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  • @fintechna 3:35 pm on July 20, 2018 Permalink | Reply
    Tags: , balance, , , , , , , technology,   

    How will biometrics balance payment security & convenience under PSD2? 

    The European Union’s new regulations, the General Data Protection Regulation (GDPR) and Second Services Directive (), require secure transactions and data handling as well as good customer experience. PSD2, in particular, requires strong customer authentication (SCA) methods, which dictate “two-factor authentication” to ensure all payment approvals are in place. Two-factor authentication means that authentication of a customer’s identity must be based on two or more of these elements: knowledge (something the user knows), possession (something only the user has) and inherence (something the user is).

    The strict PSD2 RTS requirements may lead to friction in the payments process in online and POS (point-of-sales) checkout. Existing SCA methods such as SMS-TAN and iTAN will be considered non-compliant and not user-friendly. However, PSD2 aims to improve user experience and keep —namely inherence. Inherence is the element that allows leveraging of biometric data and mechanisms for SCA.

    Technological advancements are augmenting e-commerce payments and payments innovation methods, which further enhance the consumer appetite for seamless, frictionless and secure payments experiences. is one of the latest and most cutting-edge technologies being adopted. It’s usually integrated into applications to strengthen security and curb identity fraud. Fingerprint payment is the most common biometric payment method; however, experts predict that other systems—including face, eye and voice recognition—will become more widespread over time. The question is, are these mechanisms compliant with the new regulations and what do need to consider about biometrics in a highly regulated business?

    The RTS indicates the following high-level criteria must be applied while assessing whether an authentication method qualifies as SCA:

    • Dynamic linking: All information about the amount paid and payment recipient must be passed on across all phases of the authentication. For biometrics, the numerical representation generated from the data points collected at the customer’s device needs to be dynamically linked.
    • Independence of channels: The channel used for the initiation of a payment or account information transaction must be separate from the channel used for the receipt of the authentication code.
    • Creation and validation within the bank’s environment: For biometrics, the creation of the templates needs to be performed in the bank’s environment. The software that collects data points from the device must also be provided by the bank.
    • Underivable authentication codes: The biometric data points collected from the device must be changed in such a way that every data point package can be considered a new “authentication code”, which is unique for every request and, at the same time, is capable of being verified by the bank in the matching process.
    • Non-disclosure: Biometric data points or raw data and matching templates must not be stored in the device or the bank to prevent reverse engineering of the raw biometric data.

    Customers and banks are keen to use biometrics

    Consumers are inclined toward using biometric solutions to protect their transactions because of their and speedy authentication process—and more and more banks are adopting biometric as part of their identity verification process to improve user experience. The future of biometrics in the online payment process is promising.

    Innovation in biometric technology

    New technologies are now enabling rapid innovation in two areas of biometrics: visual biometrics (face recognition, fingerprints, finger-vein, hand/finger geometry and iris/retina recognition) and behavioral biometrics (dynamic signature verification, keystroke dynamics and voice recognition). Alongside the emergence of these new modalities, other innovations are also in development:

    • Biometrics as a Service (BaaS), which is based on sharing data with a remote server holding a centralized biometric database and offering biometric-based authentication as a service over the internet.
    • Biometrics and the Internet of Things (IoT), which enhances security for the millions of new devices joining an IoT network by combining passwords with an additional layer to achieve two-factor authentication.

    As biometric solutions gain momentum and uptake, they face challenges associated with their implementation, such as the need to comply with the PSD2 RTS requirements, technology to ensure the solution’s functionality and security, and the need to develop an ecosystem in which biometric methods are used in a consistent and standardized way, across multiple markets benefitting from network effects.

    Though not without its obstacles, adopting biometric payments provides a future roadmap for a seamless, safe and frictionless payments experience. It will be interesting to see how biometrics develops in the coming years, adapting to customer expectations and overcoming the hurdles of implementation.

    The post How will biometrics balance payment security &038; convenience under PSD2? appeared first on Accenture Banking Blog.

