Digital Custody. Is custody of digital securities ‘different’?

https://thefintechtimes.com/digital-custody-is-custody-of-digital-securities-different/

James Baty

By James Baty, US Capital Global

Is custody of digital securities different?

A custodian is a financial institution that holds customers’ securities for safekeeping in order to minimize the risk of their theft or loss, and facilitate their reporting and transfer. A custodian may hold securities in physical or electronic form. The emergence of digital securities suggests some potential differences, complications or improvements, but in the end custody of private securities is pretty much the same, whether analog or digital.

We’re focusing here on digital ‘private’ securities

In this article the focus is the custody of digital ‘private’ securities, and how it might be different, or the same, from non-digital. This is contrasted with public securities, which are mostly similar, but have some different requirements and issues of scale. Also ‘digital securities’ are different from cryptocurrencies, although they have similar technical issues and risks. It is relevant that many emerging ‘digital custodians’ for cryptocurrencies constitute an early development area that will also define some of the new custodian practices for digital securities. Of course, in reality most all securities are ‘digital’, in that the record of their ownership is maintained in some computer system, but in this discussion ‘digital securities’ are securities tokenized in some cryptographically secure data base (e.g., blockchain).

Remember digital securities are ‘securities’

In April of 2019 the SEC issued it’s ‘Framework for “Investment Contract” Analysis of Digital Assets’ which basically affirms the position that a security is a security, and an STO (Security Token Offering) represents an investment contract under the Howey rules. So a ‘digital security’ is a security, fully subject to all of the normal regulatory implications. These SEC regulations come into play anytime a company is selling securities to U.S. residents, or the company’s shareholders are U.S. residents. While other regimes may have somewhat different regulations, the global trend has been towards digital securities equivalent to traditional securities.

Who can custodian private securities?

Obviously, the buyer themselves may hold their private security, or the security may be held for the buyer by the Issuer, or a regulated person under a power of attorney (POA). An investor may hold their securities themselves (i.e.’self custody’) by personally taking delivery of stock certificates. But this is not very convenient when it comes time to sell, and there is the potential risk of loss. So historically owners of public and private securities rely on some form of custodian – a bank, broker dealer, investment advisor operating under the custody rule, or a licensed commercial custodian.  The owner does not have to take physical delivery of the shares, and future transactions are not delayed by physical transfer. These custodians are subject to regulation and oversight. The custodian provides not only for safekeeping of assets, but supports trade processing and asset servicing, and importantly provides for regulatory compliance. While most investors use custodians primarily for convenience, other such as institutional investors are essentially required to use custodians. The four largest custody banks alone hold about $114 trillion in assets. 

Is Custody of Digital Securities different? Perhaps a bit ….

In March of 2109, the SEC issued a letter on the issues of and requesting comment on how digital assets are affected by the custody rule. The questions asked include:

What challenges do investment advisers face in complying with the Custody Rule with respect to digital assets? 

What considerations specific to the custody of digital assets should the staff evaluate when considering any amendments to the Custody Rule? For example, are there disclosures or records other than account statements that would similarly address the investor protection concerns underlying the Custody Rule’s requirement to deliver account statements?

To what extent can DLT (Digital Ledger Technology)be used more broadly for purposes of evidencing ownership of securities? 

Can DLT be useful for custody and recordkeeping purposes for other types of assets, and not just digital asset securities? 

What, if any, concerns are there about the use of DLT with respect to custody and recordkeeping?

In January of 2109 ESMA (the European Securities and Markets Authority issued its Advice on ‘Initial Coin Offerings and Crypto-Assets’. It stated…

First, ESMA believes that greater clarity around the types of services/activities that may qualify as custody/safekeeping services/activities under EU financial services rules in a DLT framework is needed. 

ESMA’s preliminary view is that having control of private keys on behalf of clients could be the equivalent to custody/safekeeping services, and the existing requirements should apply to the providers of those services. 

Meanwhile, there may be a need to consider some ‘technical’ changes to some requirements and/or to provide clarity on how to interpret them, as they may not be adapted to DLT technology. 

Clearly the regulators want to survey the knowledge and practices around the custody of digital assets, but in general, they describe digital assets as subject to the same custody requirements as traditional assets.

Two key issues Risk and Key Security

One position taken by many STOs is that the shareowner holds the keys to the wallet containing the digital share, and this constitutes the equivalent of self-custody. But while trading one share is not very risky, there already have been some serious security issues around very large volume cryptocurrency transactions. What happens if you lose your USB stick ‘cold wallet’ with your keys? What happens if someone hacks the wallet you stored online? What happens if bad guys know you have the keys to lots of high-value shares stored on your laptop and just put a gun to your head to make you give them the keys? Thus, to avoid this sort of risk, and add some convenience, early cryptocurrency owners would just store their wallets online at the various exchanges. 

That has left us with the legacy of many stories of loss of cryptocurrencies through fraud, hacking and error, including the infamous Mt. Gox exchange loss of 850,000 customer bitcoins valued at more than $450 million.

They subsequently closed under bankruptcy.  It has been widely reported that a total of 4 million Bitcoins have been stolen to date and 2 million have been lost, or about $14.5 billion. While digitization through cryptographically secure transactions theoretically provides some additional security to the description and identity records of securities ownership and transfer, it also raises serious new risks of recovering lost assets. 

A recent technical solution offered to improve key security is the proposal is to implement custodian services on ‘multi-signature’ tokens, where the custodian or transfer agent has an additional signature and the transaction scheme may require 1of2, 2of2, 2of3 signatures, etc. to transfer. Think of that lockbox at the bank – it takes two keys to open it, yours and the banks. And implementing multiple signatures on a digital security is sort of like that, or not. Depending on the implementation the multiple signature may allow either ‘key’ to unlock the security, or require both, or 2 of three keys… Multisignature wallet providers include Armory, Electrum, Coinbase, Bitgo and Coinb. At the extreme Coinb supports up to 15 keyholders per wallet. While superficially this seems like a solution to some of the problems of digital assets and offers additional features, it actually really complicates the situation – Essentially there is no legally distinguishable custodian of funds deposited into a shared wallet with multiple keyholders. And so, we see Coinbase (primarily a cryptocurrency exchange) which initially supporting multi-signature, has dropped support for multi-signature as it developed a separate regulated cold storage custody service (Coinbase Custody).

So is Digital Security Custody really different? Basically, no.

While there might be additional procedural issues to adopt in custody of digital private securities, there is no magic bullet that technically solves all problems, and digital private securities are subject to the same custody requirements of traditional securities. And in the realm of esoteric technical features, cold storage wallet providers (e.g.., Coinbase, Xapo, Vo1t) advertise that your offline crypto assets will be stored in a technical faraday cage that prevents any electronic signals from reaching your assets. But perhaps the real issue is to provide additional enhancements to traditional procedures. Koine offers a ‘Digital Airlock’ which uses hardware and network segmentation to secure client assets so that no staff has access to modify client standard settlement instructions or transfer assets.

In summary, a security is a security, and a digital security is subject to the same custody requirements as traditional securities. Their digital nature does not magically solve custody issues but instead creates some new challenges. The key issue is custodians providing operations and procedures that ensure the transactional security of digital assets. 

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2020 Predictions for US Financial Services

https://thefintechtimes.com/2020-predictions-fiserv/

Sam Maule

by Sam Maule, Head of North America, 11FS

The more things change, the more they say the same. Mergers, incumbent dominance, and hesitancy over market conditions are all going to continue this year. So does 2020 have anything new in store for US finserv? Let’s take a look…

Prediction 1: more mergers are on the way

Quick: name a banking core provider off the top of your head. Chances are they’ve gone through an acquisition or a merger in 2019. 

FIS, Fiserv, Global Payments – all of them either absorbed processors or joined up with other firms. Expect that trend to continue this year.

And core providers aren’t the only ones bulking up. Last year saw the largest bank merger since the 2008 financial crisis, and more institutions will follow suit in 2020. 

For super regionals to compete with the top four, they’ll need to consolidate. US Bank, PNC, Regions and maybe even Citizens: don’t be surprised if at least one of these banks makes the move.

One thing that probably won’t happen is Goldman’s rumoured acquisition of US Bank. The former has been diving into the retail space, but their acquisitions have mostly focused on the tech side. I’m not convinced that a New York capital markets bank would buy a company that does car loans and mortgages.

Prediction 2: banks will be cautious, reassess in light of the election

Already, we’ve seen companies cutting back ahead of 2020, and there are a few reasons why. Obviously there’s a major election on the horizon, but bankers are also still wary of a potential slowdown or recession. 

Granted, a few developments have calmed their worries. Detentes in the trade war with China and a clearer direction on Brexit have led some economists to believe that 2020 won’t be as dark as we initially thought. But they’ll wait and see before they take definitive action.

