVICES GIG ECONOMY
Source: PYMNTS (6/17)
The United States is currently weathering a healthcare worker shortage that is estimated to get quite a bit worse before it gets better. According to healthcare staffing consultancy Mercer, to cover the needs of an aging population as baby boomers sail into their golden years, the U.S. will need to hire 2.3 million new health care workers by 2025. The problem, according to Mercer’s data, is that there is already a shortage of the kinds of skilled workers the healthcare vertical needs — particularly among doctors, dentists, nurses and health aides. The biggest number of shortages will be among home health aides, where there are currently nearly half a million unfilled positions. As an industry, there could be hundreds of thousands of unfilled healthcare positions over the next several years.
“Few other industries are racing the clock to find a future-ready workforce like today’s health care administrators,” Jason Narlock, senior consultant with Mercer, told CNN. It is a complicated problem owing to many factors, Boon founder and CEO Ryan Vet noted in a recent interview — not the least of which healthcare work is, by nature, hard work. It’s highly skilled and in many cases requires certain intangible personality traits that are hard to teach. Vet’s mother is an RN, he said, which means he understands can’t overstate how hard and prone to burnout healthcare work is just in its nature. But, he noted, layering in over top of those baked-in difficulties is the reality that many of the processes around healthcare staff are often terrible and tend to increase burnouts and dropouts even more with loads of friction for providers and workers.
“There is a desperate need for solutions here,” Vet said.
Boon is a proprietary marketplace aimed at starting to do better by bringing the gig economy’s on-demand service to the world of healthcare staffing by connecting licensed healthcare professionals to contract work opportunities on demand. Launched this month in the research triangle, the marketplace’s goal is to take the opacity out of the temporary and contract staffing world in medicine in the hopes of providing something that works better for both parties involved.
The High Price Of Opaque Systems
Boon started with temporary and contract medical staffing as its target areas for a simple reason: that is where the problems are most visibly dysfunctional for both sides of the transaction. What mostly happens when contract staff is needed for a set term, Vet explained, is that the provider will seek out a third-party staffing agency to provide them the properly qualified candidate. That process is generally costly, so bringing on these staff members usually creates an awful lot of overhead for practices. And more problematic: what the provider is paying for is not always clear or all that necessary. There are often fees that are hidden, high multiples on hourly labor or substantial subscriptions costs.
“Practices are up against higher turnover than before and are faced with a heavily burdened overhead when it comes to bringing in new temporary team members. In an effort to solve both the problems that providers and practices face, Boon has created a marketplace.”” Vet said. Bringing in temporary staff in the medical fields shouldn’t require either a terribly inefficient in-house search or a costly black box that benefits neither of the direct participants in the transaction, he asserted. What Boon offers as a replacement to that is a two-sided marketplace that is free for healthcare workers to list their services, training and availability and free for providers looking for staffing to search to fill their needs. “The pricing,” Vet notes, “is built to be entirely transparent for both sides.”
“All parties will know exactly what they will be compensated before a shift is ever assigned. No surprises,” he said. “Unlike many traditional temporary staffing agencies, we are giving all the power back to both the hiring party and the working party.”
Boon does charge a fee to both sides of the transaction — but only after the job is agreed upon. Boon also provides more than an open job board, in essence, because the app pushes potential matches via hiring managers — and those matches are algorithmically generated to create the best fit based on factors such as technology utilization skills, past experience, availability and personality traits. The site also offers an in-depth rating system so that providers can get a clearer view of the whole background of workers. The “gig model,” he noted, generally creates a better situation for the workers themselves, who tend to be able to command better hourly rates when they are working directly with the hiring practices.
The Importance of Security
Services marketplaces, particularly those built around skilled or specialized workers, have the greatest responsibility to make sure that the employee who shows up is exactly who they say they are, and they can do what they claim to be able to do. Care.com has been on the receiving end of many accusations of negligence because improperly screened and vetted employees have at times done damage.
In the context of healthcare, someone faking their identity or qualifications is not a funny story because the outcomes can be so severe. That is why Boon does its own internal and in-house vetting and screening for licenses, certifications, training etc, and submits anyone who wants to list on the platform to an outside, third-party background check before their listing is complete. Initially, Boon will be focused on the dental industry — and it is already up and running in the North Carolina Research Triangle area. The goal is to add medical and even veterinary services in the coming months.
20. AMAZON TO MAKE PUSH FOR SLUMPING LOAN BUSINESS
Source: PYMNTS (6/14)
Amazon is going to make a push to revitalize its loan business after a recent slump, according to a report by the Financial Times. The eight-year-old business offers annual loans at interest rates of between 6 and 17 percent, but growth has slowed in the past few years. In the year between 2015 and 2016, outstanding loans almost doubled, to the tune of $661 million, and growth fell to 4.7 percent in 2017. In 2018, growth was down to 2.6 percent. Amazon stopped giving out new loans in Japan, which is one of the first markets the loan company entered. It was reportedly trying to get a better understanding of credit risks and cutting staff as well. The company is now ramping up efforts to revitalize the business, however. It has put out job ads for jobs all over Europe, Asia and in Seattle. The job listings show that Amazon wants to completely overhaul the products that it does have, and expand into new territories. It says it wants to “turn the finance industry on its head.” Amazon Lending is a fairly secret operation, by design. There’s no website and it doesn’t allow reporters when it does presentations at events.