    Accenture Banking Blog

     
  • @fintechna 12:18 pm on July 20, 2018 Permalink | Reply
    Tags: , Amalgamated, , , , , Inks, , P2Bi, , , technology   

    Digital Lending Platform P2Bi Inks Partnership with Amalgamated Bank 

    is becoming an important business even for smaller community . Larger banks, which have the resources to build their own or buy a provider (KeyBank acquired Bolstr; JPMorgan Chase acquired WePay). Smaller banks, on the other hand, tend to opt for partnerships, creating an opportunity for digital loan originating and management [&;]
    Bank Innovation

     
  • @fintechna 2:52 pm on July 17, 2018 Permalink | Reply
    Tags: , , , FINOS, , , , technology   

    Open Source Expands In Finance With The FINOS Platform 

    is expanding choice for financial services by providing a trusted for fintechs and to work together.
    Financial Technology

     
  • @fintechna 10:52 am on July 13, 2018 Permalink | Reply
    Tags: , , HighRadius, Improves, , , Reconciliations, technology   

    Citi Improves Receivables Reconciliations With HighRadius Partnership 

    have been working for years to achieve straight-through-processing (STP) but now has partnered with to bring artificial intelligence to the task.
    Financial Technology

     
  • @fintechna 3:35 pm on July 11, 2018 Permalink | Reply
    Tags: , , , , , technology   

    Banks as open platform players 

    French essayist and critic Charles Du Bos summed up the ability of humans to change when he wrote, “The important thing is this: to be able at any moment to sacrifice what we are for what we could become.”

    For a long time, most have been one thing: vertically integrated product manufacturers and distributors, shops that sell only their own brand products. But with the move towards regulatory-driven Open Banking in competitive-friendly markets like the U.K., Hong Kong and Australia, new business models are emerging—including Player, one of four bank business models we identified as winners in the digital economy.

    Is the open platform bank an intermediate point on the journey towards lifestyle platforms, on which financial services are just one of many offerings?

    Unlike a traditional bank, a banking open platform is like a department store that carries all your favourite brands and also helps you coordinate outfits and do your interior decorating. Open platforms create a market where producers (supply side) and consumers (demand side) connect and interact in efficient exchanges of value. The result is a bank-branded app store where consumers shop to assemble the products and services they need to satisfy their everyday financial needs, building their own bank from components they know will work easily together. In this business model, the platform owner has the opportunity to maintain management of the customer experience and vet the third-party products and services being offered in that experience. In turn, aggregation of demand allows them to extract economic rents from suppliers.

    This business model is attractive to new entrants because it allows them to aggregate product innovations while focusing on customer navigation and advice. A good example is Belgium-based fintech banqUP. It offers a current business account, credit and debit cards, and business apps in a unified small- business banking platform. Another is the UK challenger bank Starling, which has moved to offer a wide array of third-party products and services anchored on a core current account.

    Banks as open platform players fintech

    For incumbent banks, the economic equation of becoming an Open Platform Player can be more challenging. While an open model offering best-in-breed products can be enticing for customers, replacing balance-sheet income with fees isn’t always an attractive trade-off. A $ 100,000 mortgage with a three-percent net interest margin is equivalent to a lot of traffic on a toll road. So rather than pivot completely to an open platform model, we are beginning to see established —like HSBC and RBS in the UK—experimenting with the introduction of third-party products that they either can’t produce as well as other providers, or which, for risk appetite reasons, they may not want to provide. In the US, for example, eight of the top 10 banks now have some sort of alternative credit provider for small-business lending that falls outside their risk appetite, creating an emerging platform model in that segment.

    Banks as open platform players fintech
    Read the report

    Of course, in an open platform model, there must also be suppliers. While fintechs like Transferwise are most prominent, there is also scope for traditional banks to componentise their product offerings and create APIs that allow easy plug-and-play with open platforms. This export model, where the customer interaction is ceded to a platform owner, requires changes in how a bank deploys its resources, people and . For example, the focus of relationship managers and banking sales representatives would need to evolve to emphasize B2B customers, developers and community builders, rather than B2C interactions. It also means excelling at broader skills, such as ecosystem analytics, API security and identity management.

    While becoming an Open Platform Player may look attractive to both new entrants and incumbents, it is interesting to ask the question of if the open platform bank is just an intermediate point on the journey towards lifestyle platforms, on which financial services are just one of many offerings.