Banks will probably still face reorganisations. Wells Fargo has already hired a permanent CEO, and Citi recently brought on Jane Fraser to be its new head of consumer business. New leadership at other organisations seems likely at this point.

Prediction 3: challengers will still face challenges

If anyone at a US challenger bank is reading this, I wish you good luck. You’re going to need it.

Everyone keeps repeating the narrative that Chime’s going to change banking in this country. But until it gets its own core and its own charter, it isn’t really a bank: it’s a deposit gathering tool for Bancorp. 

Chime claims it’s going to quadruple its revenue this year, but it’s still making money predominantly from interchange fees. Eventually, it’s going to have to get into lending and credit cards. 

Then there’s the issue of scale, which is essential for any new company but critical in the wake of the recent Galileo outage

Don’t get me wrong: it’s remarkable that Chime has raised as much as it has. It’s grown really well so far, and that won’t stop in 2020. 

But it’s not a full-service digital bank yet. As a customer, I could care less about that fact; as an investor, it’s key to the money question.

Plenty of challengers are getting stacks of cash thrown their way, but it all still comes down to being revenue positive. The only sexy fintech company is one that makes money. There’s no way any upstart is going to pose a legitimate threat to even the top 20 banks in 2020, let alone the big four.

Prediction 4: Apple and Google will lead tech companies entering finance

Of all the tech companies entering the finserv space, Apple has probably the most distinct advantage: its loyal user base. 

Already, it’s leveraged their popularity to get consumers onboard with the Apple Card. It’s not just the branding – offers on other Apple products are valuable in getting evangelists onboard its financial offerings. Add to that its dominance over hardware and ecosystem and you have a formidable entrant with a pre-established market.

Google doesn’t own the ecosystem in the same way, but it’s made some promising moves. Hiring PayPal COO Bill Ready as its President of Commerce is just one of them. Android devices also offer it a foothold that other tech companies aside from Apple lack. Ultimately, they’re my picks for the two tech companies most likely to make a splash in 2020.

Prediction 5: unless they partner up, UK fintechs will struggle to enter the market

I’d love to see UK fintechs do well here in the US. But right now, I can’t see how they’re differentiating themselves. 

In an environment where cross-border payments mean jack – remember that 40% of Americans have never left the country – Revolut’s foreign currency exchange won’t carry much weight. Monzo and N26 have great budgeting and financial literacy features, but those features won’t be popular enough to lure customers away from Chase or Capital One. 

There’s a key difference between the US and the UK: here, products from big banks are meeting customers’ needs. 

Americans are loyalty driven and love cashback: Target’s RedCard and Starbucks’s mobile system are closed loop systems that offer great rewards and make shopping as easy and intuitive as possible. Right now, the UK challengers don’t provide these incentives.

Ultimately, partnerships will make or break the British fintech invasion. If the challengers don’t get recognised brands on board, they won’t be able to tap into a built-in audience that’s necessary for their success.

Companies like Monzo or Revolut are exciting for people in the industry, but I just don’t see them taking making significant inroads with consumers this year. 

So there you go. It’s bound to be a long year and a lot could happen, but these five predictions give a rough idea of where we’re headed. 

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AML: A Shocking $8.14 billion of fines handed out in 2019

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A shocking $8.14 billion of fines for AML handed out in 2019, with USA and UK leading the charge. 

Encompass Corporation, a fast-growing provider of intelligently automated Know Your Customer (KYC) solutions, has carried out an analysis of Anti-Money Laundering (AML) related penalties handed down between 1 January and 31 December 2019.

Key observations: 

  • 58 AML penalties handed down globally in 2019, totalling $8.14bn 
  • This is double the amount, and nearly double the value, of penalties handed out in 2018, when 29 fines of $4.27bn were imposed 
  • Regulators in the USA were most active, handing out 25 penalties totalling $2.29bn 
  • UK followed with 12 fines totalling $388.4m 
  • Largest monetary fine was $5.1bn and originated from France 
  • Average monetary fine for 2019 was $145.33m 
  • 2019 was record year, in terms of number of penalties handed out (58), ahead of 2016 (47) 
  • Under half of penalties given out in 2019 were to banks (28 of 58), compared to two-thirds in 2018 (20 of 29) 
  • Penalties handed down by regulators across multiple jurisdictions beyond the USA and UK: these were Belgium, Bermuda, France, Germany, Hong Kong, India, Ireland, Latvia, Lithuania, the Netherlands, Norway and Tanzania 

2014 still holds the record for the highest total value of fines at $10.89bn, but this includes an anomalously large penalty of $8.9bn. If this were to be removed, 2019 would take the lead.

Wayne Johnson

Wayne Johnson, Co-Founder and CEO of Encompass Corporation commented:

“Since 2015, annual AML penalty figures have been steadily rising each year. Multi-million dollar fines have been commonplace for a while, but we are now seeing more penalties of one billion dollars or over, with two in 2019 alone. 

Historically, the majority of these fines have been given to banks, but this year the proportion was less than half, demonstrating that money laundering is now recognised as a general business issue, not just one that is specific to financial services. Regulators in the gambling/gaming sector were particularly active in 2019, handing out five fines, all of which were well over $1 million and the highest being $7.2 million. Interestingly, four of these were in the UK, demonstrating a crackdown here. 

The USA continues to lead the way, having handed out the most penalties this year at 25 – more than twice the amount of the UK, the country in second place. Given that these two countries have transparent regulatory cultures and active regulatory bodies, we expect we shall continue to see the largest number of fines originate from here, but we are seeing activity from increasing numbers of jurisdictions as time goes on. For example, in 2019, penalties were handed out by 14 countries, compared to just three a decade ago in 2009. 

We are not expecting the spotlight on money laundering to dim. The continued and increased focus on this area highlights the severity with which it is viewed at a global level, which is not surprising given the negative economic and societal repercussions it can have. As we head into 2020, we shall continue to monitor and analyse AML penalty data with interest to see how it evolves.” 

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Small Business Finance Tips For Managing Your Invoicing

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Despite being one of the most challenging and time-consuming tasks that every business owner has to deal with, invoicing is something that you should manage adequately. It can have a significant impact on the cash flow of your business. 

Thus, the importance of producing and delivering invoices that encourage customers to pay on time. The use of automation software and ready-made invoice templates can streamline the whole process. You can check out sites like Wave if you want to learn more about them.

Aside from taking advantage of invoicing software and design templates, coming up with an invoicing strategy can also do wonders for you. It will help you send invoices more efficiently and keep track of them better.

Find out how to strategically manage your invoicing with the following tips for small businesses.

Create A Checklist Of All The Information That The Document Should Contain

As a business owner, you have a lot of responsibilities, and you shouldn’t spend all your time dealing with your invoicing. For you to save time, it’s best to create a checklist of all the information that your invoice document should contain and collect them one by one. It also helps so that you won’t miss to include critical information.  

The essential information you need includes the name of the customer, contact numbers, address of your business, and that of your client, tax identification numbers, among others. You can add more details if you want to like the description for the product or service delivered and the corresponding price. Again, you skip the hassle of gathering all these things by downloading complete invoice templates from reliable sources over the internet.

What Type Of Invoice Should You Use?

It’s worth noting that invoice templates vary. It’s especially essential to understand the different choices you have if you plan to get ready-made ones online. The type of invoice to use will depend on the details of the transaction you made with a specific client and the agreements between the two parties.

One of your options is a recurring invoice. It’s useful if you’re under a contract with a client, and you’re going to deliver a product or service regularly for several months. The schedule can be set to weekly or monthly, depending on the agreement, as indicated in the contract. This invoicing document will make it easier for your client to send recurring payments.

Another option is an interim invoice. This invoicing document also requires a customer to send recurring payments but in smaller amounts. It works when you’re going to get paid for every milestone completed in a project. Please take note, though, that you have to send a final invoice before the project ends, which leads to the next type of invoice.

The next option is the final invoice. It serves as a wrap-up of the project completed. The total amount of payments made gets included in the document. The final invoice may also contain an outstanding balance if there are any.  

The most common type of invoicing document that a lot of people encounter every day is the standard invoice. It’s what most businesses issue for a product delivered or a one-time service rendered.

Automatic Payment Reminders

Small businesses aren’t always lucky. It’s normal to meet pain-in-the-ass customers or clients occasionally. Late payments can happen, and others would even try to escape their responsibilities of paying for products or services received. To solve such problems, you can utilize automatic payment reminders that most online invoicing platforms offer. 