The job postings, however, show Amazon is serious. The application asks the question, “Are you interested in helping us disrupt an entire industry?” Some analysts don’t think that the new push will be successful, and some say that Amazon is too dependent on its own data and doesn’t have a full understanding of creditworthiness.
“They only see part of the picture if all the data are related to sales on one marketplace,” said Rob Frohwein, co-founder and chief executive of Kabbage, and “you really have to try to draw a more 360-degree view [of potential borrowers].” John Cronin, an analyst at Goodbody, said Amazon’s struggles show “the complexity of underwriting decisions.” “The reality is that while Amazon and other Big Tech firms have access to substantive customer data, what they do not have is credit history data. This is a major gap in the context of lending decision-making,” he said.
21. RUSSIA JOINS THE FASTER PAYMENTS REVOLUTION
Source: PYMNTS (6/17)
The rise of faster payment systems has become a global phenomenon. In the past few years, several global markets have invested resources into developing payment systems and infrastructure that enable funds to be delivered in real-time and that operate on a 24/7 cycle. The U.K., the U.S., Hong Kong, India and Australia are among just a few of the nations to launch their own local faster payment systems while a host of other countries are moving forward with their own plans to launch a faster payment scheme.
Earlier this year, the Russian Federation joined the ranks of these nations when it launched its own faster payment system, known as the Faster Payments System (FPS). FPS aims to enable users to make instant person-to-person (P2P) transfers using personal identifiers like mobile phone numbers, including between two parties who belong to different banks. Later this year, users’ FPS will enable users to make payments to legal entities using QR codes according to the FPS site.
FPS was developed and piloted with the collaboration of a dozen Russian banks and payment service providers, including Alfa Bank, Gazprombank, Raiffeisenbank and TB, all of which belonged to the FinTech Association founded by the Central Bank of Russia. Another member of the association involved in the development of the service was QIWI, a provider of several payment solutions including ATMs, bank cards, digital wallets, virtual cards and eCommerce solutions. As Andrey Protopopov, QIWI’s head of product and IT, recently explained to PYMNTS, the availability of the FPS in Russia could prove disruptive by making a wide range of swift payment services available and bringing new users into the nation’s financial services system.
“[Among the] important features of the system are independence and equidistance from market participants,” Protopopov said. “This means that the FPS implies equal rights and opportunities for all participants.”
Expanding financial access, boosting financial competition
As a member of the FinTech Association since 2017, Protopopov said QIWI played an active role in the creation process of FPS, including establishing the rules of operation and the system’s business model. While members encountered “contradictions and technological nuances” along the way, Protopopov said the end result was the launch of a Russian faster payment system in “the shortest time possible.”
Now that the system is live, Protopopov expressed excitement for how the system’s launch will be received among Russia’s financial service customers. One of the biggest changes he anticipates is greater competition among Russian financial institutions for consumers who will expect and demand access to faster payment services.
“The implementation of instant payments through FPS directly affects the increase in the availability of financial services for the population,” he said. “[This] leads to an increase in the loyalty of customers to banks that are members of FPS.” The launch of FPS, he said, could do more than boost customer loyalty for banks that have signed on to the system. In addition, it could also help to bring residents in rural areas into the financial services sector and expand the reach of banking services to these groups. With new customers joining the ranks of financial services, Protopopov said banks face new pressure to develop and release the services these customer value most.
“Instant payments can be a trigger for increased competition,” he said. “Now the struggle for the client will occur, including at the overlay level, and what new services will be provided through it.”
Smartphones take center stage
The rise of smartphone technology will only serve to further expand participants in Russia’s financial services landscape, according Protopopov. He pointed out that earlier this year, half of the nation’s payments made at POS terminals were made using cashless payment methods, a sign that Russia’s consumer base is embracing digital payment technology and has come to expect faster and more efficient methods for making payments.
“From year to year, customers are becoming more sophisticated,” Protopopov said. “The ease and simplicity of making a payment, the availability of loyalty programs and a developed ecosystem around a financial organization, of which they are customers, is important to them.” These shifting attitudes will put the smartphone at the center of many Russian customer’s financial lives, he added.
“Customers are already accustomed to receiving the majority of financial services remotely, and digital distribution channels are becoming a priority,” he said. “Therefore, we predict that the consumption of financial products and transactions with them will increasingly occur through mobile devices.”
The future of payment infrastructure
P2P transactions were among the first services to become available from FPS and are currently one of the most popular use cases. In the future, Protopopov expects more merchants to join FPS and be able to accept payments from customers using QR codes for payments. This, in turn, could reduce the number of paper documents and the costs of maintaining and updating POS terminal software, he said. Additional use cases could also include the ability to offer B2B payments as well as enable Russian citizens to make payments for government services (C2G payments).
