FinServ in the age of AI – Can the FCA keep the machines under check?

https://dailyfintech.com/2019/07/19/finserv-in-the-age-of-ai-can-the-fca-keep-the-machines-under-check/

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I landed in the UK about 14 years ago. I remember my initial months in the UK, when I struggled to get a credit card. This was because, the previous tenant in my address had unpaid loans. As a result, credit agencies had somehow linked my address to credit defaults.

It took me sometime to understand why my requests for a post paid mobile, a decent bank account and a credit card were all rejected. It took me longer to turn around my credit score and build a decent credit file.

I wrote a letter to Barclays every month, explaining the situation until one fine day they rang my desk phone at work to tell me that my credit card had been approved. It was ironical because, I was a Barclays employee at that time. I started on the lowest rungs of the credit ladder for no fault of mine. Times (should) have changed.

Artificial Intelligence, Machine Learning, Deep Learning, Neural Networks and a whole suite of methodologies to make clever use of customer data have been on the rise. Many of these techniques have been around for several decades. However, only in recent times have they become more mainstream.

The social media boom has created data at an unforeseen scale and pace that the algorithms have been able to identify patterns and get better at prediction. Without the vast amount of data we create on a daily basis, machines lack the intelligence to serve us. However, machines rely on high quality data to produce accurate results. As they say, Garbage in Garbage out.

Several Fintechs these days are exploring ways to use AI to provide more contextual, relevant and quick services to consumers. Gone are the days when AI was considered emerging/deep tech. A strong data intelligence capability is nowadays a default feature of every company that pitches to VCs.

As AI investments in Fintech hit record highs, it’s time the regulators started thinking about the on-the-ground challenges of using AI for financial services. The UK’s FCA have partnered with Alan Turing Institute to study explainability and transparency while using AI.

Three key scenarios come up, when I think about what could go wrong in the marriage of Humans and Machines in financial services.

  • First, when a customer wants a service from a Bank (say a loan), and a complex AI algorithm comes back with a “NO”, what happens?
    • Will the bank need to explain to the customer why their loan application was not approved?
    • Will the customer services person understand the algorithm enough to explain the rationale for the decision to the customer?
    • What should banks do to train their staff to work with machines?
    • If a machine’s decision in a critical scenario needs to be challenged, what is the exception process that the staff needs to use?
    • How will such exception process be reported to the regulators to avoid malpractice from banks’ staff?
  • Second, as AI depends massively on data, what happens if the data that is used to train the machines is bad. By bad, I mean biased. Data used to train machines should not only be accurate, but also representative of real data. If a machine that is trained by bad data makes wrong decisions, who will be held accountable?
  • Third, Checks and controls need to be in place to ensure that regulators understand a complex algorithm used by banks. This understanding is absolutely essential to ensure technology doesn’t create systemic risks.

From a consumer’s perspective, the explainability of an algorithm deciding their credit worthiness is critical. For example, some banks are looking at simplifying the AI models used to make lending decisions. This would certainly help bank staff understand and help consumers appreciate decisions made by machines.

There are banks who are also looking at reverse engineering the explainability when the AI algorithm is complex.  The FCA and the Bank of England have tried this approach too. A complex model using several decision trees to identify high risk mortgages had to be explained. The solution was to create an explainability algorithm to present the decisions of the black box machine.

The pace at which startups are creating new solutions makes it harder for service providers. In recent times I have come across two firms who help banks with credit decisions. The first firm collected 1000s of data points about the consumer requesting for a loan.

One of the points was the fonts installed on the borrowers laptop. If the fonts were used in gambling websites, the credit worthiness of the borrower took a hit. As the font installed indicated gambling habits, the user demonstrated habits that could lead to poor money management.

The second firm had a chatbot that had a conversation with the borrower and using psychometric analysis came up with a score. The score would indicate the “intention to repay” of the customer. This could be a big opportunity for banks to use in emerging markets.

Despite the opportunities at hand, algorithms of both these firms are black boxes. May be it’s time regulators ruled that technology making critical financial decisions need to follow some rules of simplicity or transparency. From the business of creating complex financial products, banks could now be creating complex machines that make unexplainable decisions. Can we keep the machines under check?


Arunkumar Krishnakumar is a Venture Capital investor at Green Shores Capital focusing on Inclusion and a podcast host.

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

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https://dailyfintech.com/2019/07/19/finserv-in-the-age-of-ai-can-the-fca-keep-the-machines-under-check/

G7 Agrees To Tax Big Tech And Cut Libra No Slack

https://www.pymnts.com/news/regulation/2019/g7-agrees-tax-big-tech-cut-libra-no-slack/

Group of Seven finance ministers and central bankers said digital currencies need to be closely regulated so that they don’t disrupt the global financial system.

Finance Minister Bruno Le Maire of France, which holds the current presidency of the G7 top world economies, said that the group opposes giving companies the same privilege as nations when it comes to creating payment methods without being subjected to any control and obligations, according to Reuters.