Automatic payment reminders send alerts to clients once they go beyond the payment schedule indicated on the invoice. The good thing about such a system is that it will notify you of every receivable that gets delayed and for every payment received. It makes your life as a business owner more comfortable. It can also show how much the customer owes and what payment options are available for them.

Using A Numbering System

An effective way to organize your invoicing is to implement an invoice numbering system. It will help resolve common issues encountered in terms of tracking invoices by giving you the chance to organize everything by numerical value or pay period. 

The use of numbering systems becomes more comfortable if you use automated invoicing software or professional templates.

Sending Invoices On Time

The importance of sending invoices on time is a no brainer. However, many businesses still miss out on doing it, especially when other responsibilities take away your focus. It’s also a common scenario when business owners fail to prepare the invoicing document immediately.

When you send invoices on time, you tell your customers or clients that you’re reliable and worthy of their trust. It shows your professionalism, and most importantly, it helps you to get paid on time, avoiding any disruption to the cash flow of your business.

Conclusion

The tips mentioned and discussed above should help you avoid problems arising from billings and collections. Always remember that not doing invoicing right can result in lousy cash flow, and it’s the last thing you’d want to experience as a small business owner who’s still trying to work your way up.

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What Brexit blues? Businesses believe Brexit will have a long-term positive impact

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A new study by Huthwaite International reveals over half of businesses in the financial sector believe Brexit will have a long-term positive impact. 

Apparently, 51% of businesses remain confident about business growth post-Brexit but worry short term with 33% concerned with the initial impact. Economic stability, a no-deal Brexit and changes to laws and legislation rank are amongst the biggest concerns for businesses in the financial sector post-Brexit. 

A new state-of-the-nation study into how businesses in the financial sector are prepared for Brexit, has revealed a staggering 37% of businesses believe the process of exiting the EU is currently having a positive impact on their business, while 29% feel it hasn’t had any impact at all.

Commissioned by global sales, negotiation and communication experts, Huthwaite International, the report shows that post-Brexit business prospects remain positive, with 51% of businesses believing their growth potential will prosper post-Brexit, regardless of the outcome.

When looking at what worries businesses most about the UK leaving the European Union, economic stability, a no deal Brexit and changes to laws and legislation ranked as the highest concerns.

Improving negotiation skills also ranked as the biggest priority amongst businesses before the Brexit deadline, with many sighting it to be a key priority when it came to safeguarding profits and reducing overheads.

Tony Hughes, CEO at Huthwaite International said: “Gaining the skillset and knowledge to survive this economic uncertainty is vital for business success. The UK is packed with ambitious and prosperous companies that in theory should flourish regardless of economic uncertainty, however the importance of obtaining the core skillsets to flourish shouldn’t be underestimated.

“One of the few certainties the UK faces is that, for selling organisations, things are getting tougher. As buying organisations entrench, delaying or even cancelling purchasing decisions, sales teams across all sectors and markets are having to up their game. This means sophisticated negotiation skills aren’t just important to ensure the UK secures a quality deal with the EU, but also form the fundamentals for ensuring business success across the UK too.”

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Signicat appoints new CEO and Chairman to accelerate international growth

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Signicat is a pioneering pan-European digital identity company with an unrivaled track record in the world’s most advanced digital identity markets. Its Digital Identity Platform incorporates the most extensive suite of identity verification and authentication systems in the world, all accessible through a single integration point. Signicat is bringing in new expertise and capabilities to help accelerate its international expansion.

Johan Tjärnberg, a special advisor at Ingenico Group and previous CEO of Bambora, has been appointed as new Chairman and Asger Hattel, previous CEO and Head of Nets Merchant Services is being appointed as new CEO. Gunnar Nordseth, current CEO and co-founder of Signicat, will remain as a shareholder and transition into a senior business development role.

“Signicat is on a fast-growing journey to expand internationally and further strengthen its position in the Nordic and broader international markets. We founded this company with a grand vision and I am very proud of what we as a team have achieved up until today. We have now come to a phase where I want to hand over the leadership reins to a leader with greater experience in international expansion, and in scaling the business to the benefit of current and future customers. I will continue to be committed to Signicat as a shareholder and I am looking forward to working closely with Asger, focusing on innovation and business development”, says Gunnar Nordseth, CEO of Signicat.

“Born from the most advanced digital identity market in the world, Signicat is a recognised leader in one of the most exciting and fast-growing technology areas globally. A warm thanks to Gunnar and his experienced management team that has succeeded in achieving this strong market position. As the majority owner, Nordic Capital is enthusiastic about supporting Signicat’s continued growth and bringing a unique experience of international expansion by the appointment of Johan and Asger,” says Fredrik Näslund, Partner, Nordic Capital Advisors.

Asger Hattel has more than 20 years of experience from companies in financial services, technology and telecom. He previously held a position as Group Executive Vice President at Nets, where he, as CEO for the Merchant Services business with his team, built Nets into a Northern European leader. Earlier he worked as Executive Vice President and Head of TDC’s Nordic and Wholesale business. He started as new CEO of Signicat on January 8, 2020.

Johan Tjärnberg, the newly appointed Chairman of Signicat, has a proven track record in building strong global fintech businesses, previously holding positions as CEO of Bambora and EVP of the Ingenico Group’s Retail Business Unit. At year-end he took up a role as Special Advisor to the Ingenico Group and during 2020 he will join the Board of Ingenico.

These two appointments strengthen Signicat’s organisation and position the company to accelerate its international expansion as the leading digital identity solution in Europe with a unique ability to help clients solve their digital identity challenges.

Signicat was founded in Trondheim, Norway in 2007 and is a pioneer and technology-leader within verified digital identity solutions in Europe. The company offers compliant, secure and user-friendly online authentication, identification verification and electronic signature solutions that reduce risk while enhancing the user experience.

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Finance Workers Are Concerned Over Technology Failings

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The majority of finance workers in the UK believe their company is failing to adapt to changing regulations and technology, making it harder to meet new reporting requirements, get an accurate oversight of its financial position, plan for the future, or compete with quicker moving competition, according to a new survey of 1,000 accounting and finance professionals.

While 55% say their company is simply too slow to adapt, 29% believe the problem is so bad, their company’s future is being put at risk.

These are just some of the issues uncovered in a new report which surveyed over 1000 UK-based finance workers to understand their interpretation of company attitudes towards adopting new technology. 

When it comes to investment in financial and accounting technology the new report has highlighted a split between those finance teams who view their company as an innovator and open to taking risks, and those who define their company as “laggards”, failing to take even low risks or dismissing new technology until it has been fully proven in the market. 

UK Finance workers split over the need to move with the times and implement new technology

Even among those finance teams whose company is investing in new technology, 16% of finance workers believe investments are made too often with no strategy (meaning they are constantly having to learn how to use new systems) while 13% said their company was too slow to invest and was constantly behind the competition on technology.

The independent survey was commissioned by automated accounts payable and document management specialists Invu and carried out by Sapio Research.  

Ian Smith, Invu Finance Director and General Manager, said: “Government initiatives like Making Tax Digital have so far been diluted and not provided much impetus for Making Business Digital. This survey shows that many businesses have been innovators seeking competitive advantage. I would expect to see this realised in 2020, with a performance gap opening up between those who have chosen this path and the laggards.” 

For those UK companies whose workforce don’t think the company is putting itself at risk over its technology policies – or lack of – 16% still felt the company was too slow to move towards updating its existing technology. 

 Smith added: “Back-office functions, like finance, are often the last to see investment in new technology. It has to be hoped that the finance staff who perceive their business is being too slow to innovate are able to persuade their management teams to act before they fall too far off the pace to survive.” 

However, it is not all doom and gloom, there is hope for businesses once they’ve decided to bring in new technology.  

Over half of UK finance workers (52%) claimed their company was “very effective” at implementing new technology – once they had made the decision to do so – with just 8% claiming their company struggled to implement new technology. 

To access the full report, you can download it from the Invu website here: https://www.invu.net/resources/ 

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Impact of Blockchain Technology in Banking

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Disruptive Technology has in the last few years altered significantly the operations of many business and industries. This happens when more superior habits of doing things that come along with the disruptive technology are introduced in the current system and replaces the common habit of doing things. Backdated to 2008, Blockchain technology is a form of disruptive technology that is bringing changes in operations of the businesses especially in the banking industry.

Blockchain technology comprises currency values such as Bitcoin, Dogecoin and many other currencies that are powerful, secure anonymous and open to anyone that may need to use them. With the technology that is associated with Blockchain, it can offer a database that keeps track of every transaction that takes place over the currency values such as bitcoin. The decentralization and transparency features of Blockchain such as the availability of the transaction details metadata in public ledgers that are easily accessible make the technology have a great impact on the banking system.