“The wider the capabilities of the system, the higher the likelihood that it will be able to cover the largest number of different groups of clients, both legal entities and individuals,” Protopopov said. For its part, QIWI is looking ahead to prepare for younger individuals — both millennials and members of Generation Z — to command a larger share of the financial services market, and is taking steps to make sure its financial infrastructure is ready to meet the expectations of both these groups. Last year, the company acquired the rights to mobile banking app Rocketbank and to Tochka, a banking solution for small- to medium-sized enterprises (SMEs), as it seeks to deliver payment solutions via mobile devices and enable SMEs to more easily accept mobile payments. With the launch of FPS, Russia joins a growing list of nations that are making financial services more easily available to residents and expanding the reach of banking services. As these systems rise and the infrastructure capable of supporting new financial services expands, banks will face increased pressure to provide new customers with the services they have come to expect.
22. THE TRUST CRISIS IN BUSINESS
Source: Forbes (6/17)
In both business and our daily lives, concerns about data security, information credibility and the fishbowl of social media are climbing fast. According to this year’s Edelman Trust Barometer, 73% of respondents globally worry about false information being used as a weapon, and only 1 in 5 people believe "the system is working for them."
Businesses know they need to address this trust gap. A lack of trust is a significant threat to an organization’s ability to grow, according to more than half of the CEOs surveyed by PwC in 2016. Last year, Harvard Business Review Analytic Services reported that nearly two-thirds of global senior executives believe trust among people, businesses and institutions is declining. Among the culprits: cybersecurity exploits leading to misuse of corporate or personal data; scandals and indictments of prominent businesspeople; and the intentional release of misleading or inaccurate information, and its subsequent spread via social media networks. Companies that want to strengthen trust are smart to begin with their own employees. Trust has become a source of competitive advantage: According to Harvard Business Review’s 2017 piece “The Neuroscience of Trust,” people in “high trust” companies report less stress, higher productivity and engagement, and less burnout.
Often, a trust deficit within a company is expressed as a series of frustrations underlying a broader and more fundamental set of issues. Many business executives are frustrated, for example, by their organizations’ inability to be more nimble, more creative and more entrepreneurial. A lack of trust may be what’s holding them back. Middle managers are paralyzed, fretting about what senior leadership might think. Meanwhile, the front line simply sighs at what they perceive as yet another program from the top. As rewards increasingly flow to those who are able to build the trust-based organization of the future, business leaders will need to heed the trust message or risk ending up with an organization that’s neither as productive nor as effective as competitors’. I see a growing number of trust-focused organizations today, and they take a common approach to three important aspects of business: leadership, communication and innovation. A global pharmaceutical company I know well exemplifies this trend.
For this company’s leaders, control is out. Empowerment and trust are in. A few years ago, the CEO—a physician by training—taught me how management had begun to add value in a different way. His foresight and humility were striking. “If we want people to take initiative on behalf of the customers they serve, think disruptively and bring creative ideas to the table, we as leaders need to empower them, support them and then get out of their way!” he told me. Communication at this company is different as well. The traditional communication playbook would call for posters in the hallways, articles in the company newsletter and a couple of elegant town hall speeches. Nowadays one might add the smart use of digital engagement tools and tracking metrics like employee Net Promoter Score. What this CEO did differently was to inject a very personal dialogue into the mix. He started by hosting a series of small-group discussions about the future of the company as a truly patient-centric organization. This allowed people to engage directly with the CEO—not just in a Q&A session but as part of a true dialogue. Other executives began to hold their own two-way discussions, as did frontline managers. One by one, they each strengthened the fabric of trust throughout the organization.
A different leadership style combined with different communication tactics leads to a different approach to innovation. The world is moving too quickly for any company to rely on traditional methods of top-down, directed innovation. Across industries, the most nimble companies increasingly employ bottom-up, agile approaches. In this pharma company, a cultural shift toward empowerment and engagement naturally led to the formation of “patient value-creation teams” that work cross-functionally, in agile fashion, to innovate on behalf of customers.
The issue of trust that this CEO was attuned to feeds into a deeper shift underway today, a redefining of the role of business in society. In the Edelman Trust Barometer study, roughly three-quarters of employees say that it is critically important for their CEOs to take the lead on change—responding to challenges in industry and society—rather than waiting for government to impose it. The era of shareholder primacy in the business world is giving way to a broader definition of success and a call to action: Build the trust-based organization. Companies can answer that call by evolving their systems of leadership, communication and innovation.
23. VISA, AI AND THE $25B FRAUDSTERS NEVER GOT
Source: PYMNTS (6/18)
Cybercrime is both pervasive and expensive, as modern problems go. According to reports, citing the University of Maryland, there is an attempted hack every 39 seconds. By some estimates, cybercrime will have cost the world $6 trillion by 2021 in damaged and destroyed data, stolen money, lost productivity, theft of intellectual property, theft of personal and financial data, embezzlement, fraud and post-attack disruption to the normal course of business. As Visa’s Melissa McSherry, SVP and global head of credit and data products, told Karen Webster in a recent conversation, fraudsters are persistent and often sophisticated, and VisaNet is a favored target — as it has been for decades.