“We cannot accept private companies issuing their own currencies without democratic control,” Le Maire said in Reuters.

He added that the ministers and governors had agreed that “stablecoins and other various new products currently being developed, including projects with global and potentially systemic footprint such as Libra, raise serious regulatory and systemic concerns.”

As for Facebook’s upcoming launch of its own cryptocurrency, the G7 said it is worried that Libra might weaken their control over monetary and banking policies, as well as create security risks.

“A global stablecoin for retail purposes could provide for faster and cheaper remittances, spur competition for payments and thus lower costs, and support greater financial inclusion,” European Central Bank board member Benoit Coeure, the chairman of the taskforce, told the G7 meeting.

“However … they give rise to a number of risks related to public policy priorities including anti-money laundering and countering the financing of terrorism, consumer and data protection, cyber resilience, fair competition and tax compliance,” he added.

The G7 also agreed that large tech companies, including Google, Amazon, Facebook or Apple can be taxed in the countries in which they make money but do not have a physical presence. They also agreed that there should be a minimum level of tax so that companies don’t engage in a “race to the bottom” to attract business from digital multinationals.

“A minimum level of effective taxation, such as for example the U.S. GILTI regime, would contribute to ensuring that companies pay their fair share of tax,” the chair summary said.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 AML/KYC Tracker provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/news/regulation/2019/g7-agrees-tax-big-tech-cut-libra-no-slack/

Capital One Beats On Q2 Earnings Amid Card Momentum

https://www.pymnts.com/earnings/2019/capital-one-beats-on-q2-earnings-card-momentum/

Capital One’s domestic card business delivered strong results and continued to increase momentum, the bank said on Thursday (July 18).

The financial institution (FI) said that, as of the end of Q2, the domestic card loans ending balance stood at $103 billion, an increase of $1.9 billion. Credit card loans increased 2 percent to $112.1 billion, an increase of $2.3 billion. The net charge-off was 3.48 percent. The bank also reported that non-interest expenses increased 3 percent to $3.8 billion, a jump Capital One said due to a 6 percent increase in marketing and a 3 percent increase in operating expenses.

For Q2, the bank said provision for credit losses decreased 21 percent to $1.3 billion.

During the post-earnings conference call on Thursday (July 18), Capital One CEO Richard Fairbank said that, with second-quarter results for the credit card business, pre-tax income was “relatively flat” compared to Q2 2018. Year-over-year (YOY) growth in loans and purchase volume drove higher revenue, which was offset by higher non-interest expense.

Fairbank said that credit card segment results and trends are largely driven by the performance of the company’s business for domestic credit cards. He noted that the second-quarter domestic card results include the impacts of the company’s decision to exit multiple small partnerships. The exits and portfolios sales “affected the optics of second-quarter domestic card loan growth, revenue and allowance,” Fairbank said.

The executive also noted that growth of branded card loans, which exclude all private label and co-brand cards, continues to accelerate in Q2. Branded card loans grew 4.7 percent from the prior year quarter in Q2. YOY growth in new accounts and purchase volume was “well above the growth in loans in the quarter,” Fairbank said. New account originations were “very strong” in branded cards, he said, particularly at the highest end of the marketplace “as we continue to gain traction in our heavy-spender franchise.” Fairbank added, “Notably we have been able to grow our spender franchise without sacrificing revenue margin.”

Capital One said its Q2 revenue increased 1 percent year over year to $7.1 billion. That was just above the $7 billion expected by analysts. The bank also reported an EPS of $3.37, excluding adjusting items, and that came in higher than analyst expectations of $2.86.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 AML/KYC Tracker provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/earnings/2019/capital-one-beats-on-q2-earnings-card-momentum/

Bitcoin Daily: US Bitcoin Ransomware Virus Shows Up In China; Crypto Thief Faces Charges For Swindling $1.7M

https://www.pymnts.com/blockchain/bitcoin/2019/us-bitcoin-ransomware-virus-found-china-crypto-thief-faces-charges-swindling-money/

A ransomware virus that the FBI has been tracking since 2018 has been detected in China.

According to CoinDesk, a recent Tencent Security report stated the virus — named Ryuk — has infected more than 100 government and private enterprises in the U.S., with hackers demanding ransom of around $5 million in bitcoin.

Ryuk is believed to be a version of the Hermes virus, spreading through botnet and spam methods. Once installed, the malware deletes all files related to the attack and kills antivirus processes. The virus also places a “RyukReadMe” file that opens the blackmail letter on the victim’s internet browser.

In January, Ryuk was reportedly responsible for a hack of Tribune Publishing. And in June, officials in Lake City, Florida, paid a $460,000 ransom after the city’s computer systems went dark — two weeks after a $600,000 hijacking in Riviera Beach, Florida.

“After the attacker has gained access to the victim network, additional network exploitation tools may be downloaded… once executed, Ryuk establishes persistence in the registry, injects into running processes, looks for network connected file systems, and begins encrypting files,” the FBI wrote, according to CoinDesk.