    Speculation is rife that Amazon will begin to offer a wider array of retail financial services products—including a checking account—which may pay no interest but instead offer discounts on other Amazon products and services as compensation for holding your balances in that account (balances which could be insured by them being held on a regulated bank balance sheet). In China, the WeChat messaging app has already become a true lifestyle platform where consumers are able to conduct a huge array of financial and non-financial transactions without leaving the app. In this world, the “Alibabas” and “Amazons” may truly become the “everything” stores through which we run our lives.

    In an era of increasing fragmentation, banks could choose to establish Open Banking platforms that focus on financial services aggregation. However, we suspect that many banks will accept that competing against the likes of WeChat, Amazon and other bigtechs of the world is a losing proposition, and decide to focus on being a product supplier instead of trying to hold onto managing the customer relationship.

    I invite you to read more about open platform banking in A New Era: Open platform banking

    The post Banks as open platform players appeared first on Accenture Banking Blog.

    Accenture Banking Blog

     
  • @fintechna 7:52 am on July 10, 2018 Permalink | Reply
    Tags: , , , , , technology, , , Victims   

    From Fire Victims To Supply Chains, Trulioo Finds New Uses For KYC 

    Identification is a basic building block of e-commerce, finance, and also a key to help the right after a disaster.
    Financial Technology

     
  • @fintechna 3:35 am on July 10, 2018 Permalink | Reply
    Tags: , , , , , technology   

    Brexit impact on payments 

    On March 29, 2017, Britain decided to leave the European Union (EU) and invoked Article 50—following the referendum held on June 23, 2016, in which 51.9 percent of the participating UK electorate voted to leave the EU. Though the UK will officially leave the EU by March 29, 2019, followed by a transition period of 21 months, the exit decision itself triggered exchange rates so volatile that it became difficult for businesses to maintain clear visibility on their international transfers. will eventually have an on business, payment service providers, and consumers—but it will largely depend on how the UK’s future trading relationship is going to be with the EU.

    In the absence of clarity of the eventual shape of Brexit, certain financial institutions are planning for the “hard” Brexit scenario and making decisions about locations, hiring and changes. From a  perspective, are reviewing their solutions across Liquidity (notional pooling, cash concentration), payments (SCT, SDD, high-value payments, FX), cash management services (virtual accounts, receivables management) and Euro-denominated products to continue to operate across borders.

    Post the transition period, the UK might also lose direct access to Euro Clearing & Settlement Mechanisms (CSMs) such as TARGET2, EBA EURO1 and EBA STEP2. UK banks may need to build Euro-clearing propositions in Europe to handle affiliates and third party/correspondent bank high-value clearing, which would involve rerouting transactions, indirect memberships via Europe branches, Nostro setups, reviewing charging models, etc.

    Non-EU financial institutions will not be able to use their UK branches to pay and collect funds after Brexit takes place, and would need to consider transferring SEPA access sponsorship from the UK to European branches. However, if they remain part of the European Economic Area (EEA) and the European Free Trade Association (EFTA), they can continue to take advantage of SEPA.

    Acquiring players may have to move their headquarters to other European markets and take new contracts to operate in the EU. Split of acquiring entities means a significant overhead by splitting scheme submissions across multiple BINs. Card machine providers would need to reclassify their machines as international or inter-regional so that customers and merchants are aware of all the changes while making card payments. The interchange classification of the UK will significantly affect merchant pricing with open questions such as the UK’s registration as part of the EEA post Brexit having significant impact on interchange base costs. Also, unknown regulatory position post Brexit on key issues such as interchange caps and card surcharges.

    PSD2 is applicable to UK banks since it came into effect in January 2018. Banks have already spent more than GBP750 million in preparation for the regulation, but once UK has officially left the EU, the UK Open Banking initiative is more likely to replace PSD2 and potentially have limited impact on a practical level.

    The UK startup ecosystem massively supported the “Remain&; vote as it provides them easy access to the Single Market, which is an important asset for startups’ business development potential. Now, they are quickly adapting to the fast-changing environment—and developing cross-border business is anyway part of the tech entrepreneur’s DNA.

