Pro Bono Cybersecurity Recruiter Aims to Protect Charities from Cybercrime

https://thefintechtimes.com/cybersecurity-protect-charities/

Specialist provider of tech and cyber-security staffing solutions, La Fosse Associates, has launched a first-of-its-kind pro bono recruitment and advisory practice to help charities combat the threat of a cyber-attack on their organisations. La Fosse Pro Bono will operate with charities throughout the UK.

In 2018, one in five UK charities fell victim to a cyber-attack and the number is expected to continue in line with the size of the sector itself. Indeed, latest figures show there are 200,000 registered charities in the UK who between them employ almost 900,000 people and generate a combined income of £48 billion.

This makes the charity sector one of the largest in the UK economy and the reason why 40,000 charities experienced a cyber-attack over the last 12 months.

many charities lack the resources available to prevent these crimes from taking place

But with tightening budgets, many charities lack the resources available to prevent these crimes from taking place. That is where La Fosse’s Pro Bono practice comes into play, as James Parker, CEO, explains:

“Care is a founding principle of La Fosse that extends beyond our own people, the clients we work with and candidates we help. It is the driving force behind the rapid growth we have experienced over the last 10 years, and the reason why we are now perfectly positioned to support those organisations who need it most.

“With a team of over 200 people operating across the UK and the United States, we have built a national and international network of skilled cyber professionals who are among the best in the industry.

“Our charity partners can tap into this network to source the cyber expertise they need to protect their organisations at no cost to themselves. It is the very definition of tech for good.”

La Fosse’s Pro Bono practice is unique to the recruitment industry and can already boast a handful of successful advisor placements, including:

·       Amnesty International: Steve Wright (DPO at The Bank of England)

·       The Natural History Museum: Simon Hodgkinson (Group CISO at BP)

·       Comic Relief: Thom Langford (Founder at (TL)2 Security Ltd)

·       United Response: Yolande Young (IT Director – Information Security at BP)

·       Cancer Research: Moty Jacob (CISO at Traiana)

The company, which is headquartered in London and has offices in New York and Santa Monica, has featured in The Sunday Times’ Top 100 companies To Work for each of the last seven years.

A significant reason for this is La Fosse’s commitment to living the core value of ‘caring’ that is central to the company’s culture. This has made it an ideal partner of choice for those charities who have already partnered with the newly-formed Pro Bono practice, including Amnesty International.

Mike Robinson, Head of Technology, at Amnesty International said: “As a Human Rights Charity we are exposed to the same threats as any other commercial organisation – more so at times, given the work we carry out.

“We can’t operate with integrity without knowing we are doing everything we can to keep our donors and activists’ personal data safe and secure.

“La Fosse’s pro bono advisor practice has provided us with invaluable access to advice and mentorship from an industry-leader in the security space, allowing us to continue to campaign for our causes safely and effectively.”

Steve Wright, a Pro Bono Advisor placed by La Fosse with Amnesty International and Data Protection Officer at the Bank of England, added: “La Fosse’s creation of a platform for pro bono work in cybersecurity is an innovative solution to solve the real problems these organisations face.

“[It] will allow me to give back to a cause more than I ever would be able to in donations. I believe it’s important that we help not-for-profits such as Amnesty as much as we can to enable them to carry out the crucial work they do.” 

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Moving Data Analytics Up The Credit Union Priority Chain

https://www.pymnts.com/news/banking/2019/moving-data-analytics-up-the-credit-union-priority-chain/

Most of the insight into credit union spending priorities featured in the PYMNTS/PSCU Credit Union Playbook earlier this year is probably much in line with expectations. Anti-money laundering, data security, mobile/digital payments, fraud-fighting and payment tech rounded out the top five — with each ranking as a lead priority for over 50 percent of credit union executives. Given the average credit union’s focus on member experience, a big focus on security and smooth transactions as innovative priorities is no surprise.

What is surprising, however, is how relatively anemic a showing data analytics makes in terms of executive enthusiasm, with just over a third (35.7 percent) of credit union executives naming it as an innovative top priority. It was a result that PYMNTS’ Karen Webster and PSCU SVP of Data and Analytics Jeff Carelli agreed was quite puzzling on first glance, given the near-universal recognition of the importance of data analytics tools.

But Carelli said the question’s binary structure is generating a somewhat misleading answer. Financial institutions, he noted, don’t pursue things like data analytics as an end in themselves — it is a tool that is almost always going to be used in service of a broader objective.

And in some of those objectives — particularly in fraud detection and prevention — those uses are happening, iterating and thriving.

But the bigger-picture problem that stat points to is in the broadness of application — and the reality that in many credit union organizations tools are siloed into particular use cases like security instead of being leveraged more broadly across the organization. And that is a limitation in thinking, Carelli says, that can be costly — and needs to be rectified going forward if credit unions want to maintain a competitive presence in consumers’ lives.

“If credit unions don’t have a focus on data and analytics, all they can do is follow the moves of their competitors and the industry at large,” he said. “They aren’t seeing the insights into what they are doing and why — and that means they can’t get ahead of them to offer customers the things they want, or the things they don’t even know they need yet.”

Where Analytics Are Working

That fraud and compliance are leading concerns for the credit unions PSCU works with, Carelli said, is not that surprising. This is particularly true for the smaller ones, both because they are the most vulnerable and because building the fraud-detection tools necessary to take on sophisticated fraudsters often constitutes a more expensive and technology-advanced undertaking than they can hazard on their own. They are also the most likely to actually suffer catastrophic losses beyond their ability to recover in the event of a massive and successful attack.

That is why it is critical that those credit unions work with a service organization like PSCU to provide access to a set of security tools they otherwise couldn’t pursue on their own.

And those tools, particularly in PSCU’s case, draw often on the analytics infrastructure within fraud departments.

“The analytics infrastructure we build,” he said, is designed “by our fraud team to build rules, check in on the linked analysis across channels about merchant types and card types, to help fend off fraud. And a major issue is how quickly you can react in terms of writing rules and using machine learning and predictive analysis to modify rules as close to real time as possible as you are seeing trends that human eyes on their own could not spot.”

Fraud fighting and, increasingly, compliance areas like anti-money laundering (AML) and know your customer (KYC) regulations, are increasingly connecting into analytics frameworks wired to look for patterns across data holistically. That — broadly from a security and risk perspective — means organizations can get a much better view in context of when operations are normal, and when something is happening that should not be happening.