It is unknown how many Chinese companies and agencies have been infected at this time.

In other news, an Israeli hacker has been charged with the theft of $1.7 million in different digital currencies.

According to The Next Web, 31-year-old Eliyahu Gigi from Tel Aviv allegedly stole bitcoin, ethereum, and dash from various foreigners, including Belgians, Dutch and Germans.

Law enforcement has revealed that Gigi had been operating a number of websites to distribute malicious software to infect victim’s computers and allow him to steal the crypto. He was arrested earlier this year with his younger brother. Gigi has been charged with theft, fraud, aggravated counterfeiting, use of a forged document, perjury, money laundering, and income tax offenses. His brother has not been charged.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 AML/KYC Tracker provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/blockchain/bitcoin/2019/us-bitcoin-ransomware-virus-found-china-crypto-thief-faces-charges-swindling-money/

Cloud Software Firm Workday Acquires Trusted Key For Blockchain Authentication 

https://www.pymnts.com/news/partnerships-acquisitions/2019/workday-acquires-trusted-key-for-blockchain-authentication/

Business and cloud software company Workday has bought Trusted Key, an identity authentication company that uses blockchain technology, according to reports

Trusted Key was started in 2016 by two former execs at Oracle and Microsoft. The company came out of Kernel Labs, which is a startup incubator based out of Seattle that has spun out a few successful companies in cutting-edge fields like machine learning and virtual reality.

Workday acquired Trusted Key because it wants to be able to move authentication credentials, like degrees, licenses and certifications, onto the blockchain. 

Blockchain is a distributed ledger technology that acts as an underpin for digital currencies like bitcoin. The amount that Workday paid for Trusted Key was not disclosed. 

“While the world of work has been transformed by technology, credentials haven’t changed much — today, they’re still largely offline and paper-based, and verifying a credential often requires a lot of manual effort and time,” said Jon Ruggiero, senior vice president at Workday, in a blog post. “With our new platform, Workday wants to change that by bringing credentials into the digital age.”

Trusted Key raised around $3 million last year in a funding round led by Founder’s Co-op and a Seattle-based venture capital firm called Pithia.

“[Trusted Key is] highly scalable for the every day high-volume transactions that Workday provides,” Pithia CEO Lawrence Lerner said. “Washington state is the hub for blockchain and where the world is turning its attention.”

Ruggiero spoke in more depth about the onboarding process and how there are new demands for workforces. 

“Credentialing is an HR process in dire need of an update — the current verification process is manual, and it can take weeks to recruit and onboard workers. We’ve heard from customers that they need a faster, more efficient way to verify skills and industry certifications, ensuring that workers are properly credentialed and in compliance,” he said. “At the same time, there are changes in the workforce itself. It’s evolving to be more mobile, distributed, and diverse with different types of workers — contractors, gig workers, salaried, and hourly — and virtual team members are common in any global organization.”

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 AML/KYC Tracker provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/news/partnerships-acquisitions/2019/workday-acquires-trusted-key-for-blockchain-authentication/

Truist, the combined BB&T-SunTrust bank, looks to defend its turf

https://bankinnovation.net/editorial/carousel/truist-the-combined-bbt-suntrust-bank-looks-to-defend-its-turf/

BB&T isn’t worried about losing market share during its pending merger with SunTrust Banks to form Truist Financial, nor is it worried about the combined bank’s name, which has come under no shortage of scrutiny. That’s according to BB&T CEO Kelly King, who will be CEO of Truist once launched.

Truist, which will be headquartered in Charlotte, will have about $440 billion in combined assets. Although it would be the largest bank merger since the Great Recession, King pointed out the combined bank still will be only about 20% of the size of each of the largest U.S. banks.

King is confident about Truist’s projected $1.6 billion of net cost synergies and savings after investments that the bank will make back in the business on technology and innovation. “We think we’ll be best-in-class in terms of efficiency,” he said in BB&T’s second-quarter earnings call Thursday. “We don’t want to project it because we’re very conservative, but there will be clear revenue synergies out of this, so this is going to be a really high-performance company.”

While King acknowledged some local and regional banks are vying for BB&T’s and SunTrust’s existing customers, he said he’s confident the two companies can hold onto their client base by retaining customer-facing employees. The banks also have touted plans to use cost savings from synergies to invest heavily in innovation.

Nonetheless, Truist faces competition. Minneapolis-based U.S. Bank, for example, is expanding into targeted communities — including Charlotte — with a “digital-first, branch-light” strategy to reach existing customers who already carry products from U.S. Bank in their wallets but lack a full banking relationship.

Similarly, Memphis-based First Horizon National is aiming for $50 million in cost savings in 2019, with $20 million to be reinvested in a customer experience transformation effort, according to that bank’s second-quarter earnings slides. Among First Horizon’s strategic objectives is “dominate Tennessee,” where BB&T and SunTrust both have a significant footprint.