“The fraudsters are very creative — and they use high-tech tools and artificial intelligence [AI] as well. They are constantly testing out network security patterns, and taking a very structured approach to [try] to break through our defenses. They are always learning from us, as we are learning from them,” she said. The trick is to make sure Visa’s education about fraudsters stays ahead of the fraudsters’ education on VisaNet — and, as the world learned yesterday (June 17), it is a trick that Visa is pulling off convincingly. The card network announced that its AI-based Visa Advanced Authorization (VAA) security product has helped issuers prevent an estimated $25 billion in annual fraud. Overall, Visa’s global fraud rates are at a historic low at less than 0.1 percent.
The results, McSherry told Webster, point to the iterative approach Visa has applied to its cybersecurity priorities in the more than two and a half decades since Visa first incorporated neural-net (AI) technology into VisaNet as a fraud-fighting tool, as well as to how foundational AI modeling is across the entire suite of security-connected products Visa offers. However, they also point to the many miles still left to go as Visa — with its partner merchants and issuers — faces the next half of the challenge. Keeping bad transactions out is important, she said, but making sure good ones go through is arguably even more important.
The AI Foundation
There might be a temptation to look at the entire box of security tools Visa throws at cybercrime and wonder if AI is being given too much credit — when things like Chip-and-PIN cards and tokenization have also been part of that 0.1 percent result.
McSherry acknowledged that point, noting that — in a world where hacks are coming at nearly two a minute — a deep and diverse toolbox is a good thing. Many of those hacks are what she and Webster called “amateur hour” attempts, which are about as effective or worrisome to Visa as a fork-armed man would be to a fortress. Yet, when the criminals go pro (and are backed by international, organized crime or, in some cases, state actors), the efforts get more sophisticated and multi-tiered. The uses for the purloined data and funds, she noted, also get more socially corrosive. However, even in that diverse set of tools, she told Webster, “Al is fundamental to everything we do.”
“At every layer (in authentication, authorization), there is some sort of modeling as part of the security toolset,” she explained. “And in every one of [those layers], at least one of those models is leveraging AI to make it better. It is pervasive in how we prevent fraud.” Visa can never kick back and rest, she noted, as fraudsters don’t rest. However, having been at this kind of data-focused, fraud-fighting for over two decades has its advantages, particularly in developing multi-leveled responses.
“The question we now have to use that data to answer is, ‘How do we prevent fraudsters from disrupting transactions?’” McSherry said, and the answer to that is bigger than just stopping that bad ones.
Letting More Good Through
While saving $25 billion in fraud losses is a good thing, it is an accomplishment that Visa can take no time to focus on because it’s on to the next problem: battling false declines. Customers, she noted, aren’t terribly understanding when their cards get declined for any reason but insufficient funds/credit. If they don’t understand why a card doesn’t work, they nearly instantly stop trusting it, and the card drops to the bottom of their wallets. What Visa is now explaining to clients is that many transactions it is ranking with low-risk scores are getting declined.
“We say this isn’t just about being safe. This is about customer experience, and keeping loyalty and trust in place. It really helps them to see that broader context, and [reevaluate] how their fraud rules are balanced,” she said. Moreover, as AI increasingly expands into background risk-based authentication contexts, Visa is able to unlock much more data and build that into its models. As this happens more, pushed around by open data regulation in Europe, Visa can build more of that authentication data into risk models — it is seeing fraud rates go down and authorization rates go up.
This is a better experience for the consumers, which asks less of them, yet keeps their data privacy safer than it was before. It’s a lot to do — and a lot of integration and persuasion. In cybersecurity, McSherry noted, one can never take a low rate of fraud for granted because there is a virtual army of hackers always hoping to turn the tide in the battle. However, it helps that Visa has been guided by the same philosophy since 1993 in pushing its AI efforts — and it’s paying off.
“Our goal is to make sure every good transaction goes through, [and] every bad one is declined,” she said. “We work very hard at preventing fraud, but we also [work] hard to know what is low-risk enough that it should be passed through.”
24. WHY MACHINE LEARNING IS THE FUTURE OF BUSINESS CULTURE
Source: Forbes (6/6)
Machine learning has been one of the top tech new topics in recent months and is now being widely applied to businesses. Briefly, machine learning (ML) is an application of AI (artificial intelligence) that allows systems to learn and improve without being directly programmed. Focussing on the development of computer programs that can access data in order to learn autonomously, machine learning is being used by Google on its AI Platform which is bringing all its services, from data preparation to the training, tuning, deploying, collaborating and sharing of machine learning models.
Today ML has the ability to compute vast quantities of data and to collect metrics while developing more intelligent algorithms that will be able to perform complex tasks. Take Periscope Data which is invested in taking machine learning and AI to evolve into a deeper evolution of data analysis and access where humans and machines in what is a quickly evolving business culture today. Where real-time intelligence for complex decision-making is crucial for businesses today, that forecasting the performance of the markets in future years will be best accomplished with ML over human force.
There are challenges with the integration of AI within businesses which are often resistant to change. For instance, there needs to be a prioritization of IT applications over IT architecture where companies ought to stop separating digital from AI and instead think of their desegregation. Employee engagement with AI has recently been shown to increase performance and retention in the same way that the Internet Of Things (IoT) has also demonstrated similar advantages. Additionally, AI can function to promote a healthier work culture as TechRepublic recently reported that by analyzing email conversations and biometric data, “companies can more easily promote a sense of belonging among employees, identify red flags, and create an engaging work environment.”