And, Carelli noted, in the world of security and risk, analytics are absolutely the supporting core missing because there is a wide understanding that data and analytics are really a foundation that underlies all of it.

The educational and operational challenge going forward is helping credit unions build that foundation under more of their organizations.

The Work Left To Do 

Credit unions have a lot to focus on at any given moment — from keeping members happy and protecting security to innovating payments forms and designing digital experiences — and all of it is critical to keeping up with the pace of a rapidly innovating market. The trick in presenting data analytics to departments, Carelli said, is not to force anything on them, or drag them into something they don’t want to do. It is to help them see this isn’t a new thing to do — it is a new way to do what they already have to do.

“This doesn’t have to be one more thing to think about and wrap their heads around or one more thing to worry about,” he said. “It is a foundation that can help you achieve all your other goals and make it easier to do so.”

That foundation, he said, can strengthen all kinds of areas. There are the places everyone’s minds jump to, he noted, like marketing or building consumer products and offerings. There are also the less flashy areas like back-office automation that frees humans from labor-intensive tasks.

And, he pointed out, the solutions also will tailor to the needs of the actual credit unions — and their actual members. What data analytics does best, he said, is aggregate and distribute data so credit unions can get a clearer snapshot of who they serve, what those people do — and how their attempts to offer up solutions to those customers compares to other credit unions in their size range.

What they do with that snapshot, he said, will vary depending on what they see in it. But it is better to know, and to strategize from knowledge, as opposed to seeing what everyone else does and making a guess as to whether to follow along or not.

“What credit unions do first is meet the needs of their members — and go the extra mile to anticipate them and meet them before they ever say them,” he said. “For us the challenge is how to bring as much data to our members in as many channels as possible so they can actually do that.”

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/news/banking/2019/moving-data-analytics-up-the-credit-union-priority-chain/

Global Regulators Circle Libra’s Crypto Wagon

https://www.pymnts.com/facebook/2019/global-regulators-circle-libras-crypto-wagon/

Two more financial regulators have warned that they won’t allow Facebook’s planned cryptocurrency, Libra, to launch without looking at it closely. The international Financial Stability Board (FSB) and the U.K.’s Financial Conduct Authority (FCA) have joined the Bank of England (BoE) and the G7 in speaking out about the need to thoroughly vet Facebook’s plans to release Libra next year.

In a letter to G20 leaders before their summit in Osaka, Japan this weekend, Randal Quarles, head of the FSB and vice chair for supervision at the Federal Reserve, spoke of the potential risks posed by digital currencies.

“Though crypto assets do not currently pose a risk to global financial stability, gaps may occur where crypto assets fall outside the scope of regulators’ authority, or from the absence of international standards,” Quarles said in the letter on Tuesday (June 25), according to the Financial Times. “A wider use of new types of crypto assets for retail payment purposes would warrant close scrutiny by authorities to ensure that they are subject to high standards of regulation.”

He added, “The FSB and standard setting bodies will monitor risks very closely and in a coordinated fashion, and consider additional multilateral responses as needed.”

Andrew Bailey, CEO of the FCA, revealed that his organization is working with the U.K. Treasury and the BoE to investigate Facebook’s plans.

“We will have to engage domestically and internationally with Facebook and this other [Libra] organization. They are not going to walk through authorization without that,” Bailey said on Tuesday.

As for the U.S., the Federal Reserve stated that it will also be holding Libra to high standards when it comes to consumer protection and regulation.

“Libra’s a new thing; we are looking at it very carefully,” said Federal Reserve Chairman Jerome Powell on Tuesday. “Given the possible scale of it, I think that our expectations — from a consumer protection standpoint, from a regulatory standpoint — are going to be very, very high.”

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/facebook/2019/global-regulators-circle-libras-crypto-wagon/

Senate Panel Eyes Algorithms, Social Media and ‘Persuasive Technology’

https://www.pymnts.com/news/regulation/2019/senate-panel-algorithms-social-media-persuasive-technology/

Algorithms and artificial intelligence — artfully applied, but for less-than-ideal purposes?

To that end, on Tuesday a U.S. Senate panel examined the ways social media giants — marquee names among them such as Google and Facebook — interact with users.

The hearing, held by the Senate Commerce subcommittee on Communications, Technology and Innovation, queried researchers and others who were critical of using AI to suggest content to end users.

The hearing came in the wake of, and continuance of, debate on privacy concerns for online users, as Reuters noted.  Proposed protections would curtail at least some use of data with the intent to suggest content.

In one example of criticism, Senator Brian Schatz, ranking Democrat on the Senate Commerce subcommittee, said the algorithms “feed a constant stream of increasingly more extreme” content.  The social media firms, he said, need to be held accountable for the impact of those algorithms.  “If YouTube, Facebook or Twitter employees, rather than computers, were making the recommendations, would they have recommended these awful videos in the first place?” Schatz asked. “Companies are letting algorithms run wild and only using humans to clean up the mess.”

In an appearance before the panel, Maggie Stanphill, Google’s director of user experience, said “No, we do not use persuasive technology at Google.” She went on to say that “dark patterns and persuasive technology are not core to our design.”

As quoted by The Hill, Sen. Richard Blumenthal, Democrat from Connecticut, said that “On the issue of persuasive technology, I find, Ms. Stanphill, your contention that Google does not build systems with the idea of persuasive technology in mind somewhat difficult to believe, because I think Google tries to keep people glued to its screens, at the very least.”

Also appearing before the panel was Tristan Harris, known as a former Google programmer who has been critical of social media practices.  Harris said that at least some platforms can predict behavior and “things about us that we don’t know about ourselves.”

The June hearing comes after U.S. lawmakers in April proposed a bill that would make tech companies detect — and remove — any discriminatory biases found in their technologies such as algorithms.

The Algorithmic Accountability Act of 2019, introduced by Democratic Sens. Ron Wyden and Cory Booker, would give new power to the U.S. Federal Trade Commission (FTC).  In other tenets of the bill, tech companies with annual revenue above $50 million would be mandated to study if race, gender or other biases are embedded in their computer models. The rules, as noted in this space back in April,  would also apply to data brokers and businesses with over a million consumers’ data.