Also see: BB&T-SunTrust Faces Daunting Tech Integration After $66 Billion Merger

According to King, the systems integration planning for Truist is on track. “Historically, when we’ve done small acquisitions, it’s kind of like a ‘one weekend big bang’ where you can do everything,” he said. “This likely won’t be that.” He predicted it will be up to an 18-month process, during which the combined bank will upgrade all of its systems state by state over the course of months or business by business across all states over the course of months.

King also took the opportunity to defend the name choice of Truist for the combined bank. “We wanted a name that speaks to the essence of the companies but reflects a go-forward mentality in terms of growing with our clients, helping our communities become better places and, of course, doing a really good job for our shareholders and our associates,” he said.

A hearing between the banks and the U.S. House Committee on Financial Services on the proposed merger is scheduled for July 24.

https://bankinnovation.net/editorial/carousel/truist-the-combined-bbt-suntrust-bank-looks-to-defend-its-turf/

Bankers prepare for GDPR-type regulations to take hold in the US

https://bankinnovation.net/allposts/operations/comp-reg/bankers-prepare-for-gdpr-type-regulations-to-take-hold-in-the-us/

The GDPR bogeyman is now preoccupying bankers in the U.S.

The EU’s General Data Protection Regulation (GDPR), which took effect in May of last year, gives customers the right to know what data institutions keep about them, the right to demand that institutions delete personal data and the right to be forgotten. So far, it’s only affecting U.S. banks that do business in the EU, but U.S. banks and financial services companies are coming to terms with the fact that similar regulations likely will take effect on their home turf.

“We have institutions and advisers having a debate about this,” said Bob Miller, vice chairman and CEO of Private Client Resources, a company that offers wealth aggregation and data management solutions for private banks, advisers and trust companies. “They are doing the right thing because of the inevitability of GDPR-like legislation here in the U.S.” Miller spoke as part of SourceMedia’s InVest event in New York this week.

A customer’s personal financial data is the cornerstone of any relationship a bank or financial company has with its clients. Bankers increasingly are looking to drive more revenue from customers through insights and product suggestions, but the use of personal data brings forth questions of how to use data in a transparent way and still hold the confidence of the customer.

For U.S. Bank, the customer’s need to know is crucial. “Monetizing data inherently is not a problem,” said Timothy Nagle, chief privacy officer and associate general counsel at U.S. Bank. “Basically, it is done to derive insight and understand trends so that we can develop products and services for customers to better anticipate their needs. Have we fully disclosed what we’re collecting and how we’re using it? Does the customer feel they have control over how we’re using that data and that we’re using that data responsibly?”

Essentially, customers need to know what happens to their data, said Philip Watson, head of the global investment lab and chief innovation officer at Citi Private Bank. “Clients want to be safe and understand how the company they’re operating with [is using the data], what are the controllers of the data and how processors of the data are going to use their data,” he added.

Despite customer concerns around data privacy, the unique aspect of financial services is that the quality and relevance of advice institutions offer customers is based how much data customers share with their financial services provider, explained Lowell Putnam, head of partnerships at Plaid. As a result, regulatory requirements like the GDPR can be seen as new lever to build trust with customers, he noted.

“Financial institutions touch the most intimate parts of our lives and yet basically have the lowest brand integrity,” Putnam said. “We can view privacy as an opportunity to try and build more trust and rebuild all of our brands.”

https://bankinnovation.net/allposts/operations/comp-reg/bankers-prepare-for-gdpr-type-regulations-to-take-hold-in-the-us/

Ex-Microsoft Employee Accused Of Stealing Millions In Digital Currency

https://www.pymnts.com/news/security-and-risk/2019/ex-microsoft-employee-accused-of-stealing-millions-in-digital-currency/

A former Microsoft engineer named Volodymyr Kvashuk was arrested and charged with mail fraud for allegedly stealing millions in digital money from Microsoft, according to the Department of Justice.

Kvashuk, 25, is a citizen of Ukraine who was living in Washington and working first as a contractor for Microsoft, and then a full time employee, from August 2016 to June of 2018.

His job was to test the company’s online sales platform, but he allegedly used that access to steal “currency stored value,” (CSV) like gift cards. The U.S. Attorney’s Office, Western District of Washington, said he resold the currency on the internet, and used the money to buy a $160,000 Tesla and $1.6 million lakefront property. Kvashuk has a hearing on Friday (July 19).

Kvashuk was supposed to test Microsoft store access with a fake account that would recreate the experience of what a shopper would go through on the site, and the system was set up in a way so that no items would be shipped out.

However, the testing program was not meant for the purchase of items with CSV. He allegedly used the test accounts to buy the CSV and then unloaded it on Internet reseller sites. At first, the amounts were relatively small, ranging in the area of $10,000. But then, the DOJ alleged, he upped his game, and started stealing amounts in the millions, using a bitcoin “mixing” service to obfuscate the origin of the money, so it wouldn’t be traced back to him. 

Kvashuk is accused of funneling $2.8 million into his bank accounts over seven months. Investigators at Microsoft approached him in May of 2018, and he was fired a month later.