In fact, ML has been used across various disciplines from healthcare to education and it is showing no sign of slowing down. What is clear from the advantages of using AI within business is that a majority of companies are actively working on a roadmap for handling data (68 percent), yet only 11 percent of these companies have completed this task. The models which are the most successful today are those which allow certain tasks to be taken over by AI whereby machine learning can acquire more information from and predict consumer behavior. Current ML models allow for rapid iteration of data and they deliver quick, reliable data sets which impact directly on the culture of work for businesses involved in any sort of real-time analytics, data integration and management, sales/revenue forecasting, and personal security and data processing.
As machine learning has provoked worries in many quarters that our jobs will be replaced by AI, the reality is that machine learning is already merely allowing humans to get on with the more interesting facets of their jobs as AI slogs away at the more mundane aspects of operations such as data mining. It’s time for us to embrace machine learning for what it offers us instead of worrying what it might take away. In the end, we can look to ML as a time-saving device that allows humans to explore their more creative ambitions while ML is in the background crunching numbers and generally taking on the more mundane tasks.
The future culture of work is already upon us as many companies have shifted toward the “community” model of working as the boring tasks are left to ML and decisions will be more and more data-driven and teamwork entirely coordinated by AI. In fact, Microsoft announced its research last Fall which shows that companies using AI are outperforming by 5% those which have no AI strategy. Another outcome of AI on business culture is that more decisions within businesses will be based on data causing the business model to have no strict format. Where probability will trump planning and strategy, businesses will have to become more flexible. But how will this boon to work culture translate to business today?
Studies have shown that many clients still do not trust AI which makes it difficult to convince those within any specific business culture that AI can work to their advantage. A recent study conducted by the research firm Savanta surveyed 5,000 consumers around the world about their views of AI, morality, ethical behavior, and empathy. The results demonstrate that over half of the respondents believe that AI is biased and less than one-third of the respondents felt comfortable with businesses using AI to interact with them. While consumer culture’s distrust of AI might not initially seem to inflect business culture, the reality is that machine learning cannot fully take off within business culture until consumers are also on board. Imagine, if you will, flying in a plane where only half the plane has life vests under their seat. To create a healthy culture where machine learning is fully integrated, everyone needs to be on board.
In the recent and important discussions involving basic income, we need to look to ML as a means to an end in a workforce which is quickly being reduced by automation and which can profit from the more human and creative side of labor. The future of business culture is not only in flux, but so is our current culture of work and everyday living.
25. ASK THE EXPERT: HOW WILL PSD2 AFFECT YOUR CRYPTO EXCHANGE?
Source: WorldPay (6/5)
Ewoud Barink is a Business Development Manager at Worldpay. He specialises in blockchain and cryptocurrency eCommerce payments. Here, he answers the key questions on how the final implementation of PSD2 will affect crypto exchanges.
Since it became law in January 2018, PSD2 has had a significant impact on the practices of payment service providers – and crypto exchanges/brokers are no exception. The legislation has already started to affect everything from the way crypto customers pay online, to the information they see when making a payment. It’s also increased innovation potential for payment providers and put an end to surcharging. But an additional challenge will come in September, when the final stage of PSD2 is implemented. Read on to find out how this could affect your crypto exchange.
What’s the main challenge for crypto exchanges?
From 14 September, Strong Customer Authentication (SCA) will be required for all electronic transactions in the European Economic Area. SCA essentially means 2-factor authentication, meaning that consumers will have to put in extra security information to buy crypto – or anything else online – in Europe. This should help to lower fraud and increase security for customers buying crypto with their card. It could also have an uplifting effect on the sometimes challenging authorisation rates we often see in the crypto industry – as issuers will have higher confidence in a transaction if it is fully authenticated. However, the more information you ask a customer to provide during payment, the more friction you add to the payment process, which does mean you’re risking a spike in dropouts.
Exchanges who provide the most convenient ways for people to purchase crypto will likely gain customers and strengthen their position in the market.
How can crypto exchanges overcome this challenge?
The main method for performing SCA on card transactions will be 3D Secure (3DS) essentially this will become a requirement for every online merchant after September. The good news is that 3DS is being upgraded and improved with the release of 3DS2., which will provide your customers with the most seamless authentication experience possible. If the issuer does decide to challenge the cardholder to authenticate themselves (hopefully in less than 20% of cases), with 3DS2, there are lots of new ways to complete the authentication, including using biometrics, one-time passwords or the cardholder’s mobile banking app.
Are there any ways to avoid fully authenticating every EEA transaction I receive?
There are a number of SCA exemptions available as part of the new requirements. Transactions that are considered low-risk, based on a real-time risk check, aren’t subject to SCA. This method can be used on transactions up to 500 euros, depending on the fraud rate of your acquirer. Low-value transactions of less than 30 euros are also exempt from SCA, while the same goes for ‘whitelisted’ transactions – those with repeat customers who tell their issuing bank that they trust your site.