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/news/regulation/2019/senate-panel-algorithms-social-media-persuasive-technology/

Shopify Stock Drops After Analyst Concerns Over Competition

https://www.pymnts.com/news/investment-tracker/2019/shopify-stock-drops-after-analyst-concerns-over-competition/

Shopify’s shares fell 8.9 percent on Tuesday (June 25), its biggest drop of the year.

The fall comes after its shares more than doubled from the beginning of the year, which created more than $25 billion in market value. That led the company’s shares to trade at around 21 times its estimated sales, making it more expensive by that measure than any tech stock in the S&P 500 Index.

However, at least five analysts have downgraded the company in the past two months, mostly due to the stock’s hefty price.

“We take a step back on shares to digest the 125 percent YTD increase ([versus] 21 percent for the Nasdaq), premium valuation and new product announcements,” wrote Wedbush Analyst Ygal Arounian as he downgraded the stock to neutral from buy, according to MarketWatch. “Additionally, while we view the announcements at Shopify Unite last week as further improving and differentiating the platform, the most impactful announcement, Shopify Fulfillment Network (SFN) isn’t expected to generate profits until 2023.”

Shopify is expected to generate more than $1.5 billion in revenue this year, and its revenue growth — as well as its execution — is still an attraction for investors. In fact, the company hasn’t missed any sales estimates in the 16 quarters that it has reported results as a publicly traded company.

“The reason I think the shares have done so well, independent of the real strong and favorable environment for software stocks, is that it’s lived up to its promise, and then some,” said Tom Forte, a D.A. Davidson analyst. “They now have a lengthy track record of execution, and being shrewd when it comes to capital allocation.”

Despite the recent downgrades, most analysts are still optimistic about the company. Shopify’s U.S.-traded shares currently have 15 buy ratings, 11 holds and two sells, according to Bloomberg. In addition, the stock has gained almost 1,600 percent since its May 2015 initial public offering (IPO) at $17 a share.

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/news/investment-tracker/2019/shopify-stock-drops-after-analyst-concerns-over-competition/

JPMorgan CEO Jamie Dimon Calls US Student Lending A ‘Disgrace’

https://www.pymnts.com/loans/2019/jpmorgan-ceo-jamie-dimon-us-student-lending-disgrace/

Months after he called out “irrational” student lending that has been impacting the economy through his annual letter, JPMorgan Chase CEO Jamie Dimon noted that U.S. student lending is “hurting America.” Dimon also noted that the government has “irresponsibly” lent over $1 trillion as of 2010 and that they want to forgive it now, Yahoo Finance reported.

Dimon said, according to the outlet, “I think they should look at all parts of student lending, fix the broken parts, and then forgive those people who need forgiveness, and then help people get into school, and then make sure the schools are responsible in getting the kids out,” Dimon continued, “and what we’ve done is a disgrace, and it’s hurting America.”

Forgiveness for student loans has become a focal issue of the upcoming 2020 election, and Democratic candidates have been unveiling plans. U.S. Sen. Bernie Sanders (I-VT) debuted a cancellation plan, which the outlet described as “sweeping,” that would tax transactions of a financial nature.

The news comes as student loan debt in the United States has set a new record and reportedly reached $1.465 trillion last November per a Bloomberg analysis. According to Bloomberg’s analysis of student loan securitization data, the debt level is more than two times the $675 billion in student loan debt back in June of 2009 when the Great Recession concluded.

At the time, it was noted that individuals who took out student loans in 2012 have defaulted at a faster pace than any other borrowers since the financial crisis, and that loans issued in 2012 have the highest cumulative loss percentage in comparison to any other year since 2009 at the end of the recession. That implies borrowers who took out student loans in 2012 are having a harder time paying them back on a monthly basis in comparison to those who got them before or after the recession.

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/loans/2019/jpmorgan-ceo-jamie-dimon-us-student-lending-disgrace/

Fed Plans To Take A Close Look At Facebook’s Crypto

https://www.pymnts.com/facebook/2019/fed-plans-to-take-a-close-look-at-facebooks-crypto/

The U.S. Federal Reserve plans to hold Facebook’s cryptocurrency, Libra, to high standards when it comes to consumer protection and regulation.

“Libra’s a new thing; we are looking at it very carefully,” said Federal Reserve Chairman Jerome Powell on Tuesday (June 25), according to Reuters. “Given the possible scale of it, I think that our expectations — from a consumer protection standpoint, from a regulatory standpoint — are going to be very, very high.”

Facebook revealed last week that it plans to launch its own digital currency next year. The company teamed up with Uber, Mastercard, Visa and others on the project.

“Authority for overseeing Libra is going to be in a number of places, but I think that the big picture is we are going to be looking really carefully at it,” said Powell.

The Fed won’t be the only regulator taking a close look at Libra. The international Financial Stability Board (FSB) and the U.K.’s Financial Conduct Authority (FCA) have both spoken publicly about the issue, joining the Bank of England (BoE) and the G7 in speaking out about the currency, and its need for regulation.

“Though crypto assets do not currently pose a risk to global financial stability, gaps may occur where crypto assets fall outside the scope of regulators’ authority, or from the absence of international standards,” said FSB Chair Randal Quarles in a letter. “A wider use of new types of crypto assets for retail payment purposes would warrant close scrutiny by authorities to ensure that they are subject to high standards of regulation. The FSB and standard setting bodies will monitor risks very closely and in a coordinated fashion, and consider additional multilateral responses as needed.”

The U.S. House Committee on Financial Services has scheduled a hearing to examine Facebook’s proposed cryptocurrency, and its impact on consumers, investors and the U.S. financial system. The Senate Banking Committee will hold its own hearing on the social media giant’s digital currency the day before. In addition, Committee Chairwoman Maxine Waters (D-CA) has already called for a moratorium on the crypto until lawmakers can investigate it further.

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/facebook/2019/fed-plans-to-take-a-close-look-at-facebooks-crypto/

Facebook’s Sh*tcoin Could be a Blessing in Disguise for Adoption of Cryptocurrencies

https://thefintechtimes.com/facebook-shtcoin-cryptocurrencies/

On Yavin, blockchain data strategist, CEO and founder of Cointelligence, says that Facebook’s cryptocurrency Libra is not a real cryptocurrency, and yet, it could have a positive impact on the crypto market. However, the arrival of Facebook Coin hasn’t had as much of an effect on the market as Mr Trump’s trade policy according to Luno.
 