Mail fraud is punishable with a $250,000 fine and up to two decades in prison. In addition to the DOJ, the case is also being investigated by the U.S. Secret Service and the Internal Revenue Service Criminal Investigation’s Western Area Cyber Crime Unit.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 AML/KYC Tracker provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/news/security-and-risk/2019/ex-microsoft-employee-accused-of-stealing-millions-in-digital-currency/

Ondot Unveils New Cloud Service to Help Smaller Banks, Credit Unions Compete

https://finovate.com/ondot-unveils-new-cloud-service-to-help-smaller-banks-credit-unions-compete/

The new cloud service announced by Ondot this week will make it easier for the company’s 4,000 bank and credit union customers to secure faster upgrades, deploy new functionalities, and access the latest innovations designed to enhance the mobile and digital card experience. Leveraging the cloud will also help FIs lower costs associated with operations, maintenance, compliance, and monitoring.

Ondot Head of Product Prasanna Narayan pointed to the challenges that regional banks and credit unions in particular face when it comes to integrating physical data into their data centers. Making Ondot’s card controls and other solutions available via a cloud-based service, Narayan explained, can help these smaller financial institutions keep pace with their bigger rivals. “This option allows mid-sized and smaller issuers to more quickly and easily launch these services and compete with larger national banks on digital customer experience,” he said.

Enhanced security is as much a part of the new cloud service as the enhanced customer experience. Narayan highlighted Ondot’s depth of understanding the security and compliance needs of financial institutions given its eight years of experience working with banks and credit unions. A scalable and reliable AWS, and robust disaster recovery and redundancy provide consistent uptime for clients using the service.

Santa Clara, California-based Ondot demonstrated its digital card mobile app at FinovateSpring 2018. The solution supports a range of digital payment card services from new customer acquisition to instant card activation and new card provisioning. The company won a Finovate Best of Show award at our first conference in Dubai, UAE, last year, FinovateMiddleEast, where it demoed its card controls technology.

2018 was a big year for the company. Back in November, Ondot introduced a new, end-to-end digital card services platform for banks in the Asia-Pacific region. Last summer, the company announced a partnership with PSCU, the premier payments credit union service organization, that will enable credit unions to integrate Ondot’s card alerts and controls technology into their mobile and online account management apps – or have them delivered directly via PSCU’s digital platform.

Founded in 2011, Ondot has raised $51 million in funding. Vaduvur Bharghavan is co-founder and CEO.

https://finovate.com/ondot-unveils-new-cloud-service-to-help-smaller-banks-credit-unions-compete/

Mobile eCommerce Startup OfferUp Adds Hold Feature

https://www.pymnts.com/news/ecommerce/2019/offerup-adds-hold-feature/

Mobile marketplace startup OfferUp has added a new feature to protect against what the company calls “flaky buyers and sellers,” according to a report by GeekWire.

The feature is called “Hold Offers” and it lets buyers reserve things they want and then complete the purchase using a QR code when two people meet in person to exchange the item. 

The company wants to differentiate itself from other eCommerce rivals like Craigslist, Facebook Marketplace and eBay, and the new advance payment system is a big part of that strategy. OfferUp says that it’s the first peer-to-peer (P2P) marketplace that lets customers use Apple Pay, Google Pay and Samsung Pay as part of its digital infrastructure.

OfferUp CEO Nick Huzar said that he wants to make buying and selling easier on the app by making it happen in-app instead of using other apps like Veno or PayPal.

“By bringing [payments] into the experience, we can actually help if things arise in the transaction,” Huzar said. “But if you take it off the platform, there’s not a whole lot we can do.”

Integrated payments are common on online marketplaces but not so much for P2P transactions, and OfferUp is trying hard to differentiate itself from competitors. The company has amassed $260 million in funding so far, and it uses word of mouth as an effective tool for growth. 

The company is popular though, and its app has been downloaded 80 million times with an impressive 44 million users. Many users spend about the same amount of time on OfferUp as they do on social media sites — a sign that the company has a loyal fan base. It wants to continue to grow to new markets.

When a buyer uses the “Hold Offers” button, the item gets marked as sold, and then OfferUp takes payment information to make sure the money is there to pay for the item. When two people meet up, the buyer will offer a QR code for the seller to scan. OfferUp accounts can be linked with all sorts of payment options.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 AML/KYC Tracker provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/news/ecommerce/2019/offerup-adds-hold-feature/

Why Merchants May Need Multiple Processing Relationships

https://www.pymnts.com/news/retail/2019/merchants-multiple-payment-processing-modo/

FinTech firms are keeping tabs on the optimization curve of eCommerce merchants — and how their payments needs evolve. Merchants might start with an off-the-shelf eCommerce platform and use that company’s payment solution. Alternatively, they might build their own websites and use a payment processor geared toward online businesses. And then they might quickly realize that they should add a new digital payment method because a lot of customers are tapping into that option. That is “well and good for a while,” Modo Chief Revenue Officer Brian Billingsley told PYMNTS in an interview.