The banking system handles millions of funds transfer on daily business from one area to another in the world making it an area where Blockchain has impacted in terms of operation. The sector is benefiting from the application of Blockchain technology due to its proneness to errors and fraudulent transactions. This has led to the move by Fintech institutions to adopt Blockchain as a form of transaction. This is because Blockchain technology in banking system has the potential to outdo the need for the manual processes involved in the banking fund transfer system by replacing it with the secure transaction and assuring the clients safer ways of fund transfer which does not even involve as much transfer costs as those used in banking systems. 

Although Blockchain technology was not well accepted in the banking industry, the theory is changing and the technology is now well accepted. This has been mainly connected to the success rate of Blockchain technology in many industries. Large banking institutions such as JP Morgan have shown interest in Blockchain with the American multinational investment bank setting up a whole division they named Quorum in New York to perform research and implementation of Blockchain technology specifically. Reasons for implementation of the technology include;

Saving on transaction costs

One of the reasons as to why banking is adopting Blockchain is because of its ability to enable banks to save a lot of money in terms of transaction costs. Normally, fund transfers from one region to another involve certain costs due to currency variations from one region to another and involve some paperwork. Since Blockchain is offering this option of transfers without these costs and paper works, banks are keen to grab this opportunity. This has been the source of the wave of Blockchain implementation by the major banks since the saving transaction costs will result in millions of extra profits. 

Reduction of fraud

Another reason for the heavy jump-in into Blockchain technology in the banking system is because of the rate at which the normal transactions are exposed to fraudulent activities. Blockchain will achieve this through the removal of intermediaries. Over 50% of money laundering is said to happen within the transaction system where intermediaries such as stock exchange play a big role in this.  Therefore, the technology is estimated to have a great impact on the banking system where it will also protect the bank against the chances of cyber-attacks in the banks’ database. 

The new set of millennial customers

While clients are changing, today’s and future generations are expected to rely so much on technology. Currently, the young clients’ generation is growing in a well-networked environment with a lot of knowledge in crowdsourced funding and online transactions. These have made the banking industry to adjust to Fintech to be able to deal with these millennials by adapting and adjusting to Blockchain technology in their system. This will enable the millennials to perform their business transactions without the intervention of the so-called ‘big boys’. 

Trade finance

These activities mainly compose of paperwork transactions in the banking industry in transactions such as billing and factoring with also some international transfers in exports and imports. This area is seen to be most efficient when transactions are done over Blockchain Technology. Movement of these transactions, especially worldwide can be quickly accelerated using this technology under the smart contracts that digitize the transactions and also prole the role of documentation.

It is therefore expected that Blockchain technology will continue to impact the banking system due to the increase in innovation in the Internet of Things which is revolutionizing many industrial sectors.

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Gaming in the Digital Age

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Over the past 45 years, gaming has shown remarkable growth in all forms across the world. Now, gaming is everywhere in our lives, from video games to consoles, from PCs to mobile. In other words, gamification has also become a part of our social media, messaging apps, and work-life balance.

Gaming was once a solitary niche activity and it has evolved into being firmly part of our mainstream culture. The Internet Trends Reports by internet guru Mary Meeker has dedicated a large section of gaming and its effect on various industries. According to the report, no other digital media has the engagement that gaming has. In addition, video games had gained more attention than Facebook, where the audience is engaged more in video games. Video games and mobile games had more attention than various social media platforms.

Casino Gaming

Casino gaming, for a long time, was about the atmosphere, socialising and having fun. Whilst this still exists, as many physical gaming casinos still do well, there are now more options than ever before. You can indulge in each of these elements without having to step foot outside your house. 

This isn’t to say you should never go to a physical casino, of course. It also isn’t endorsing for being lazy. Physical casinos can still be a fun experience, but gaming is about choice. You may decide that the local casino is showing a popular UFC fight, and you might want to enjoy roulette before it starts. Alternatively, you may decide that you want to play games on your mobile in bed. 

Having a lot of different games to play, having a choice of tables to play at, and having a choice on whether or not you want to go to a physical casino is why the digital age is revolutionary. It is not about one being better than the other is, but rather recognizing arising choices and trends in a growing industry.

Casino gaming in the digital age is a completely new experience. There are ways to simulate the traditional way of gaming, as well as new experiences to indulge in. Online gaming platforms have an incredible amount of games. Whether you like western-style themes or ancient Egyptian settings, there will be something for you. Online gaming has opened up the market so there are far more customers. This increase in demand has led to an incredible explosion in game development, meaning there is now more choice than ever before.

High-Quality Games

This has led to a rise in the quality of games, too. To capture the attention of the large market, there is a gamification of slot machines (among other games). This means some stories and characters are being introduced, bringing in new elements of entertainment. For example, Admiral Casino makes use of extremely high-quality stories and themes to captivate its audience.

Social Gaming

Social media is a new frontier for gaming. It is enough to think of online games and there are high chances to think about connected consoles or role-playing games. Facebook is out of the question; however, there are 1 billion hours spent in a month into social media gaming.

Rumbi Pfende, UK country manager for casual games portal Zylom by RealGames, has noted about what makes a social game more subtle. For her, a social game has a distinguishing feature where social gaming is about how a friend can perceive a gamer, which in turn it influences the type of games people play.

On the casino part, online gaming sounds like it’s deviating away from the social hub that physical casinos are. This is far from true. Online gaming has actually ended loneliness for many people who build online relationships by co-playing games with each other. Online chats are available, and the social aspect can actually be a driving force for people going online to game.

Social media, multi-player interactive games, and smartphones are embraced by the millennials. Why? Social games are a great way of enabling more casual gamers because social games are about bringing games to people who may have never played before.

VR

VR gaming is the term that describes a new generation of video games that uses VR technology. The technology gives players a truly immersive, first-person perspective of game action. Players experience and influence the game environment through a variety of VR gaming devices and accessories.

Virtual Reality is also integrated into online gaming, which is having some huge effects. This is improving the social aspect even more so, as you’re now able to actually (well, not actually) sit next to each other at a table and talk via microphone. Additionally, the visual effects and immersion are only going to improve as more games are developed with VR in mind. In addition, on gaming platforms such as Steam, you will find many VR casino games and there is also a land-based casino in France that made the first VR blackjack in the world, in 2019.

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Africa In The Eyes Of The World

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By Sebastian Jaramillo Bossi, Co-Founder MondeB2B

Sebastian Jaramillo Bossi

The negative perception of Africa in the world began to change in the 21st century with promising figures in economic growth and consumption, an increase in the middle class, some industry and agricultural development and an improvement in governance, among others.

Everything seems to indicate that such improvements and the enormous demographic potential predict an “African century”.  But, developments on the ground are slow, and nothing has been consolidated yet.

Africa continues to be the continent with the highest poverty in the world, but it has had a boom never seen before with constant growth, thanks to the implementation of economic opening policies which has also led to increased foreign investment. Large companies are forthcoming thanks to some of these policies that defend private property and economic freedom and contribute towards security for investments. Between 2000 and 2018 Africa had an average growth of 6.2%, more than double the growth of Latin America.

In 2015, five of the ten fastest-growing economies were from Africa: Ivory Coast, Ethiopia, Tanzania, Rwanda, and the Democratic Republic of the Congo; all these economies grew by over 7%. What is the common denominator for these countries to develop? The reforms created by governments, greater economic freedom and the protection of private property. As an example, the Democratic Republic of Congo had more than seven thousand companies created, which has also had social consequences. Since 2000, life expectancy has risen by eight years, child mortality has been reduced from 17% to 8%, but still, its biggest problem is that there are more than 420 million people living in poverty.

Ganha and Botswana are other examples of progress. In Ghana, they built six mega shopping centers in six years, which is significant considering they only had one before, and foreign investment has grown strongly in recent years. In the case of Botswana, it has a GDP almost equal to that of Thailand which is impressive growth. We could add to this list Kenya, Uganda, Tanzania, Mozambique, and Zambia.

The Continent of the Future?

In recent years, Africa has been thought to be the continent of the future, which will be able to feed the growing world’s population and the only one that could supply countries like China, India and the USA.

But there is another side of the story. Despite the growth of these countries, poverty remains a huge challenge. Just as an empirical fact, Ethiopia has approximately 100 million inhabitants, and they have achieved high growth rates, but they continue to have distressing figures of roughly 20 million children with malnutrition.

Africa also continues to have the lowest GDP in the world, with areas such as South Sudan, Burundi, Malawi, Sierra Leone, Central African Republic, Mozambique, Madagascar and The Democratic Republic of the Congo averaging a GDP of only 350 dollars. In Zimbabwe, for example, the majority of the population is poor, they have one of the most substantial inflation rates in history, they became independent only in 1980, 15% of the population has HIV, and unemployment rates are some of the highest in the world. All this is primarily due to popular discontent, which has led them to a constant political crisis.