“The new Facebook coin is a fake cryptocurrency. They are calling it cryptocurrency because it is a buzzword. It may be a digital currency, but it is not a cryptocurrency. It is a crap coin,” says On Yavin. 
 
On believes that Libra is not a real cryptocurrency because of three main factors: A Facebook digital currency will by definition be largely centralised; Facebook has a huge trust problem after its poor track record in securing its users’ personal data; and Facebook is partnering with big companies such as Uber, Paypal, Vodafone and Visa to create Libra. In essence, this means that big corporations will continue to control the system and exploit users. “That is the opposite of what a real cryptocurrency should be,” says On.
 
However, regardless of the future of Libra, its launch has exposed huge numbers of people to cryptocurrencies and the world of blockchain. Because Facebook has now officially stepped in, crypto may start to be viewed as more serious and credible.

“I think that the positive side is that Libra will get so many people introduced to the new generation of digital payments and some of them will want to learn more about real cryptos like Bitcoin and Ethereum.” 

Up to this point, conversations about cryptocurrencies have been nearly exclusive to technologists. Now with the launch of Libra, Facebook is practically making cryptocurrency available to its two and a half billion users at once. “I think that the positive side is that Libra will get so many people introduced to the new generation of digital payments and some of them will want to learn more about real cryptos like Bitcoin and Ethereum.” 

Marcus Swanepoel, CEO at Luno, is less convinced of Libra’s power to influence the crypto market for better or worse;

“Cryptocurrencies are neutral as the financial markets debate Libra

Facebook’s planned launch of the Libra token has put the focus back on digital currencies, but left Bitcoin and Ethereum in the trading range they have had for the last few days.  As the markets debate the old arguments about the relative merits of centralised versus decentralised financial systems and whether a coin is a currency or a security, altcoins have seen reduced volumes.  BTC is currently holding around the US$9,300 level and ETH is around US$270.

Today the UK Bank of England rate decision is expected to remain unchanged however in the US President Trump appears to want to start devaluing the dollar and start a ‘currency war’ which could lead to more liquidity going into altcoins.”

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KoinWorks Closes $12M In Series B Funding Round

https://www.pymnts.com/news/investment-tracker/2019/koinworks-closes-12m-in-series-b-funding-round/

KoinWorks announced that it has raised $12 million in a Series B funding round. The round was co-led by EV Growth and Quona Capital, with participation from existing investors. The funding will be used to expand the KoinWorks team and partnerships, as well as further develop the company’s systems and technology.

Founded in 2016, KoinWorks is now Indonesia’s largest peer-to-peer (P2P) lending platform, registered and supervised by OJK. The company brings together borrowers and lenders via its platform, which provides access to financial services for small businesses (SMBs) that have historically been unbanked or underbanked by traditional financial institutions (FIs).

“When we started KoinWorks, we set out to democratize finance in Indonesia while fostering financial inclusion,” said KoinWorks Co-founder and Executive Chairman Willy Arifin in a press release. “In just a few short years, we’ve grown to have the largest retail investor base in Indonesia, with more than 300,000 users. The round was oversubscribed, which means that the money raised only represents the amount of liquidity that existing shareholders were willing to make available, and does not reflect the true appetite of investors in KoinWorks.”

Benedicto Haryono, KoinWorks’ CEO and other co-founder, added, “For the past three years, we have served the majority of Indonesia’s retailer market for the distribution of productive loans. Our rapid growth is supported by increasing public awareness of the importance of early investment.”

More than 60 percent of the investor-funders in the KoinWorks platform are millennials, with 70 percent revealing that KoinWorks is their first investment product.

“KoinWorks shares Quona’s mission of financial inclusion, and has had a dramatic impact on businesses in Indonesia as a result of their commitment to responsible lending,” said Ganesh Rengaswamy, co-founder and partner at Quona Capital. “Their role in enabling resources, catalyzing [SMB] growth, cannot be overstated. We are thrilled to support KoinWorks as they consolidate their market leadership.”

KoinWorks previously raised funds in a Series A funding round last year from investors Mandiri Capital Indonesia, Convergence Ventures, Gunung Sewu, Beeblebrox and Quona Capital.

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/news/investment-tracker/2019/koinworks-closes-12m-in-series-b-funding-round/

Bitcoin Daily: Walmart China Uses Blockchain For Food Sales; Would-Be Fed Member Moore To Create His Own Crypto Bank

https://www.pymnts.com/blockchain/bitcoin/2019/walmart-china-blockchain-food-sales-moore-crypto-bank/

Bitcoin startup Lolli announced that it has struck a new partnership with Hotels.com, joining Lolli’s existing partners Booking.com, Priceline, Hilton and Marriott.

“We are leveraging our Hotels.com and Booking.com partnerships to begin international expansion in the coming months,” Lolli CEO Alex Adelman told CoinDesk about his company’s plans for the next six months. “Canada has been in high demand, and we think that’s going to be a great test market for us. That will help us expand to other countries as well.”

Lolli allows its users to earn bitcoin rewards for online purchases. For trips that cost customers several thousand dollars, some Lolli users have earned more than $100 in bitcoin rewards.

“We want that number to grow,” Adelman said. “Now we’re starting to test content for teaching people what ‘stacking stats’ means. … Hopefully, someday 90 percent of our customers will be new because we want to make the market bigger.”

In other news, Walmart China, China Chain Store & Franchise Association (CCFA), PwC, Inner Mongolia Kerchin Co., Ltd., and VeChain, have announced the launch of the Walmart China Blockchain Traceability Platform, built on the VeChainThor blockchain.

In addition, the first batch of 23 product lines that have been tested and launched on the platform have been revealed, with another 100 product lines set to be released by the end of the year.

“As the world-leading enterprise public blockchain platform, VeChain aims to empower enterprises in the large-scale digitization process by providing safe and mature blockchain deployment solutions and promoting the wide application of blockchain technology. We achieve this while putting forward new insights for the development of the businesses’ ecosystems. The launch of the Blockchain Traceability Platform by Walmart China, the world-class retail giant, is of great significance to the commercial application of blockchain technology. VeChain will work with Walmart China to actively take heed of the call of the government, by utilizing technology to promote the traceability of fresh food, and to provide innovative solutions for the traceability platform through digital technology, so as to generate more transparent and reassuring consumption experience,” Kevin Feng, chief operating officer of VeChainThor, said in a press release.