Using exemptions can help provide your customers with a frictionless payment experience, and can reduce the costs that the new levels of authentication are expected to bring. For these reasons, consider putting an exemption strategy in place as soon as possible. At Worldpay, we’ve built a brand new service (Exemption Engine) that will help you maximise the number of SCA exemptions you can request – saving you money and helping you to retain a frictionless payment journey.
Cryptocurrencies are outside of the scope of PSD2 – unless a credit or debit card is involved – so SCA does not need to be applied to crypto-crypto transactions.
Will PSD2 create any new opportunities for crypto exchanges?
While 3DS2 will make authentication much slicker, ultimately PSD2 may add more friction than we see today when paying for crypto on cards. This means that one of the by-products of SCA may be that alternative payment methods will become more popular, especially eWallets. Although alternative payment methods will also be subject to two-factor authentication from September, many of them are already compliant with this rule, will not need to make changes to their checkout and offer a very frictionless overall experience.
As a Crypto exchange, you can capitalise on this opportunity by offering your customers a greater selection of alternative payment methods. Exchanges who provide the most convenient ways for people to purchase crypto will likely gain customers and strengthen their position in the market.
If you’re only offering card payments, we strongly recommend implementing 3DS2 (via 3DS Flex) into your payment flow. Using 3DS1 generally sees 22% of transactions abandoned by the customer. With the roll out of 3DS2, we're hopeful to see an improvement. Essentially putting measures in place to ensure tighter security checks do not deter customers from completing transactions online.
I handle a lot of crypto-to-crypto payments. Are these affected by PSD2?
Cryptocurrencies are outside of the scope of PSD2 – unless a credit or debit card is involved – so SCA does not need to be applied to crypto-crypto transactions.
- WorldPay is a member of ACT Canada; please visit https://www.worldpay.com/global
26. SECURE REMOTE COMMERCE: THE NEXT STEP
Source: American Express (6/7)
Today, the industry organization EMVCo released its highly anticipated EMV® Secure Remote Commerce (SRC) Specification v1.0¹. SRC is the technical standard that will, for the first time, establish a standardized way for card payments to be made in a secure, convenient and consistent manner across web and mobile sites, mobile apps, and connected devices.
This announcement is important because it is a major step forward in creating a better, industry-wide digital checkout experience that puts Card Member experience and security first. With the new specifications now available, we are in the final stages of making SRC a reality. We are collaborating closely with our partners across the payments ecosystem – third party aggregators, processors, gateways, issuers, and merchants – to enable, adopt, and distribute SRC based on this new specification.
These efforts will help bring the many benefits of SRC to Card Members. Card Members using SRC will no longer have to repeatedly enter their card, shipping, and billing information when making purchases through websites, mobile sites or apps. SRC supports tokenization and introduces dynamic data in each transaction; it also removes the need for merchants and service providers to store sensitive card information.
American Express Cards will be enabled for use in interoperable SRC solutions, including those to be offered by Visa and MasterCard, which have plans to convert their existing checkout buttons to SRC. At launch later this year, SRC will support multiple card brands, including American Express. We believe SRC not only provides a more seamless customer experience, but also an efficient way for payment service providers and merchants to offer multiple card brands for digital checkout with a single integration, and we are working with a wide range partners on this initiative.
SRC is expected to roll out internationally following its introduction in the U.S. We are committed to ensuring American Express Cards around the world are enabled for use in SRC wherever it is offered. While there is more work to do, we are excited about this next step in the evolution of e-commerce. We believe SRC is the right solution for e-commerce in today’s digital world, and will offer better convenience, consistency, and security as consumers increasingly make purchases through connected devices.
- American Express and MasterCard are members of ACT Canada; please visit https://www.americanexpress.com/canada/ and https://www.mastercard.ca/en-ca.html
27. TOP 10 CYBERSECURITY COMPANIES TO WATCH IN 2019
Source: Forbes (6/16)
- Gartner predicts worldwide spending on information security products and services will reach $124B in 2019, growing 8.7% over the $114B invested in 2018.
- Cloud Security platform and application sales are projected to grow at a 35.3% Compound Annual Growth Rate (CAGR) between 2017 to 2019, becoming a $459M market this year.
- Security Services is projected to be a $64.2B market this year, increasing from $52.3B in 2017, attaining a CAGR of 7.08%.
- Privileged Access Management (PAM) is the highest priority security initiative for CIOs in 2019.
- Today’s Threatscape Has Made “Trust But Verify” Obsolete
The threatscape every business operates in today is proving the old model of “trust but verify” obsolete and in need of a complete overhaul. To compete and grow in the increasingly complex and lethal threatscape of today, businesses need more adaptive, contextually intelligent security solutions based on the Zero Trust Security framework. Zero Trust takes a “never trust, always verify, enforce least privilege” approach to privileged access, from inside or outside the network. John Kindervag was the first to see how urgent the need was for enterprises to change their approach to cybersecurity, so he created the Zero Trust Security framework in 2010 while at Forrester. Chase Cunningham, Principal Analyst at Forrester, is a mentor to many worldwide wanting to expand their knowledge of Zero Trust and frequently speaks and writes on the topic. If you are interested in cybersecurity in general and Zero Trust specifically, be sure to follow his blog.