The vast majority of countries are indeed impoverished.

A large portion of the African population is engaged in agriculture and manufacturing, with most of the companies being informal because there is no confidence in business people or in the government. This, consequently, has led to a very high level of tax evasion…

The promising figures in economic growth in some parts of the continent need to be accelerated further.

On a widely used map of the world, Africa appears to be comparative in size to China, but the real size of Africa is much bigger! It is equivalent in area to all of Europe (except Russia and the Nordic countries), the United States, China, India, and Japan combined, really hard to imagine, but true.

Africa, Barn Of The World

According to the World Bank, seven of the fifteen countries that are increasing agricultural production are from Africa. Experts see the continent has the potential of being the “barn” of the world. The strange thing is that the United Nations have declared that this “barn” can feed the world as a whole, but this then prompts the following question: is it ethical to feed the world when there is still so much famine in the region itself?

This is why Africa needs to continue growing. China is a good example of a country that managed to open to the world, giving its producers the opportunity to successfully access foreign markets. Most of it has been done with the help of technology, with the development of companies like Alibaba.  Since the 90s, China began to supply the entire world, but the most incredible thing is that they also managed to provide for themselves. Can’t the same happen with Africa?

It is incredibly likely that if Africa continues along this path of productivity and becomes a “barn” to the world, it will also be able to supply for its domestic consumption. More companies would be created with a steady growth of the number of SMEs, employment would increase, the middle class will continue to grow, and supply would be available to the world and domestically. This should continue to grow vertiginously, especially if some tools and education could be offered to producers so the population would be able to stand on its own feet and stop relying on charities.

Technology is an answer

Looking for ways to continue supporting the growth of Africa, I have always seen technology playing a role in the development of a society. That is why four years ago, together with my friend and business partner Juan Olea, we developed a very ambitious pilot, a B2B marketplace, similar to Alibaba, for African producers. As a result, in just four weeks 400 African food-producing companies were uploaded. The pilot plan allowed us to understand their needs for digitalisation, and to realise that there is a large number of producers with the ability to export, with the correct degree of knowledge and a desire to introduce technology into their small and medium enterprises.

It’s hard to understand how this has not been a priority for global innovative entrepreneurs, and I wonder, why are our great innovators-entrepreneurs more concerned with bringing a few into space instead of taking care of vast masses of poverty?

We cannot waste more time. It is true that since the report of May 11, 2001, where The Economist classified Africa as the continent without hope, Africa has grown substantially and is believed to be the continent of the 21st century, but there are still large amounts of famine, and above all, more than 400 million people in poverty who cannot wait. It is time to open innovators´ eyes so that we can help integrate this continent into the world economy in a limited time and help defeat extreme poverty that suppresses Africa.

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Banks Have a Responsibility to Fix the Financial Education Gap

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by Michal Kissos Hertzog, CEO, Pepper

Michal Kissos Hertzog

Despite the abundance of technology and information at our fingertips, impartial and free financial guidance is scarce. Fintechs are addressing the financial literacy gap with tailored insights, real-time alerts, and nudges – but our new research has found that consumer confidence when it comes to managing their personal finances is shockingly low.

The recently launched Pepper report, Banks’ Role in Modern Society, found that 93% of consumers do not believe their school, college or university prepared them to control their purse strings, with two thirds (67%) admitting they feel ill-equipped to make the best financial decisions for themselves. 

As we enter a new decade banks need to understand their role in modern society is changing. But what can they do?

Banks are still not leveraging data to solve pain points

When it comes to financial education, there’s clearly room for schools and universities to step up. But it makes sense for banks to play a role in this too, as they have the data and tools to help people manage their money in real life. What’s more, in the absence of robust financial awareness among customers, nearly half (47%) said they believe it’s a bank’s duty to help them make better money decisions. 

goHenry, Squirrel, Cleo, and Yolt are good examples of fintechs who are working to fill the financial literacy gap in the UK, offering solutions to help Brits better manage their cash. So why are banks still yet to make headway in this space?

One key reason for this is the inability to utilise the wealth of customer data they’re sitting on, due to clunky legacy systems that still exist in most major banks. Products and services need to start with understanding customer pain points – such as people not being involved with their money; not knowing how much to save, how much they’re paying for loans and so on – and using that data to focus on solving them.

If banks moved from a business model that focuses on P&L and to one which puts customers at the heart of decisions, they would be well underway to fixing the financial literacy gap and catering to the 49% of Brits who would trust their bank to provide money management information.

Fintechs are able to address these pain points much easier, adapting to new demands quickly and efficiently. With a flexible digital core, traditional banks can meet customers’ evolving needs and demands and provide solutions of real value that empower customers with financial awareness and knowledge.

Boosting consumer’s knowledge and confidence to invest 

It’s not news that cash savings rates in the UK are shocking. According to Finder, consumers are struggling with growing their cash: 1 in 3 Brits having less than £1500 savings, yet our research shows they’re still not turning to investments because they lack the know-how. In fact, nearly three quarters (72%) of consumers do not currently invest in stocks and shares or in an investment fund, with a fifth (18%) admitting they do not know how to.

Fintechs such as Wealthfront and Acorns in the US, are working towards giving everyday consumers access to investment education. At Pepper, we recognised the gap in the market and launched Pepper Invest, which provides customers with educational insights such as information about the stocks available and their past performances, analysts’ recommendations, news, hot updates, a glossary of capital market terms, and more.

Yet many banks in the UK often ignore customers than earn below a certain wage. In fact, almost two thirds (63%) believe banks prioritise those in better financial positions and over a third (36%) say banks don’t prioritise loyal customers at all – that’s a lot of customers that feel underappreciated. 

The rise of apps, APIs and broader technologies within AI, data science and machine learning, is beginning to open up access and help those who want to get onto the investment ladder (e.g. 73% of 18-24-year-olds) but feel like they can’t (e.g. 81% of 18-24-year-olds). Not only does this help lower the barriers of entry to the investment market, but these technologies can also help to provide education and guidance along the way. Clearly though, the industry has a way to go and banks in particular need to step up.

Consumers want more from their bank – not just a safehouse for cash

Nowadays, consumers want and expect more from companies they interact with. In the same way that Asos suggests similar items based on your browsing history, or Deliveroo recommends your next meal by using your last order, the research has shown that consumers want their bank to be more than just a safe house for cash.

Ultimately, this is a reciprocal relationship. If banks help their customers become more financially savvy, by giving them the tools to make better financial decisions with simple and straightforward guidance, they will become better customers. They will be more likely to use other products and services in a positive way – such as mortgages and investments – yet too many banks are still reliant on income from overdraft fees and costly loans.

Above everything, a bank’s role in modern society is to be customer-obsessed and to do right by them. It’s crucial that banks move away from a profit and loss business model and mindset to one which focuses solely on the customer. Only then will we see the improvements to financial education and literacy that consumers clearly want and need.

Please see here for the full report commissioned by Pepper, Banks’ Role in Modern Society.

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Tackling Money Laundering – New UK Rules

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New money-laundering rules came into force on 10 January in the UK.

Firms need to take action as new rules aimed at tackling money-laundering came into force. These place increased importance on the acceptable use of electronic verification methods in confirming identity, without the need for passports or utility bills.

Consequently, all financial services firms, solicitors, accountants, estate agents and now also letting agents not currently using electronic verification, need to re-evaluate their customer due diligence processes. Electronic verification is a far more robust, cost-effective method of Know Your Customer (KYC).

The new regulations recognise the latest technological developments and clearly state that regulated businesses can use electronic verification instead of traditional methods of KYC such as passports, driving licenses and utility bills. Since 2004, firms have been able to use electronic verification, but the latest regs are explicit in that firms can use this method as their sole basis for client verification.

In an earlier (April 2019) Treasury consultation on the money laundering regulations, before they brought them into law, the Government also made it clear that it was looking to encourage the greater use of electronic verification.

The EU’s Fifth Money Laundering Directive (5MLD) was transposed into UK law by regulations published just days before Christmas, leaving firms with very little time to make the necessary changes. Any firms that haven’t already prepared will, therefore, need to take action immediately.  This includes sectors that were not previously included such as crypto-currency platforms, art dealers, pre-paid cards and certain letting agents dealing with rents of over €10,000 per month.

Martin Cheek, SmartSearch

Commenting on the new regulations, Martin Cheek, managing director of SmartSearch, said: “The Government – and the EU – are right to want to see more use of electronic verification. It’s been shown to be more reliable, quicker and more cost-effective than manual checks. Plus, firms can have highly efficient screening and ongoing monitoring for Politically Exposed Persons and Sanctions, all of which are a requirement of the Anti-Money Laundering rules.