    While negotiating exit from the EU, it is important from a payments perspective that there is no detriment for customers or businesses, and that the UK economy continues to operate smoothly. Without any solid evidence on the changes to current legislation, firms need to ensure that compliance and change teams are on the front foot to meet the requirements of the new ecosystem.

    The post Brexit impact on payments appeared first on Accenture Banking Blog.

    Accenture Banking Blog

     
  • @fintechna 12:18 am on July 5, 2018 Permalink | Reply
    Tags: , , , , , , , , technology   

    Lessons from Distributed Ledger Technology and the Future of Banking 

    It’s no secret technologies (DLT) have been front-of-mind for financial institutions examining solutions to existing problems in institutional and retail . While is still a greenhorn in the wilderness of capital markets, the underlying concept should be heralded as a catalyst for innovation. Blockchain has been the inspiration for solutions like [&;]
    Bank Innovation

     
  • @fintechna 10:23 pm on July 4, 2018 Permalink | Reply
    Tags: , , , , , technology   

    Blockchain: the disruptive technology that will make financial markets more efficient – Or maybe not 

    A lot gets published on a daily basis about the seemingly awesome, game-changing possibilities of and other distributed ledger technologies (“DLT”) applied to smart contracts, optimising payments systems and other aspects of the financial markets. A growing number of financial entities are seriously investing in it, and we keep reading and hearing that this is the future of financial markets.

    The message for financial entities being: get in the game now or risk irrelevance tomorrow.

    So what are these distributed ledger technologies all about, and are they all they’re cracked up to be? DLT, in its various flavours, is the behind and every other . The blocks necessary to put together the puzzle to complete a transaction are distributed across a decentralised computer network of users, and DLT’s main selling point is that it’s self-authenticating and very difficult to tamper with.
    Around 2016, started to get very excited about DLT because they figured that it could be applied to efficiently and quickly settle payments and securities transactions, and even to develop smart contracts: algorithm-based programmes that use DLT to automatically detect when a party performs its obligations or fails to do so, and trigger payments or penalties accordingly. It’s easy to see why financial entities get so excited about DLT: it can significantly cut down the time required to settle transactions (a process that normally takes two or three days for securities), and automate verification procedures which are currently carried out manually.

    Ever since that epiphany, financial entities’ investment in DLT has grown dramatically, whilst the rest of us wait with bated breath in anticipation of a brave new financial world any day now – only that it might not happen just yet.
    The fact of the matter is that DLT was developed for the purpose of sustaining cryptocurrencies (and smart contracts, in the case of Ethereum), and it works well in that application. But just because DLT fits the bill for cryptocurrencies, does that mean that it will also do a good job when applied to the financial market infrastructures?
    A few days ago, the Dutch Central Bank published a report with its conclusions on a series of blockchain trials conducted over the past three years to assess the actual usefulness of DLT in realistic financial market infrastructures scenarios. These trials are particularly insightful for a number of reasons:

    • they were conducted by a central bank, which means that the focus was not on commercial gain but on whether this technology is actually fit for transaction settlement purposes from a systemic point of view;
    • they were conducted over a three-year period;
    • over which four different DLT prototypes were tested in different scenarios, all of which conveys the idea that this testing exercise was thorough and reliable.

    When it comes to financial markets infrastructures, there are strict requirements in terms of authorisation, availability, capacity, costs, efficiency, legal certainty, reliability, scalability, security, sustainability and resilience, and each of them is a deal breaker. Current interbank payment systems, such as Target2 in the Eurosystem, meet all of the above requirements and, in the words of the Dutch Central Bank “are highly efficient, can handle large volumes and offer the legal certainty that a payment is completed.” It follows that any new technology must at the very least tick all boxes, and additionally show distinct advantages, if it is to replace existing systems.