And economist Stephen Moore, who recently lost out on a bid to join the board of the Federal Reserve, wants to launch his own mini-Fed through the creation of a cryptocurrency product that aims to be “the world’s decentralized central bank.”

Moore joined a group of entrepreneurs who are creating what is being described as a new type of central bank that aims to stabilize cryptos like bitcoin.

“I’m really excited about doing this,” Moore said, according to FOX Business. “I hope it makes me rich.”

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/blockchain/bitcoin/2019/walmart-china-blockchain-food-sales-moore-crypto-bank/

ClearGlass Announces New ‘Exceptional Transparency’ Asset Managers

https://thefintechtimes.com/clearglass-asset-managers/
ClearGlass, the independent technology and analysis company that is making full cost transparency a reality, is pleased to announce the next ‘exceptional transparency’ asset managers to be added to a list that already includes Baillie Gifford, Legal & General Investment Management, Majedie Asset Management and MFS Investment Management.

These new managers, which include private markets and non-domestic managers, are Adam Street Partners, New Forests, Partners Group, PIMCO, Sands Capital Management and T. Rowe Price International Ltd.

Each has distinguished itself in unique and outstanding ways:

  • Adam Street Partners, a global private markets investment manager, has until now supplied fee data using the ILPA (International Limited Partners Association) private equity template. Recently, Adam Street mapped its ILPA-compliant data to the CTI (Cost Transparency Initiative) Private Equity template in order to supply data to ClearGlass. This should become the model for all managers already providing ILPA-level data.
  • New Forests is a sustainable real-assets investment manager and, in keeping with its strong ESG credentials, supplied data in less than seven days from initial request using the newly-released CTI templates. Additionally, from Australia and therefore not subject to the same standards felt by domestic managers, New Forests has clearly demonstrated its desire to meet client requests.

  • Partners Group has supplied data using the CTI Private Equity template, released only 3 weeks ago. ClearGlass being able to accept, process and analyse data using this new format was a pre-condition of Partners Group supplying the data so quickly. Partners Group is a global private markets investment manager investing predominantly in illiquid asset on behalf of its clients, and its ability and willingness to provide data using the new template distinguishes it from even the majority of managers managing liquid assets.
  • PIMCO has assigned a single dedicated relationship manager to handle all requests from ClearGlass. This single dedicated point of contact has significantly reduced the lead-time between data request and data submission.
  • Sands Capital Management has also allocated a dedicated relationship manager to deal with data requests via ClearGlass and is not based in the UK, demonstrating a strong desire to meet the needs of its clients despite not being subject to the transparency precedent in the UK.
  • T. Rowe Price International Ltd. has opted for the maximum level of granularity on all submissions, a unique step. One of the tenets of the IDWG was that managers should gain credit for willingness to give data not just to the minimum requirements, but for full and complete transparency. By supplying non-compulsory data, T. Rowe Price meets and exceeds the expected standards.

The full list of exceptional managers now stands at:

  • Adam Street Partners
  • Baillie Gifford
  • Legal & General Investment Management
  • Majedie Asset Management
  • MFS
  • New Forests
  • Partners Group
  • PIMCO
  • Sands Capital Management
  • T. Rowe Price International Ltd.

Radha Kuppalli, Executive Director, Investor Services at New Forests said, “Transparency and accountability with our clients and stakeholders is a core value of New Forests so we are delighted to be included as an exceptionally transparent asset manager by ClearGlass. We aim to provide our clients with timely and robust information to support their interests and support long-term, productive investment relationships. We look forward to continue working on reporting with ClearGlass.”

Chris Sier, ClearGlass Chairman said, “The fact that these managers started their transitions long before the templates were formally released shows outstanding vision, as well as a clear desire to do the right things for clients irrespective of the prevailing regulatory environment.

“At ClearGlass we measure success in how quickly we can obtain data from asset managers. All of the managers on this list have significantly reduced the lead-time to get data as a result of their firm-wide stances on transparency. What is becoming apparent is that culture within a manager has a significant role to play when it comes to being transparent. Consequently, if transparency and client service are important selection criteria for the provision of asset management services, these managers are a very good starting point for any shortlist.”

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https://thefintechtimes.com/clearglass-asset-managers/

Illinois Passes Marijuana Legalization Bill

https://www.pymnts.com/news/regulation/2019/illinois-passes-marijuana-legalization-bill/

The governor of Illinois signed a marijuana legalization bill on Tuesday (June 25), making it the 11th state to legalize pot.

In addition, Illinois has become the first state to legalize the selling of the drug. Governor J.B. Pritzker, who advocated for legalization during his 2018 campaign, signed the bill in Chicago with the plan’s lead sponsors, Representative Kelly Cassidy (D-IL) and Senator Heather Steans (D-IL), in attendance.

“Today, we’re hitting the ‘reset’ button on the war on drugs,” Cassidy said, according to the Associated Press.

Residents 21 and older may purchase and possess up to one ounce (30 grams) of marijuana at a time, while non-residents are permitted to have 15 grams. The law — which goes into effect on Jan. 1, 2020 — allows cities and counties to prohibit sales, but not possession, within their borders. In addition, personal growing will only be legal for medical use. Possession will remain illegal until Jan. 1, said a spokesman for Senate Democrats.

“The war on cannabis has destroyed families, filled prisons with nonviolent offenders, and disproportionately disrupted black and brown communities,” said Pritzker. “Law enforcement across the nation has spent billions of dollars to enforce the criminalization of cannabis, yet its consumption remains widespread.”

During his campaign, Pritzker claimed that taxation of marijuana could generate $800 million to $1 billion a year, while dispensary licensing would bring in $170 million next year. However, Cassidy and Steans recently lowered those estimates to $58 million in the first year and $500 million annually within five years.

Illinois’ 55 medical-cannabis dispensaries will be the first to apply for licenses because they’re proven businesses, Cassidy said. They can apply to dispense recreational pot at their current stores, as well as request a license for a second location.