AI and machine learning applied to cybersecurity’s most significant challenges is creating a proliferation of commercially successful, innovative platforms. The size and scale of deals in cybersecurity continue to accelerate with BlackBerry’s acquisition of Cylance for $1.4B in cash closing in February of this year being the largest. TD Ameritrade’s annual survey of registered investment advisors (RIA) showed nearly a 6X jump in cybersecurity investments this year compared to 2018. The top ten cybersecurity companies reflect the speed and scale of innovation happening today that are driving the highest levels of investment this industry has ever seen. The following are the top ten cybersecurity companies to watch in 2019:
One of the world’s leading commercial enterprise security solutions, serving as the industry benchmark for endpoint resilience, visibility, and control. The company enables more than 12,000 customers with self-healing endpoint security, always-connected visibility into their devices, data, users, and applications whether endpoints are on or off the network, and the ultimate level of control and confidence required for the modern enterprise. Embedded in over one billion endpoint devices, Absolute delivers intelligence and real-time remediation capabilities that equip enterprises to stop data breaches at the source.
To thwart attackers, organizations continue to layer on security controls — Gartner estimates that more than $124B will be spent on security in 2019 alone. Absolute’s 2019 Endpoint Security Trends Report finds that much of that spend is in vain, however, revealing that 70% of all breaches still originate on the endpoint. The problem is complexity at the endpoint – it causes security agents to fail invariably, reliably, and predictably.
Absolute’s research found that 42% of all endpoints are unprotected at any given time, and 100% of endpoint security tools eventually fail. As a result, IT leaders see a negative ROI on their security spend. What makes Absolute one of the top 10 security companies to watch in 2019 is their purpose-driven design to mitigate this universal law of security decay.
Enterprises rely on Absolute to cut through the complexity to identify failures, model control options, and refocus security intent. Rather than perpetuating organizations’ false sense of security, Absolute enables uncompromised endpoint persistence, builds resilience and delivers the intelligence needed to ensure security agents, applications, and controls continue functioning and deliver value as intended. Absolute has proven very effective in validating safeguards, fortifying endpoints, and stopping data security compliance failures. The following is an example of the Absolute platform at work:
BlackBerry Artifical Intelligence and Predictive Security
BlackBerry is noteworthy for how quickly they are reinventing themselves into an enterprise-ready cybersecurity company independent of the Cylance acquisition. Paying $1.4B in cash for Cylance brings much-needed AI and machine learning expertise to their platform portfolio, an acquisition that BlackBerry is moving quickly to integrate into their product and service strategies. BlackBerry Cylance uses AI and machine learning to protect the entire attack surface of an enterprise with automated threat prevention, detection, and response capabilities. Cylance is also the first company to apply artificial intelligence, algorithmic science, and machine learning to cyber security and improve the way companies, governments, and end users proactively solve the world’s most challenging security problems. Using a breakthrough mathematical process, BlackBerry Cylance quickly and accurately identifies what is safe and what is a threat, not just what is in a blacklist or whitelist. By coupling sophisticated math and machine learning with a unique understanding of a hacker’s mentality, BlackBerry Cylance provides the technology and services to be truly predictive and preventive against advanced threats. The following screen from CylancePROTECT provides an executive summary of CylancePROTECT usage, from the number of zones and devices to the percentage of devices covered by Auto-Quarantine and Memory Protection, Threat Events, Memory Violations, Agent Versions, and Offline Days for devices.
Centrify is redefining the legacy approach to Privileged Access Management by delivering cloud-ready Zero Trust Privilege to secure modern enterprise attack surfaces. Centrify Zero Trust Privilege helps customers grant least privilege access based on verifying who is requesting access, the context of the request, and the risk of the access environment. Industry research firm Gartner predicted Privileged Access Management (PAM) to be the second-fastest growing segment for information security and risk management spending worldwide in 2019 in their recent Forecast Analysis: Information Security and Risk Management, Worldwide, 3Q18 Update (client access required). By implementing least privilege access, Centrify minimizes the attack surface, improves audit and compliance visibility, and reduces risk, complexity, and costs for the modern, hybrid enterprise. Over half of the Fortune 100, the world’s largest financial institutions, intelligence agencies, and critical infrastructure companies, all trust Centrify to stop the leading cause of breaches – privileged credential abuse. PAM was also named a Top 10 security project for 2019 in Gartner’s Top 10 Security Projects for 2019 (client access required).
Cloudflare is a web performance and security company that provides online services to protect and accelerate websites online. Its online platforms include Cloudflare CDN that distributes content around the world to speed up websites, Cloudflare Optimizer that enables web pages with ad servers and third-party widgets to download Snappy software on mobiles and computers, CloudFlare Security that protects websites from a range of online threats including spam, SQL injection, and DDOS, Cloudflare Analytics that gives insight into website’s traffic including threats and search engine crawlers, Keyless SSL that allows organizations to keep secure sockets layer (SSL) keys private, and Cloudflare applications that help its users install web applications on their websites.