“It’s a pity the regulations didn’t appear until so late in the day, but it is imperative that firms take action now to show they comply with the new regulations or else they could face a significant fine. 

“There is increased national and international focus on the scourge of money-laundering and terrorist financing and electronic verification is an easy way to help prevent this.

“At SmartSearch we make it our business to stay up-to-date with all the latest developments so our clients who use SmartSearch for their checks can be sure they are compliant at all times.”

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Firms Warned Over Rise of ‘Ransomware Gangs’ After Travelex Attack

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The cyberattack on foreign exchange provider Travelex demonstrates the growing threat of ransomware and is a warning that firms need to step up their security, according to a leading cyber expert.

Tim Thurlings of bluedog Security Monitoring says the company has detected a worrying increase in the number of ransomware attacks worldwide in recent months. He blames a combination of factors including the ready availability of ransomware on the darknet and the uptake of cyber insurance which effectively allows companies to cover the cost of ransom payments.

The Travelex case follows a recent attack on the Dutch University of Maastricht, which is believed to have paid several hundred thousand euros to retrieve its data.

Tim Thurlings says: “Ransomware is now big business. Criminal gangs are blatantly targeting companies and negotiating fees. The cybercrime market has become more professional. Coders develop ransomware and sell it on the darknet, which covers their own tracks and allows others to take the risk.

“Attackers can buy advanced malware from as little as €500 and it even comes with helpdesk support to ensure victims can access bitcoins to pay the ransom.”

Typically malware enters a company’s IT network through vulnerabilities in the system or through phishing emails to staff. Once inside, it spreads through the system, activating only once the backups and many of the machines are infected. The company’s data is then encrypted and the business grinds to a halt.

“This is when the clock starts ticking,” says Tim, “as now everything is costing money. Productivity is at a standstill and experts are called in to restore the network. Typically the ransomware demand is well thought out and is an amount which is lower than the cost of fixing the problem.

“The attackers know that businesses have to get back on their feet or go bankrupt, and that big companies are insured against these types of attacks. With the insurance companies picking up the bill, the attackers have created a very attractive and profitable business model.”

While big companies tend to be targeted by professional crime gangs, smaller firms suffer more random attacks but can be more at risk.

“Attacks on smaller firms are more like drive-by shootings,” adds Tim. “The criminals may send out a million phishing emails, knowing that a small number of people will click through. Small firms are unlikely to have the money to pay the ransom, hire experts to restore their system or have cyber insurance – so there is a bigger risk of them going out of business.”

While companies need to secure their networks and educate staff about cybersecurity, he says firms now need to take their security to the next level by using a professional 24-hour cybersecurity monitoring service.

“Measures such as firewalls and endpoint protection which firms have traditionally relied on are no longer adequate today as they can be breached all too easily,” says Tim. “Companies need to be able to detect threats inside the network – whether that is ransomware spreading through the system, an attacker logging into it from a remote location or a rogue employee downloading sensitive data.

“A cybersecurity monitoring service will help ensure that any problems are identified and contained as quickly as possible with minimal impact on the business.”

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Standard Chartered makes strategic investment into Linklogis

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Standard Chartered has announced its strategic investment into Linklogis, China’s leading supply chain financing platform, to enhance its joint supply chain ecosystem proposition and provide suppliers with access to affordable and convenient financing. This marks the Bank’s first investment in a supply chain platform in China, as well as the first global bank investor in Linklogis. The purchase of the equity stake also builds on Standard Chartered’s ongoing partnership with Linklogis, which started in February 2019 with the signing of a memorandum of understanding to jointly develop and deliver a supply chain financing proposition, and the completion of several joint deep-tier supply chain financing transactions. 

Standard Chartered will continue to leverage Linklogis’ technology and expertise to provide large corporate buyers with greater visibility and transparency of their extensive network of suppliers, as well as cheaper and easier access to financing for suppliers further upstream. In addition to offering these capabilities to onshore customers, both parties will explore new opportunities, including the extension of these solutions to support cross-border flows. 

Benjamin Hung, Regional CEO for Greater China & North Asia at Standard Chartered, said: “Corporate clients globally are increasingly looking for efficient and secure digital platforms to meet their supply chain financing needs. Our strategic investment into Linklogis not only allows us to better serve our clients by being a part of their integrated ecosystem, it also reinforces our efforts to support China’s opening by facilitating the flow of capital, particularly for the Greater Bay Area.”

Simon Cooper, CEO of Corporate, Commercial and Institutional Banking at Standard Chartered, added: “Providing deep-tier supply chain financing is a key priority in our strategy to support our clients’ entire sales and distribution network. To that end, we are excited to deepen our partnership with Linklogis, who shares our commitment in helping businesses around the world create healthy and sustainable supply chains by banking their suppliers and distributors.”

Charles Song, Chairman, and CEO of Linklogis, said: “We are much delighted with the deepening of partnership with Standard Chartered which shall invariably complement each other’s effort in the offering of supply chain financing solutions to the suppliers’ ecosystem. It has always been the strategic goal of Linklogis to develop innovative tech-enabled supply chain financing platform for the betterment of market efficiency and in support of real economy.” 

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Best Apps to Help You Manage Your Finances

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We’re at the end of 2019 and the national debt issue isn’t letting up. Many people struggle with debt – whether it’s because of student loans or because of accumulated credit card debt, or for other reasons. It’s never been more important than it is now to have a set of money-management skills that will help you balance your finances and stay afloat.

Especially when the big city is becoming even more difficult to live in, being money smart will make all the difference between being able to pay your rent or not. While managing your personal finances can seem daunting and difficult, there are tools out there that you can use to help. You can also seek out the aid of a non-profit credit counseling agency that can teach you how to use these tools effectively, as well as come up with a debt repayment plan.

Here are a few money management tool apps that you can use on your own or with the help of a certified Credit Counsellor.

Mint

Mint is a free app and it is an effective financial planning resource that you can use to create a budget and track spending. It offers the convenience of having all of your finances in one place by allowing you to connect your bank and credit card accounts, as well as enter info about your monthly bills.

It will send you reminders about when bills are due and alert when you are about to hit a budget limit. The most useful bit is that it will track your spending habits and then give you the advice to help you have better control over your spending.

You Need a Budget

You Need a Budget (YNAB) is a great app if you are struggling with the debt partially due to the built-in “accountability partner” that keeps you on track and lets you know where you’re slipping up and how to remedy it. You can set up weekly or monthly budgets but also create budgets for other purposes, like when it comes to buying Christmas gifts, for example.

While there is a monthly or annual fee (depending on which you choose), you may just find that the services worth it. After all, the investment may encourage you to stay on track and actually use the app to your benefit.

Wally

This completely free app helps you spend tracking in the most convenient way: instead of having to manually enter in your expenses you can instead take a photo of your receipts and the app will be able to read them and add the total to your monthly spending. You can also enable geolocation on your device and it will automatically record where your money was spent as well.

With a clean design and an easy-to-use interface, you can’t go wrong with Wally if you are looking for something simple to use that will help you track your monthly spending.

What Works for You?

Not everyone is the same when it comes to managing money. There are a lot of apps out there that can help that are totally free or that offer free trials. Take a look and see which one works for you!

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Australia’s first startup for bill-splitting may change the course of 2020

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Payments are always awkward when it comes to parties or being around with friends. When you plan a dinner with friends or family members, it may get uncomfortable. Getting a bill from the restaurant could be problematic. Let’s take a live example – you got coffee while your friend ordered Pizza and coke. How would you split the bill when you have just ordered a coffee?

Bill splitting is a new trend, and people are striving for this kind of financing technology. Australia is one of the first countries to grant little start-up with significant funds for a new word in fintech.

Benefits of bill-splitting

We should say that planning an event with friends or family members is always problematic when it comes to finances. In a typical scenario, people may feel awkward when they have to think about splitting. Just like we mentioned in the example above, it may be inconvenient to pay for something that you’ve not ordered.

Bill-splitting is a new word in technology. The financing world was waiting for apps like that. The Australian government will give enough funds to start-ups to come up with this kind of app. From now on, Aussies will have a perfect gadget to help them in bill-splitting. The government is a much-needed middle-man in this kind of tech-finance trend. Every local brand in the country should follow this contemporary technological approach, and country authorities may help it.

First start-up for Australia for bill-splitting

Groupee was the first start-up to raise millions of dollars from the private and public sectors. The CEO of the company says that people love sharing experiences. Paying for something that you’ve not ordered is not a pleasant experience. That’s why bill-splitting is an essential factor when it comes to an enjoyable experience with a group of friends.