So far, 10 other states and the District of Columbia have legalized the smoking or eating marijuana for recreational use. Additional states, including New York and New Jersey, have considered legalization in their legislatures this year, but none of the proposals gained any traction.

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/news/regulation/2019/illinois-passes-marijuana-legalization-bill/

UK regulator’s concerns about the resilience of neobanks

http://www.linklaters.com/en/insights/blogs/fintechlinks/2019/june/uk-regulators-concerns-about-the-resilience-of-neobanks

Some banks are so large that regulators worry about the impact their failure could have on the financial system. Most banks are not that big. But some, typically newer digital banks, are growing fast and so attract increasing scrutiny of how they manage risk. A recent review by the UK prudential regulator highlights the risk controls that it thinks all banks should have in place.

What has happened?

The Prudential Regulatory Authority has reviewed 20 neobanks to test their financial resilience and has set out its findings in a letter to CEOs.

The review looked at these banks’ ICAAP stress testing, asset quality reviews, and funding and lending analysis.

What did the PRA find?

The PRA was reassured about the resilience of this fast-growing part of the banking sector. But its review did find several issues for neobanks to work through. The PRA stresses that firms’ governance and risk management functions should be tailored to their business model and risk appetite.

Stress testing

  • According to the PRA, some firms have been too optimistic about the impact of a stressed scenario on their business. They were not able to demonstrate a proper understanding of the underlying issues or the practical actions that they would take in the event of a stressed scenario.
  • The PRA expects senior management and boards to engage with, and challenge, stress testing exercises.
  • The review found that neobanks tend to have concentrated exposures to higher-risk market segments. This should be considered when provisioning and stress testing.
  • Firms should closely consider management actions proposed in their ICAAP stress tests. The PRA will be sceptical, for example, of firms which expect to raise new capital during a market-wide stress scenario.

Asset quality reviews

  • The review found that some neobanks take commercial lending decisions too quickly.
  • The PRA encourages firms to have sufficient data and management information available in relation to their loan portfolios.
  • The letter reminds firms that risk management functions should be adequately resourced and provide appropriate challenge to, and oversight of, the business.

Funding and lending analysis

  • The review found that many firms are too reliant on funding from short-term, fixed rate deposits.
  • The PRA calls on firms to consider, for both baseline and stressed scenarios, how they will price their borrowing and their lending, having regard to the spread between these and how that compares to the broader market.
What happens next?

The PRA plans to provide further feedback in July. Neobanks can also expect engagement from their supervisory contacts on the findings of the review.

http://www.linklaters.com/en/insights/blogs/fintechlinks/2019/june/uk-regulators-concerns-about-the-resilience-of-neobanks

Getaround Acquires Nabobil For $12M

https://www.pymnts.com/news/partnerships-acquisitions/2019/getaround-acquires-nabobil-for-12m/

Carsharing leader Getaround announced that it is expanding its global footprint with its $12 million acquisition of Nabobil.

Founded in 2015, Nabobil has built a strong user base in Norway. The acquisition will boost growth, and improve the user experience in the Nordic region through the integration of Getaround’s connected car technology.

“This is an exciting moment for our company, made possible by the incredible work of our founders and team,” said Nabobil CEO Even Heggernes, in a press release. “Joining Getaround, the world’s leading carsharing platform, gives us the power to invest in keyless, connected-car hardware, and grow the Nordic organization.”

Getaround, which launched the connected carsharing marketplace in 2013 with its Getaround Connect device, will now operate in seven European countries: Norway, France, Germany, Spain, Austria, Belgium and the U.K. The entire Nabobil team will join Getaround to continue operations and oversee expansion in the region.

“We are excited to welcome the Nabobil team to Getaround,” said Getaround Founder and CEO Sam Zaid. “We are building an exceptional global organization, and the tremendous experience, drive and values that the Nabobil team bring[s] to Getaround will help drive us forward in our mission to empower people to carshare everywhere.”

Christian Hager, Jacob Tveraabak and Karl Munthe-Kaas, representing the three original co-founders and the board of Nabobil, added, “We are very pleased that the world’s leading carsharing platform has acquired Nabobil — and that we will be part of Getaround‘s journey onward. We cannot imagine a better match, and, with the new solid owners, the access to capital for Nordic growth is ensured. For Nabobil’s customers, this secures better services and improved technology on a sustainable platform. This is a great recognition for Nabobil’s loyal users, employees and shareholders.”

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/news/partnerships-acquisitions/2019/getaround-acquires-nabobil-for-12m/

Securing The Self-Serve Store

https://www.pymnts.com/automated-retail/2019/securing-the-self-serve-store/

Consumers want the immediacy of brick-and-mortar shopping without sacrificing eCommerce convenience. They may enjoy strolling the aisles of physical retail, but many customers still want support features that enable them to quickly and easily find and buy items, through self-serve offerings and other automation technologies.

Today, most automated retail models tend to follow either an Amazon Go-style, cashierless store or an intelligent cabinets approach. The June Automated Retail Tracker charts all the latest developments and deployments of these models and more.

Around the Automated Retail World

Renewable materials and connected packaging provider Stora Enso recently delved into the intelligent cabinets space, with an offering that enables customers to unlock and pay for removed items through compatible apps. The intelligent cabinets are intended to provide speedy food and beverage purchases.

In India, meanwhile, eCommerce-focused fashion company Myntra followed a different automated retail model, and opened a new cashierless store, selling items from its Roadster outdoor lifestyle brand. The venues rely on radio-frequency identification (RFID)-technology and self-checkout.

Pizza company Domino’s is looking to bring automation to new parts of the retail process by piloting a driver-free delivery service. The company will deliver meals with robotics company Nuro’s self-driving cars, and is slated to test the service in Houston this year.

Find these and all the latest headlines in the Tracker.

Inside Farmhouse Market’s Staff-Free Organic Food Store

Filling a small city’s retail gaps can be daunting work for would-be entrepreneurs who have limited time and resources, but automation lessens those burdens. Farmhouse Market Co-founder Kendra Rasmusson launched the remotely monitored, staff-free grocery store to bring organic food to her hometown.

In this month’s feature story, Rasmusson explained what it took to secure the 24/7 accessible, automated store against shoplifting, while avoiding the introduction of payment frictions. Get the full story in the Tracker.