Applying machine learning to endpoint detection of IT network threats is how CrowdStrike is differentiating itself in the rapidly growing cybersecurity market today. It’s also one of the top 25 machine learning startups to watch in 2019. Crowdstrike is credited with uncovering Russian hackers inside the servers of the US Democratic National Committee. The company’s IPO was last Tuesday night, with an initial $34/per share price. Their IPO generated $610M at a valuation at one point reaching nearly $7B. Their Falcon platform stops breaches by detecting all attacks types, even malware-free intrusions, providing five-second visibility across all current and past endpoint activity while reducing cost and complexity for customers. CrowdStrike’s Threat Graph provides real-time analysis of data from endpoint events across the global crowdsourcing community, allowing detection and prevention of attacks based on patented behavioral pattern recognition technology.
Hunters.AI excels at autonomous threat hunting by capitalizing on its autonomous system that connects to multiple channels within an organization and detects the signs of potential cyber-attacks. They are one of the top 25 machine learning startups to watch in 2019. What makes this startup one of the top ten cybersecurity companies to watch in 2019 is their innovative approach to creating AI- and machine learning-based algorithms that continually learn from an enterprise’s existing security data. Hunters.AI generates and delivers visualized attack stories allowing organizations to more quickly and effectively identify, understand, and respond to attacks. Early customers, including Snowflake Computing, whose VP of Security recently said, “Hunters.AI identified the attack in minutes. In my 20 years in security, I have not seen anything as effective, fast, and with high fidelity as what Hunters can do.” The following is a graphic overview of how their system works:
Idaptive is noteworthy for the Zero Trust approach they are taking to protecting organizations across every threat surface they rely on operate their businesses dally. Idaptive secures access to applications and endpoints by verifying every user, validating their devices, and intelligently limiting their access. Their product and services strategy reflects a “never trust, always verify, enforce least privilege” approach to privileged access, from inside or outside the network. The Idaptive Next-Gen Access platform combines single single-on (SSO), adaptive multifactor authentication (MFA), enterprise mobility management (EMM) and user behavior analytics (UBA). They have over 2,000 organizations using their platform today. Idaptive was spun out from Centrify on January 1st of this year.
Kount has successfully differentiated itself in an increasingly crowded cybersecurity marketplace by providing fraud management, identity verification and online authentication technologies that enable digital businesses, online merchants and payment service providers to identify and thwart a wide spectrum of threats in real-time. Kount has been able to show through customer references that their customers can approve more orders, uncover new revenue streams, and dramatically improve their bottom line all while minimizing fraud management cost and losses. Through Kount’s global network and proprietary technologies in AI and machine learning, combined with policy and rules management, their customers thwart online criminals and bad actors driving them away from their site, their marketplace and off their network. Kount’s continuously adaptive platform learns of new threats and continuously updates risk scores to further thwart breach and fraud attempts. Kount’s advances in both proprietary techniques and patented technology include: Superior mobile fraud detection, Advanced artificial intelligence, Multi-layer device fingerprinting, IP proxy detection and geo-location, Transaction and custom scoring, Global order linking, Business intelligence reporting, Comprehensive order management, Professional and managed services. Kount protects over 6,500 brands today.
The acknowledged leader in Mobile Device Management software, MobileIron’s latest series of developments make them noteworthy and one of the top ten cybersecurity companies to watch in 2019. MobileIron was the first to deliver key innovations such as multi-OS mobile device management (MDM), mobile application management (MAM), and BYOD privacy controls. Last month MobileIron introduced zero sign-on (ZSO), built on the company’s unified endpoint management (UEM) platform and powered by the MobileIron Access solution. “By making mobile devices your identity, we create a world free from the constant pains of password recovery and the threat of data breaches due to easily compromised credentials,” wrote Simon Biddiscombe, MobileIron’s President and Chief Executive Officer in his recent blog post, Single sign-on is still one sign-on too many. Simon’s latest post, MobileIron: We’re making history by making passwords history, provides the company’s vision going forward with ZSO. Zero sign-on eliminates passwords as the primary method for user authentication, unlike single sign-on, which still requires at least one username and password. MobileIron paved the way for a zero sign-on enterprise with its Access product in 2017, which enabled zero sign-on to cloud services on managed devices. Enterprise security teams no longer have to trade off security for better user experience, thanks to the MobileIron Zero Sign-On.
Sumo Logic is a fascinating cybersecurity company to track because it shows the ability to take on large-scale enterprise security challenges and turn them into a competitive advantage. An example of this is how quickly the company achieved FedRAMP Ready Designation, getting listed in the FedRAMP Marketplace. Sumo Logic is a secure, cloud-native, machine data analytics service, delivering real-time, continuous intelligence from structured, semi-structured, and unstructured data across the entire application lifecycle and stack. More than 2,000 customers around the globe rely on Sumo Logic for the analytics and insights to build, run, and secure their modern applications and cloud infrastructures. With Sumo Logic, customers gain a multi-tenant, service-model advantage to accelerate their shift to continuous innovation, increasing competitive advantage, business value, and growth. Founded in 2010, Sumo Logic is a privately held company based in Redwood City, Calif. and is backed by Accel Partners, Battery Ventures, DFJ, Franklin Templeton, Greylock Partners, IVP, Sapphire Ventures, Sequoia Capital, Sutter Hill Ventures and Tiger Global Management.
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