Jarred Baker, CEO of “Groupee,” noted that the start-up was founded back in 2016. With a specific profile, the company was focusing only on the restaurant industry. Soon, they found that people need bill-splitting in every area of life, and the company decided to expand. Jarred is thankful to the private business sector of Australia that helped the company to raise millions of dollars in 2019. At the same time, Baker said that the Australian government helped them a lot to connect with all industry companies.

The company decided to grow overseas from 2020. It will be impactful as the Australian government is right by the company’s side. CEO of the company said that they want to expand not only in country-wise but also in different industries.

Start-up will touch every industry in Australia

The IGaming industry is growing in Australia. The country gave the green light to many operators and has been friendly since passing the bill about online gaming space. Groupee representatives believe that the company can operate not only on the food industry but also on the gaming space. Friends could be interested in playing together and set up a challenge. In most cases, online betting or casino games could be motivated by the challenge to a friend or family member.

Start-up representatives want to expand their interest in online gaming space from 2020. Australian online casino will have new features from 2020, where people will be able to challenge their lucky and split the bet. It will be a new word in the gaming industry, and country officials are ready for it.

Future of bill-splitting in next decade

As we have mentioned above, the company was founded back in 2016. Since then, a few years have passed, and the company has finally come to an interesting point of development. CEO of start-up believes that the next decade will be something that people are not waiting for. Jarred noted that the company has innovative ideas to change almost every industry in Australia.

As of now, start-up idea about bill-splitting is accessible in every phone or bank of Australia. The application has some exciting features to use cards of friends (Visa and MasterCard). It’s attainable to Aussies, but soon it may be tested around the world.

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Fujitsu’s Top Predictions for UK Financial Services in 2020

https://thefintechtimes.com/fujitsus-top-predictions-for-uk-financial-services-in-2020/

The financial services industry in the UK in 2019 is drastically different than that of 2009. Social, economic and technological shifts have led to enormous change and this has translated to a radically different banking experience for consumers across the country. We have seen the rise of digital banking, the disappearance of banking services from our high streets; and traditional banking institutions are facing increasing competition and growing costs of operations. The next decade holds only more transformation for how banks run their business, and consumers interact with their banking providers.

According to Ian Bradbury, CTO, Financial Services for Fujitsu UK and Ireland, the changes afoot in the industry offer traditional banks challenges, but also opportunities to evolve their business and offer a new banking experience; one that will cater for a discerning and demanding customer base.

“Technology has completely changed the face of banking in the UK. As we head into a new decade, it’s safe to say that there has been a radical shift in the way people bank. Customers are looking to digital alternatives that are speedier and more convenient than traditional ways of banking and the new competition in the market has changed the way traditional banks operate. The past year has seen app-only challenger banks rise in popularity, a decline of physical bank branches and a renewed focus in the industry on social purpose. These will continue to shape the face of financial services over the next year as the industry heads towards another important year.”

In the face of rapid transformation, Bradbury has outlined the top six changes he predicts for financial services in the coming year.

  1. Workplace transformation will take hold

While we have been seeing a subtle transformation in the banking workforce for a number of years, 2020 will bring the biggest shift yet. As the digitisation of banking continues, financial services organisations will move away from traditional, functional roles; prioritising people who can help evolve what the bank does.

This will result in a vastly different workforce with vastly different skills. Creativity, collaboration and empathy will be crucial skills for the new set of banking employees, as companies look for employees who can offer not only technical expertise but the soft skills that will help banks build the new services and ways of working that will attract consumers.

Banks all around the world have been looking at ways to scale down and reskill the workforce, but 2020 will be the year we see that fully take shape.

  1. 2020 will be the year of challenger banks

There has been a lot of talk about challenger banks over the past few years, and in 2019 the likes of Monzo and Starling Bank were successful in their crowdfunding ventures. But 2020 will be the year they reach their full potential.

These banks have all been born in the cloud and their methods are agile, cheap and stable, a model that traditional banks have been attempting to replicate. Over the year, they will continue to grow their customer base and expand their services over the next year. Most significantly, these banks will start to see growth coming from the segment of consumers who are the most loyal to legacy banks; tempting traditionalist to use their services by offering slick user interfaces and superior digital services.

As a result, 2020 may be the year when a traditional bank takes the leap and acquires a challenger bank to take advantage of the brand loyalty, as well as the scalable cloud-native systems owned by those banks.

Many challenger banks are now in a position where they are serious competitors to traditional banks, largely thanks to the huge investment in the fintech sector over the past year. This will see them move even further into the mainstream in 2020.

  1. The debate about digital currencies will reach fever pitch

The arguments for the introduction and adoption of cryptocurrency may be valid – for example, ensuring that nation-states are unable to manipulate and influence traditional currencies, ensuring more financial stability for citizens – but the entrance of new cryptocurrencies in 2019 has attracted strong criticism from the industry.

With tech giants betting big on the future of cryptocurrencies, financial regulators have had to respond in kind; and 2020 may be the year we see central banks introducing their own cryptocurrency.

Tech companies will go through great lengths to develop their own cryptocurrencies next year, so central banks will have to match them to maintain control over their legal tender.

  1. Outsourcing rates will spike, as banks hand over responsibility for their legacy systems

As banks continue to focus on modernising their services, we will see a dramatic rise in outsourcing when it comes to the management of legacy systems. Rather than focusing resources on managing their IT stack, banks will hand off responsibility to third parties, so they can spend more time serving their customers and finding new routes to market that will grow their consumer-base.

Much like the moves we’ve seen in the insurance industry over the past few years, banking will become less about legacy tech, and more about building new cloud systems that allow for innovation and new digital solutions for customers.

As banks improve their IT systems, they will be able to meet the increasing demands of today’s tech-savvy consumer.

  1. Banks will put trust at the heart of their services

2020 will be the year where banks invest in services, offerings, and programmes that demonstrate to consumers that they are trusted institutions. As businesses that are entrusted with consumers’ money – and their data – they hold a unique position to build a strong relationship with people based on trust.

As the industry’s social purpose is increasingly put in the spotlight, banks have recognised the need to contribute to wider society; not only providing banking services to their customers but also improving their lives on a broader level.

With traditional banks typically more trusted than new digital entrants, this is an opportunity to differentiate themselves in 2020 in an industry that is more crowded, more complex and more competitive than previous years.

Given the pressure that traditional banks are under from app-only alternatives, trust will be one of the biggest strengths they have over the next year.

  1. Non-bank digital platforms will up the fight against traditional banks

As non-bank digital platforms continue to offer alternative payment schemes, lending options and savings alternatives in 2020, banks will risk losing an increasing number of customers to these competitors. As these services become more integral to the customer journey, banks will be facing a tough decision – whether to find opportunities to partner with digital-first non-banks, or to rise to the challenge and compete with the new players in the market.

For those who choose to create partnerships, there will be the opportunity to provide payment, lending and saving services via the non-bank platforms, but they should expect to see a squeeze on their margins of profit and a rise in competition across the market. The increased competition on the market means that banks’ profitability and wallet share will inevitably suffer.

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Micro-Businesses Spend Ten Weeks a Year Trying to Sort Their Finances

https://thefintechtimes.com/micro-businesses-spend-ten-weeks-a-year-trying-to-sort-their-finances/

The new report, Make Business Simple, has been created to shine a light on the practices of the UK’s 5.6 million micro firms and help them cut down on financial admin time. Research shows that micro-firms (0-9 employees) are spending 19% of their time on this type of work – equating to 15 hours a week. A third (33%) says that financial admin negatively impacts their personal life and one in ten (11%) says it keeps them up at night. Smaller firms are disproportionately impacted, with sole traders spending almost a third (31%) of their time sorting finances. 

UK micro-businesses spend ten weeks of the year working on financial admin, according to a new report, Make Business Simple, published today by digital bank Starling. The report has been created to shine a light on the practices of the UK’s 5.6 million micro-firms, which make up 96% of the business population, and encourage them to embrace new ways of cutting down time spent on financial admin.

By studying more than 1,000 UK micro-businesses, Starling Bank found that the average firm clocks up 79 hours of labour each week, of which 15 are spent on finance admin tasks – a considerable 19% of total time, equating to just under ten weeks of the working year. The research also found that the smallest firms are disproportionately impacted by this kind of work, with sole traders spending almost a third (31%) of their labour time on financial admin work, and companies with 1-4 employees devoting a quarter (25%) of their time to this area.

Micro-businesses in the study recognised this as an issue, with more than a quarter (27%) stating that they spend too much time on financial admin, rising to almost half (46%) among firms with 5-9 workers. When asked what effect is has on the rest of the business, one in ten (10%) believed it hampers growth while a fifth of micro-firms (21%) say that if they could reduce time spent on finances, they would divert the labour towards sales.