Merchants then may have, say, unique needs depending on their product and market. They may discover that they are getting a lot of volume from Canada or that other English-speaking markets are often hitting their website. A merchant might want to launch in Europe and realize that rates differ from one processor to another. It also might start selling in Northern Europe and realize that many people don’t like using cards: They might want to use an invoice or a product like Klarna instead. They may undergo this almost organic optimization, where Billingsley said it’s almost like “opportunities find them.”

But as merchants keep ramping up that optimization curve, Billingsley said, the more they optimize it becomes exponentially harder to keep squeezing out value. Merchants may be either trying to drive acceptance, ensure that new customers have they payment methods they want, increase authorization rates or lower costs. And, when it comes to the importance of having multiple processors, Billingsley pointed out that some merchants have had significant outages and weren’t able to route traffic to other processors. Target, for instance, recently faced a register outage, which meant it couldn’t process cards or other forms of payment. And online marketplace Etsy experienced a service disruption in 2016, which impacted a significant number of Etsy transactions.

Several large merchants are currently working with the FinTech firm, and they are live and all have different reasons. A company, say, might be adding local payment methods to help them in different markets. With a domestic U.S. focus, a merchant might want to add secondary and tertiary processors for both backup purposes as well as to start becoming more competitive or allowing processors to become more competitive.  Some very large merchants are famous for going into their quarterly business reviews and saying to processor X that they missed some SLAs and that the company is going to shift, say, 30 percent of their volume to processor Y for the quarter and see how it works out.

While Modo is not a processor as it doesn’t hold, touch or move money, Billingsley points out the company wants to make sure that merchants can allow processors to compete on who is the best. Billingsley said it’s here to help merchants execute on the strategy that makes the most sense for them. And, through Modo’s dashboard, companies can turn processors and other payment service providers on and off with the click of a button. After entering their credentials for a processor, they can route transactions based on the least cost and switch processors, among other options, in the age of FinTech innovation.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 AML/KYC Tracker provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/news/retail/2019/merchants-multiple-payment-processing-modo/

eBay Chief Says Libra Is A Risk, But Shows Promise

https://www.pymnts.com/cryptocurrency/2019/ebay-chief-libra-cryptocurrency-risk/

The CEO of eBay, Devin Wenig, said his company’s support of Libra could potentially be a gamble, but that if it pays off it will be worthwhile, according to a report by CNBC.

“Will Libra work? I think it is speculative,” Wenig said. “We all know that. But it is promising, and it’s worth a try.”

Facebook announced Libra last month, with potential plans to launch it by 2020. Since the announcement, there has been scrutiny from central banks, world leaders and regulators about the potential effects Libra could have on the financial market as a whole.

Libra will be run by a nonprofit organization and will be based in Switzerland. Facebook says it has a wide range of backers that will ensure the currency is stable and not as volatile as other cryptocurrency, like bitcoin and Ethereum.

“We are sponsors of this, in part, because crypto and blockchain in particular have great promise,” said Wenig. “A well-run public blockchain that the marketplaces adopt could do immense good.”

The essential goal of blockchain in terms of crypto is to make it as easy to send money as it is to send a text, to anywhere in the world.

“Legitimate questions have been raised by regulators,” Wenig said. “We’ll let Facebook respond to those.”

Before his appearance in Congress, David Marcus, who is heading up the Libra project, released a statement about how the currency will be regulated.

“The Libra Association expects that it will be licensed, regulated and subject to supervisory oversight. Because the Association is headquartered in Geneva, it will be supervised by the Swiss Financial Markets Supervisory Authority (FINMA),” Marcus said. “We have had preliminary discussions with FINMA and expect to engage with them on an appropriate regulatory framework for the Libra Association. The Association also intends to register with FinCEN [the U.S. Treasury Department’s Financial Crimes Enforcement Network] as a money services business.”

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 AML/KYC Tracker provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/cryptocurrency/2019/ebay-chief-libra-cryptocurrency-risk/

Didi Plans Safer Version Of Carpooling Service Hitch

https://www.pymnts.com/news/ridesharing/2019/didi-plans-safer-version-of-carpooling-service-hitch/

Chinese ride-hailing giant Didi Chuxing has announced it has plans to relaunch its Hitch carpooling service with added safety features.

The company had pledged in 2018 that it would prioritize safety over growth after suspending the service following the murder of a female passenger, according to a report in Reuters on Thursday (July 18).

Didi has no definite timetable yet for the relaunch of Hitch but it is putting forward a proposal for public consultation.

Hitch allowed users to hail a car through their smartphones and share a ride with someone else headed in the same direction. Before it was suspended last year, it was also advertised by Didi as a new way to meet people.

The proposed new service will minimize personal information while offering a way for drivers and passengers to double-check the identity of people they are sharing a car with, the news outlet said. Algorithms will also be able to detect anomalies like abnormal route changes.