    So did DLT live up to the hype? Not quite, it seems. Again, quoting the Dutch Central Bank: “The blockchain solutions we tested proved to be inefficient – in terms of both costs and energy consumption – and unable to handle large numbers of transactions. Furthermore, several consensus algorithms we used will never achieve the full certainty of a transaction, so that it cannot be undone, which the central banks&39; Target2 system offers. Other algorithms are able to withstand parties with malicious intent and have the potential of raising the [financial market infrastructures’] cyber resilience, but they currently fail to meet other [financial market infrastructures] requirements. DLT may well offer enhanced efficiency in payments that involve multiple currencies, however”.
    What does this all mean? It means that, though “the blockchain technology underlying bitcoin is interesting and promising, and future algorithms may well offer improved compliance with [financial market infrastructures] requirements” in its current form, DLT does not seem to cut the mustard.
    Undeniably, DLT is an exciting technology and, in some form yet to be developed, it might be just the ticket to improve the efficiency of financial settlement systems. Just don’t expect that to happen next week.


    Adolfo Pando-Molina is CEO & General Counsel of RegBot®

     

     
  • @fintechna 3:35 am on July 1, 2018 Permalink | Reply
    Tags: , , , Bronze, , , technology   

    Will artificial intelligence launch a new Bronze Age? 

    In my last blog, I discussed how and talent are the building blocks for ’ transformation to what Accenture calls “the New”.

    But now let’s take a step back. Around five thousand years ago, humans in what is now China and Europe began working with an alloy of copper and tin. Combined, these two soft metals formed , a material harder than other metals available at the time.

    In the Bronze Age that followed, civilization made great leaps in agriculture, writing and government, all enabled by the gains in productivity from this valuable alloy.

    I don’t think it is unrealistic to believe that we are looking at the start of a new Bronze Age, an era of unleashed potential made possible by a new alloy: the combination of human and (AI) in the workplace.

    Will artificial intelligence launch a new Bronze Age? fintech
    Read the report

    Our recent research into the attitudes of financial services executives and workers toward the future of the workforce indicates that this belief is widely shared. Nearly seven in ten (69 percent) financial services executives said the industry would be completely transformed by intelligent technologies, and nearly two-thirds (63 percent) said they expect AI to result in a net gain in jobs in their organization over the next three years.  Bankers were even more optimistic at 74 percent and 67 percent, respectively.  And 62 percent of all financial services employees (67 percent in banking) said they expect intelligent technologies to create opportunities for their work.

    Across the board, survey respondents said they believed that AI would cause more jobs to be reconfigured than eliminated and that reconfigured jobs would be more strategic. Contradictions emerge, however, as many firms indicate that their people may not be ready for this transformation. Financial services executives say only one in four of their employees are ready to work with intelligent technologies, and nearly half (47 percent) say the growing skills gap is the leading factor affecting their workforce strategy. Yet only a small number (3 percent) indicate they plan to significantly increase their investment in reskilling over the next three years. Firms will need to resolve these contradictions to make real progress in creating the human/AI alloy needed for the new Bronze Age.

    Digital in general, and AI, in particular, can transform financial services HR support in multiple ways, with three levels of transformation to be reached:

    1. The first level of transformation is to digitize the existing processes linked to workforce management, lightening the process weight and facilitating new ways of working—ranging from tackling processes such as role fulfillment and evaluation to personal development and enhanced collaboration.
    2. The second level of transformation—which, like the third level, cannot be done without reimagining the way people and machines work together—is to pivot the workforce by supporting employees as they reinvent their role within the organization. Our research indicates that a large majority of workers are eager and willing to be retrained (with as many as 85 percent saying they would invest their free time to learn new skills).  Accenture recently announced a $ 200 million commitment to education, training and skills initiatives over the next three years, to equip people with the skills needed for the new work environment.
    3. The third level of transformation is “scaling up to the new”—that is, augmenting people’s capabilities to develop new business models using artificial intelligence. Scaling up means promoting innovation within the whole organization, through a different HR management model, different organizational structures (such as the tribes model) and different evaluation KPIs.

    A few banks and insurers have already started applying AI to their HR management, but the journey through the three levels has not yet been made at scale and will require significant investment in talent management, retraining and redeployment.  The new Bronze Age will confer advantages on firms that can harness the human/AI alloy, but doing so will require a serious commitment to the human as well as the AI part of the mix.

    Learn more about Accenture’s research into automation and the future of the workforce in our report, Reworking the Revolution.

    The post Will artificial intelligence launch a new Bronze Age? appeared first on Accenture Banking Blog.

    Accenture Banking Blog

     
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