Deep Dive: Obstacles to the Adoption of Mobile Payments in Automated Retail

Mobile payments have yet to displace cash or card payments in the U.S., with both merchants and consumers seeming wary of shifting their practices to support this payment method. Retailers don’t want to invest their limited budgets in technologies unless they are certain that consumers will be receptive, and consumers may need some convincing before they see the point of changing their existing payment habits.

This month’s Deep Dive explores the obstacles to greater uptake of proximity mobile payment, the potential benefits of its use (such as quick, secure checkouts) and the offerings that retailers may need to provide to encourage consumer adoption. Read more in the Tracker.

About the Tracker

The Automated Retail Tracker, powered by Worldnet Payments, serves as a bimonthly framework for the space, providing coverage of the most recent news and trends, as well as a directory that highlights the key players contributing to the segments that comprise the expansive automated retail ecosystem.

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/automated-retail/2019/securing-the-self-serve-store/

Blockchain’s Real-Time Payments Use Case

https://www.pymnts.com/blockchain/2019/blockchains-real-time-payments-use-case/

Players in payments and commerce keep trying to get their heads around blockchain technology, seeking out use cases and striving to determine if the reality can ever live up to the hype. Answers are relatively slow in coming, and skepticism abounds. However, in Canada, real-time payments, energy and incentives have combined in a way that includes blockchain, which would pave the way for other such efforts.

That’s the story told by Oscar Roque, AVP of innovation, research and emerging solutions at Canadian payments network Interac, in a new PYMNTS interview. He spoke about how the organization has found a potential, new payments-related use for blockchain, how it can be used to bridge together previously independent organizations and what might come next based on that push, as Interac continues to innovate in the FinTech space.

Pilot Push

For a three-month pilot that ended in May, he said, Interac worked with Alectra Utilities to offer real-time disbursements to consumers using Interac e-Transfer (Canada’s leading P2P and B2B digital money movement service). Roque said Alectra made the offers to several consumers and, by using blockchain, was able to “incentivize” consumers based on their “climate-friendly” behaviors, an example of how Interac is looking to innovate with social purpose.

More specifically, the program applied to Alectra customers with solar panels, batteries and/or electric vehicles, who could earn real-time disbursements by, say, not charging those vehicles during peak periods, or taking similar conservation steps. The program also involved a relationship with IBM for what Alectra described in a statement as a “flexible compensation plan.”

“The marketplace provides a single, permanent ledger that is trusted across the network, and blockchain enables the energy transactions to be settled, and digital assets exchanged, among all stakeholders,” the utility said.

According to Roque, the pilot produced consumer feedback that “was absolutely tremendous,” and could inform future blockchain and payment efforts involving Interac and other organizations. The real-time disbursement aspect led to changes in consumer behavior that promoted them to be climate-friendly, he said.

Roque noted that, in addition to learning how to incentive consumers, and the importance of innovation with social purpose, “the pilot provided significant learnings around multi-party governance on blockchain, trust and consensus models, and new business modeling through the creation of new business networks.”

Hot Topic

Blockchain is certainly a hot topic when it comes to digital payments and commerce, and more authorities and organizations are trying to gain an edge when it comes to the technology. A recent example of that comes from Nevada.

As PYMNTS recently covered, Governor Steve Sisolak signed the following bills into law: SB161, which creates a regulatory sandbox for emerging tech companies through a program in the Department of Business and Industry; SB162, which develops a definition for “public blockchain” within Nevada Revised Statutes, and requires government agencies to accept electronically certified documents; SB163, which authorizes businesses to store and maintain corporate records on blockchain; and SB164, which defines virtual currencies as intangible personal property.

That said, blockchain is no silver bullet, to put it mildly. Much confusion, and even false promise, surrounds the technology, which is often primarily associated with the world of cryptocurrencies.

Blockchain Problems

For instance, when it comes to blockchain technology, the crux of many of its purported benefits for the enterprise is its decentralized nature, which, proponents of distributed ledger technology (DLT) have said, promotes visibility and makes it more difficult for data to be manipulated. The security benefits of decentralization make blockchain an attractive fit in corporate finance. Popular use cases that have emerged in recent years include blockchain’s potential to securely transmit remittance data along with payments in cross-border B2B transactions, enable companies to use smart contracts to enforce business agreements in B2B trade and mitigate the risk of fraud in supply chain transactions.

However, the lack of a central authority can make enterprise development, and the implementation of blockchain-based solutions, extremely difficult and friction-filled. For example, corporates often go it alone when creating a blockchain solution, and that lack of a central intermediary can make it difficult for companies to find guidance.

In talking about potential future use cases of blockchain with PYMNTS, Roque offered optimistic realism about the technology, avoiding hype. He discussed how blockchain — assuming it is attached to relevant, pragmatic use cases — can add incremental value to a business or other organization. That said, the promise of blockchain “is probably overstated with banking,” at least when it comes to the ability of the technology to “significantly disrupt banking.”

In fact, in Roque’s view, the excitement about blockchain has subsided over the last two years or so. “The hype has started to die down. We are now in the trough of disillusionment,” he said. However, that’s not all bad for the further development of blockchain, he added, as “in the trough is where the real work gets done.”

Blockchain is a massive work in progress — a technology in search of solid use, if not eventual mainstream acceptance. When applied correctly, it has the ability to significantly change the way organizations do business with one another. As Interac has shown, use cases are out there, and more research and validation is on the horizon.

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/blockchain/2019/blockchains-real-time-payments-use-case/

Payments Execs Weigh In On Innovation For The Roaring 2020s

https://www.pymnts.com/news/payments-innovation/2019/payments-execs-weigh-in-on-innovation-for-the-roaring-2020s/

A decade is a nice, round number — a convenient marker for what has come and what is coming. We as humans tend to measure our lives in decades, referring to ourselves as children of the ’60s, perhaps, or pining wistfully for the synthesized pop sounds of the ’80s.

In payments, 10 years is a long time — where everything can change, and where once fanciful notions can become ubiquitous new ways of transacting. That said, we are now at the six-month mark of 2019, and a new decade looms. Call it the sunsetting of the 2010s, an opportune time to preview everything from eCommerce to artificial intelligence (AI), from A to Z — here, we can term it APIs to Zelle.