A partnership with Chinese insurers is also in the works as well as a separate program for female passengers and drivers.

Didi started offering crowdfunding and lending in January 2019 as a way to distance itself from the murders and other scandals. In December, it announced a company-wide reorganization, meant to improve safety and efficiency.

The services include wealth management tools, credit, lending and crowdfunding for serious illnesses. All of the services are geared toward the company’s temporary and short-term workers. The new products will bring Didi into direct competition with the Alibaba Group and technology giant Tencent.

Didi hopes to take on Uber in Latin America, eyeing Chile, Peru and Colombia. Uber and Didi are already in a fierce battle in Brazil. Early last year Didi acquired 99, a startup in Brazil, to enter the market.

The company is also launching an online financial system targeted toward car leasing and fleet management companies. The new service will try to make the lives of Didi’s partners easier by providing them with risk-control tools built from the heaps of driver data the company has on its workers.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 AML/KYC Tracker provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/news/ridesharing/2019/didi-plans-safer-version-of-carpooling-service-hitch/

Visa invests in Indonesian payment, ride hailing app Go-Jek

https://www.mobilepaymentstoday.com/news/visa-invests-in-indonesian-payment-ride-hailing-app-go-jek/

Visa invests in Indonesian payment, ride hailing app Go-Jek

iStock photo

Visa has invested in Go-Jek, Southeast Asia’s ride hailing app and payments platform, as part of a Series F fundraising round.

As part of the collaboration, the two companies will work toward providing cashless payments solutions to the “unbanked and underserved” across Indonesia and Southeast Asia, Visa said.

“We are excited about this partnership because Visa and Go-Jek share common objectives,” Chris Clark, Visa regional president Asia Pacific, said in the release. 

Visa did not disclose how much it invested or how big a stake it would claim in Go-Jek.

Launched in 2011 in Jakarta, Go-Jek has evolved into a super app of sorts. It began as a ride-sharing, but now allows its customers to make online payments for food, groceries and a plethora of other services. The company’s name is a play on the word for “motorbike taxis.”

“Visa’s investment in Go-Jek is an endorsement of our business model and reflects their belief in Go-Jek’s ability to improve the lives of people across the region through our services and payments ecosystem,” Andre Soelistyo, Go-Jek’s president, said in the release. 

Earlier this month Go-Jek secured an investment from Mitsubishi Motors Corp. and Mitsubishi Corp. as part of its ongoing Series F funding. Both amounts were undisclosed. Go-Jek also raised about $1 billion earlier this year from Alphabet Inc’s Google, JD.com Inc and Tencent Holdings, and is valued at up to $10 billion.


Topics: Card Brands, Mobile Apps, Mobile Payments, Region: APAC


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Western Union Teams With UK’s Post Office To Digitize Global Payments

https://www.pymnts.com/digital-payments/2019/western-union-uk-post-office-global-payments/

Western Union has announced a collaboration with the United Kingdom’s Post Office Ltd. to offer U.K. consumers and businesses expanded digital international payment services.

The Western Union cross-border money movement platform will power international money transfers and payments as an integrated service on Post Office’s digital channel, according to a press release.

On the branded online portal, customers can access international payment services modeled on Western Union’s global online transactional sites.

Western Union’s international reach and scale mean we’re able to bring a new dimension to Post Office’s digital offering for individuals and businesses,” said Hikmet Ersek, president and CEO, Western Union. “This collaboration marks an expansion of our strategy to open our platform to new alliances and solve the complexities of cross-border, cross-currency transactions for companies.”

With 11,500 locations, Post Office is the largest retail network in the U.K., surpassing high street banks and building societies.

“The launch of this service is great news for our customers, and demonstrates how we’re committed to enhancing and expanding the services our customers can access through our digital channel,” said Owen Woodley, CEO of financial services and telecoms at Post Office.

Customers will have the capability to transfer money online to bank accounts, mobile wallets and retail agent locations in more than 200 countries and territories.

In other news, Visa has entered into a strategic partnership with Western Union to expedite the movement of money globally – and digitally – across a range of use cases. Western Union will leverage Visa Direct, the card giant’s real-time push payments platform, to offer global consumers and businesses expedited push-to-card transfers.

Dollar General has also signed on with Western Union. The alliance enables customers to initiate international and domestic money transfers digitally through the Western Union mobile app or website and then pay in person at Dollar General stores.

Also, Western Union recently expanded its services into Thailand and launched a brand-new international money transfer service in the region. Customers in Thailand can pay out into billions of bank accounts around the world and in almost 100 countries and territories, or to the company’s 500,000+ agent locations in 200 countries and territories.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 AML/KYC Tracker provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/digital-payments/2019/western-union-uk-post-office-global-payments/

T-Mobile, Sprint Merger Could Be At Risk If DOJ Sues

https://www.pymnts.com/news/partnerships-acquisitions/2019/tmobile-sprint-merger-doj-threatens-lawsuit/

The Department of Justice (DOJ) may file a lawsuit to block the merger of telecom giants Sprint and T-Mobile if the two parties can’t reach a settlement by next week, according to reports.