Firms in the study also recognised the impact of finance-related work on life outside the business, with a third (33%) claiming that it affects their personal life, one in ten (11%) stating they have been kept up at night thinking about finance work and 12% admitting it negatively affects holidays.

The most time-consuming finance task is accounting, which takes micro-firms 1.7 hours each week, equating to more than one week a year spent solely on keeping the books. Accounting was also seen as the most stressful part of running a business and was more likely than any other task to eat into downtime, with a third (32%) of micro-firm leaders stating this is the case.

When asked what could save time in this department, one in five (19%) firms felt that being able to see and access all of their finances in one place could be the solution, while one in six (16%) recognised the potential benefit of having an accounting system integrated with their bank account.

Anne Boden, CEO and founder of Starling Bank, said: “The importance of micro-businesses can’t be overstated. They make up the vast majority of enterprises in the UK, employ almost nine million of us and generate nearly a trillion pounds in revenue each year.

“In our new report, Make Business Simple, we wanted to get to know these companies better and identify ways in which we could unlock more of their potential. What our findings unequivocally show is that micro-businesses are spending a huge amount of time on financial admin work.

“We have developed our business account with this challenge in mind. By offering businesses a digital bank account with smart money management tools as well as a range of services that can be linked to their bank account and easily accessed, we hope to reduce the burden caused by finance work, freeing up more time for business leaders to focus on growth.”

Commenting on the report, one Starling Business Account customer, photographer Aina Gomez said: “I didn’t get into business to do finance-related admin, but without it, you are doomed. I’m still learning. I’ve purposely put myself through some training, but I can still say that this is the worst part of running a business. However, I realise how key an issue it is and keep pushing to learn how to do it better.”

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Will a VPN Protect You Against Cyber Attacks?

https://thefintechtimes.com/will-a-vpn-protect-you-against-cyber-attacks/

This year, threat actors will steal over 33 billion files from unsuspecting users. Identity theft alone impacts over 60 million Americans — and these numbers don’t include the millions more that are affected by phishing emails and cyber-blackmail attempts.

It’s safe to say that cybersecurity is one of the most critical areas of interest in the 21st century. And statistics echo that. Over 80% of Americans are concerned about their digital safety and security. To help curb the threats, millions of people are turning to Virtual Private Networks (VPNs) to help them access the internet more safely. In fact, over 25% of all internet connections now come through VPNs.

But do they work? Are VPNs really enough security to prevent cyberattacks?

What Are VPNs?

Virtual Private Networks (VPNs) help people access the internet anonymously by routing and encrypting their traffic through servers outside of their local network. VPN technology can get hyper-complex. But, if for a simple breakdown, you can learn more here.

So, what can VPNs do?

  • VPNs can help bypass region-locked content
  • VPNs can encrypt your data
  • VPNs can help bypass firewalls
  • VPNs can secure browser histories
  • VPNs can speed up internet connections
  • VPNs can anonymize digital sharing
  • and VPNs can help protect against cybersecurity attacks

It’s the latter that this post is going to focus on. But it’s important to remember that VPNs are not created for the sole purpose of security. They have hundreds of functions and are an important part of the global privacy and security debate — and millions of people’s daily lives.

Do VPNs Help Prevent Cybersecurity Attacks?

The answer to this question is nuanced, and it really depends on the type of cybersecurity attack being performed. Broadly, VPNs address many weak points that threat actors utilize to breach networks. But granularly, certain attack vectors can easily bypass a VPN — especially if they originate internally.

To better address this question, this post will be broken down by the type of cybersecurity attack.

Do VPNs Help Prevent Malware and Viruses?

No! While popular VPN services like Surfshark, NordVPN, and Express VPN all have encryption protocols and baked-in security features, they cannot protect against physical viruses. Instead, users should rely on anti-virus programs that are regularly updated, well respected, and reputable.

It’s important to note that VPNs can also be subject to malware and viruses themselves. For those people using free VPNs on a crowded server, VPNs may actually create additional security issues — not help prevent them. Since these large servers are a big target for hackers, it’s important to only use reputable VPNs that offer plenty of support and server space (note: these are almost always a pay-to-play service).

Do VPNs Help Prevent External Hacking Threats?

Yes! Threat actors attempting to steal information during transfer (i.e., over your connection) are going to have an incredibly difficult time doing so with a VPN in place. Some VPNs — such as those that encrypt data using military-grade encryption tech — can act as a significant barrier for hackers attempting to steal information in motion.

So, when a person with a VPN is connecting to a local wifi hotspot, they don’t have to worry about malicious individuals stealing their credit card information, passwords, files, or anything else. Their traffic is being routed through a secured, encrypted connection to an external server.

This also makes VPNs incredibly valuable for those looking to remain private online. Threat actors, ISPs, and website owners will be oblivious to the location, identity, or be able to trace any information coming from a computer with a VPN.

Do VPNs Help Prevent Internal Hacking Threats?

No! VPNs cannot prevent someone from hacking a computer physically. VPNs are only for connections, not physical security. Passwords, 2 Factor Authentication protocols, and robust identity controls are the primary methods that are used to safeguard physical servers, computers, and mobile phones.

For businesses looking to deepen their security posture, investing in solutions like identity controls and least-privileged access methodologies in addition to VPNs is a smart move. For individuals, simply password locking the device and activating 2 Factor Authentication should prevent physical hacks.

How Do VPNs Protect You?

Every 39 seconds, a hacker attacks someone and attempts to steal their valuable information. These attacks can cause significant stress and financial loss for those affected. 77.3% of identity theft victims report emotional stress, and there is a new victim of identity theft every 2 seconds — impacting 33% of US adults.

Those are some massive numbers! Proper usage of VPNs could help curb that number significantly. While VPNs cannot prevent viruses or malware from attacking systems, they can protect users from hackers attempting to steal their records during transit. This accounts for a significant portion of the overall threat attacks carried out in the United States and abroad.

But, cybersecurity is only one of many reasons to leverage a VPN. They help safeguard against nosey governments and private entities, they protect information from prying eyes, they can help bypass firewalls and other restrictive elements, and, to top it all off, they can improve speed, reduce privacy frictions, and help people access region-locked content from across the globe.

In other words, VPNs can do much more than keep computers secure.

Final Thoughts

There is often confusion around what VPNs can and cannot do. Many people believe that simply connecting to a VPN will prevent them from being able to be attacked online. Other people believe that VPNs offer no security benefits. The answer lies somewhere in the middle.

Yes! VPNs can help protect against malicious threat actors. No! They are not a catch-all to cybersecurity attacks. The easiest way to explain it is this — VPNs can help protect data from prying eyes and hackers using encryption technology, but they cannot prevent viruses, malware, or physical threats from stealing information. This makes VPNs an incredibly valuable cybersecurity tool, but not one that offers broad coverage. Invest in VPN technology, AND an anti-virus and identity control to cover all of your cybersecurity bases.

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Nets acquires Finnish payment technology providers Poplatek and Poplapay

https://thefintechtimes.com/nets-acquires-finnish-payment-technology-providers-poplatek-and-poplapay/

Nets acquires Finnish software developer Poplatek Oy (“Poplatek”) and payment terminal service provider Poplatek Payments Oy (“Poplapay”) to boost its payment terminal service capabilities. The addition of the tech competencies from both companies will further strengthen Nets’ ability to provide best-in-class payment acceptance solutions to merchants across Europe.

Today, Nets, a leader in the payments industry, announces its acquisition of Finnish software developer Poplatek, together with its spin-off company Poplapay that provides payment terminal services in Finland. The acquisitions will further strengthen Nets’ group-wide payment application capabilities and offerings within payment terminal services.

CEO of Merchant Services at Nets, Robert Hoffmann, says: “Our ambition is to become a pan-European payments champion. Poplatek is an agile and high performing tech company, and Poplapay has solid capabilities within payment terminal services. Together, they will help us increase our flexibility to better accommodate different customer needs across Europe and provide best-in-class payment acceptance solutions, also going forward.”

CEO of Poplatek, Mikko Virtanen, says: “Becoming part of a leading pan-European industry player like Nets is very exciting for us. We look forward to taking part in the European journey that Nets has embarked on and bringing our skilled teams together to develop solutions for the benefit of merchants across Europe.”

CEO of Poplapay, Petri Ahti, says: “We are thrilled about the opportunity to take our service capabilities to the international playground. Becoming part of the Nets family paves the way for us to increase our market reach and gives us resources to further improve our services for existing customers as well as accelerating the development of new services designed to fulfill the demands of European customers.”

Poplatek and Poplapay employ approximately 40 people in total and have combined annual revenue of around €5 million. The acquisitions were completed on 8 January 2020.

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