Last month, some U.S. state attorneys general got together and filed a lawsuit to block the merger, saying that the cost to consumers – $4.5 billion a year – was too great. The DOJ was not involved in that particular suit.

Sprint and T-Mobile both agreed to some concessions, like selling off certain brands, including prepaid brand Boost, and selling other assets to Dish Network, which would allow the satellite TV company to move into the mobile space and essentially become a fourth telecom provider.

The deal, however, is stalled over issues of who would be able to buy the divested assets if they get sold again in the future. Deutsche Telekom, which owns more than 60 percent of T-Mobile, wants to avoid giving up too much to Dish and creating a large competitor.

T-Mobile and Sprint have said they will sell off other assets like Sprint Prepaid and Virgin Mobile brands. Dish would get to use T-Mobile’s service for about seven years, until it has built its own infrastructure. There would also be an agreement that T-Mobile would give Dish operational support while customers switched over to Dish.

Sprint is controlled by SoftBank Group. Both companies said they would pause the deal until the case by the state attorneys general is completed. There is a July 29 deadline, although it will likely be extended. Federal Communications Commission Chairman Ajit Pai has signed off on the deal, and a formal order of his decision is expected to appear in the next few weeks.

Earlier this month, it was reported that the DOJ was close to approving the merger if the conditions to Dish were met.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 AML/KYC Tracker provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

https://www.pymnts.com/news/partnerships-acquisitions/2019/tmobile-sprint-merger-doj-threatens-lawsuit/

Western Union partners with UK Post Office on digital cross-border funds transfers

https://www.mobilepaymentstoday.com/news/western-union-partners-with-uk-post-office-on-digital-cross-border-funds-transfers/

Western Union announced an agreement with U.K. Post Office Ltd. to offer digital international funds transfers and payments. 

Customers of Western Union will now be able to send funds and make payments across borders through the U.K. Post Office digital channel. 

“Western Union’s international reach and scale means we’re able to bring a new dimension to the Post Office’s digital offering for individuals and businesses,” Hikmet Ersek, president and CEO of Western Union, said in a company release. “This collaboration marks an expansion of our strategy to open our platform to new alliances and solve the complexities of cross-border, cross-currency transactions for companies.”

Western Union allows customers to make digital transfers to bank accounts, mobile wallets and retail agent locations in 200 countries worldwide. 


Topics: Money Transfer / P2P, Region: EMEA

Companies: Western Union


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https://www.mobilepaymentstoday.com/news/western-union-partners-with-uk-post-office-on-digital-cross-border-funds-transfers/

Sprint powers Dynamics wallet card

https://www.mobilepaymentstoday.com/news/sprint-powers-dynamics-wallet-card/

Sprint powers Dynamics wallet card

Sprint announced that its Curiosity IoT network is powering the Dynamics Wallet Card, which claims to be the world’s first connected payment card, in a company release. 

The wallet card is a digital storage card where consumers can put their debit, credit, prepaid, multi-currency, loyalty and other cards all in one place and use the card anywhere in the world through a single interface, according to a spokesperson. 

Emirates NBD will be rolling out the card as a replacement for existing cardholders. It is the only announced financial institution that is issuing the card, however negotiations are ongoing and the card will expand to additional markets, including the U.S., according to officials. 

The card can accept messages, for example if a bank or retailer needs to reach the cardholders, then digital coupons, alerts or other messages can be sent through wireless connections. 


Topics: Card Brands, Mobile/Digital Wallet, Mobile Payments, Region: EMEA

Companies: Dynamics Inc., Sprint


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https://www.mobilepaymentstoday.com/news/sprint-powers-dynamics-wallet-card/

N26 raises another $170 million in Series D round for mobile bank expansion

https://www.mobilepaymentstoday.com/news/n26-raises-another-170-million-in-series-d-round-for-mobile-bank-expansion/

German challenger bank N26 raised another $170 million to bring its total Series D fundraising to $470 million, which values the company at $3.5 billion, according to a company release. 

The company said that all the previous investors in the Series D round extended their investments in the startup. They include Venture Partners, GIC (Singapore’s sovereign wealth fund), Tencent, Allianz X, investor Peter Thiel’s Valar Ventures, Earlybird Venture Capital and Greyhound Capital. 

N26 officials said the funding will be used to drive expansion in Europe, the U.S. and Brazil, as well as bring new features to the banking service. The company plans to launch a service called Shared Spaces, which allows users to create sub accounts for up to 10 people 

The company recently launched in the U.S., marking the first expansion of the challenger bank outside of Europe. N26 plans to expand next into the Brazilian market. 


Topics: Mobile Apps, Mobile Banking, Region: Americas, Region: EMEA

Companies: N26 Inc.


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https://www.mobilepaymentstoday.com/news/n26-raises-another-170-million-in-series-d-round-for-mobile-bank-expansion/