To get a sense of the most significant seismic shifts that have pushed payments innovation inexorably ahead through the past 10 years, as well as what lies over the horizon, PYMNTS queried 29 C-level executives with a collective thumb on the pulse of innovation. Each of these men and women were asked to name the single, most important innovation that has had a ripple effect through the ecosystem. The answers were varied, spanning from blockchain to instant payouts.

The particular innovations spotlighted were varied as well, tied to, say, consumer-specific or B2B-specific cases. However, common threads that ran through the tapestry lie with technology’s transformation, marked by speed, intelligence and mobility.

It can be argued that the consumer experience has been leading by example through the past few years, giving merchants and financial institutions a roadmap of what to do and what not to do when it comes to satisfying demand and creating as frictionless a commerce experience as possible.

The flip phones of earlier in the millennium are, largely, a memory. Now, smartphones can help one shop whenever and wherever, transacting by tapping. Machine learning and AI can help merchants tailor relevant offers, real time and in context.

Technology has also proven invaluable in the ongoing fight against fraudsters, who are increasingly moving online, as consumers are doing the same. One laggard has been catching up a bit: B2B, where the paper chase is becoming a bit more streamlined and digital as transactions move across borders, currencies and time zones. No matter the application, risk analysis is crucial, especially in an age when know your customer (KYC) is as much a mandate as it is good business sense.

If there is one constant in innovation, especially payments innovation, it is that it’s constantly evolving. We may look back on the relative clunkiness of what went before and chuckle, and say it was “obvious” that we’d wind up where we are now, given the road we’ve traveled. Past is prologue, as they say, even if it is not a specific predictor. Hindsight may be 20/20, but it’s crucial as we get ready for 2020. Read on.

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Latest Insights: 

The Payments 2022 Study: Building A High-Performance Payments Team For Fraud Detection, a PYMNTS collaboration with Stripe, examines how digital platforms of all sectors and sizes plan to develop their anti-fraud teams as part of their their broader growth and development strategies. Drawing from an extensive survey from approximately 250 payments heads at digital platforms in the U.S. and abroad, our study analyzes how poor anti-fraud capabilities can harm platforms’ long-term growth strategies, and how they can build high-performing teams to tackle these challenges.

https://www.pymnts.com/news/payments-innovation/2019/payments-execs-weigh-in-on-innovation-for-the-roaring-2020s/

The AI Ethics Conundrum – How to Mitigate Bias

https://thefintechtimes.com/the-ai-ethics-conundrum/

As the pace of AI uptake increases, it’s clear that it will have a considerable impact on the future of business, finance and our wider society. While flourishing AI innovation is a positive thing, we must also manage the potential risks and do our part to ensure that it advances in a responsible way.

In fact, our new research shows that ethical and responsible AI development is a top concern, with 94% of IT leaders believing that more attention needs to be paid to corporate responsibility and ethics in the application of AI.

Much evidence shows that the insights AI offers can be highly beneficial, however we must also recognise its limits in providing perfect answers. Data quality, security and privacy concerns are real and thus the AI regulation debate will continue.

A key threat to effective use of AI is the phenomenon of AI bias. This occurs when an algorithm delivers prejudiced results based on incorrect assumptions in the AI development process. These are often ‘built-in’ through the unconscious preferences of the human being who created the process or selected the training data. They can also reflect issues in the data gathering stage where weighting procedures cause incorrect conclusions to be made about certain data sets.

As we become increasingly reliant on AI, it’s essential to eliminate biases as much as possible because it can often cause undesirable decisions and outcomes. Legal cases have already taken place where groups have forced the disclosure of how algorithmic processes take decisions. Many have won compensation when either the algorithm or the underlying data has been found to introduce bias. A recent example involved teachers who were not paid performance bonuses, and won damages when it was realised that the algorithm assessing eligibility for the bonus did not take into account class sizes – a factor found to be highly significant in pupil attainment.

As we become increasingly reliant on AI, it’s essential to eliminate biases as much as possible because it can often cause undesirable decisions and outcomes.

How does AI perpetuate bias?

Bias can enter the system at any stage of the learning process and it’s not always related purely to training data. It can emerge at any time throughout the deep learning process, whether that includes collecting data, setting objectives or preparing the data for training or operation.

The most commonly acknowledged bias concerns the initial process of collecting, selecting and cleaning data. Here bias can arise in training data if decisions around rejecting outliers, or data that is perceived as irrelevant, is not tested and then accidentally introduces prejudices. This can result in certain factors being mistakenly favoured by the AI in place of others that could be more relevant to the desired outcome.

Take for example a growing male-dominated business looking to use AI to screen candidates. If the AI was trained on the CVs and employment data of current successful employees, it is likely that it will develop a bias towards selecting male applicants for interviews as they fit the pattern of the company as it exists. Simple fixes like removing the sex of the employees from the training data may not work as the AI algorithm may identify patterns of male-dominated hobbies as indicators of desirable employees, for example.

Secondly, in setting objectives for a deep learning model (i.e. what the designers want it to achieve) the objective needs to be set in context in order for recommendations to be correctly computed. For example, if the objective is to increase profits without context and boundaries set relating to maintaining customer satisfaction, the output will be skewed. The AI could seek to achieve the goal by making short term decisions that achieve the objective of profit, at the expense of the long term viability of the business.

The most commonly acknowledged bias concerns the initial process of collecting, selecting and cleaning data.

Lastly, bias can be introduced during the stage where data is prepared for processing. This often results in certain attributes for the algorithms being prioritised over others. The choice of which attributes should be considered or ignored will have a significant impact on the accuracy a model can predict. It’s therefore imperative to grade and rank them correctly. It’s also important to avoid dropping data that is hard to process. Designing a data pipeline that can handle exceptions well is essential to ensure there is sufficient data for good training outcomes.

The above processes highlight that in many cases, bias can easily leak into the system. It’s often only discovered when a system goes fully live, by which time the issue can become far more difficult to address. Therefore, testing the system against expectations as it develops and involving a diverse group of stakeholders in the evaluation is critical.

So how can we mitigate bias within AI?

There are many examples of how the industry is working towards addressing the bias conundrum. Most have involved revisiting and updating data after the event when bias is discovered, and it’s often the human element (or the personalities that feed into the underlying systems) which were the source of bias.

Once the human factor is addressed, developers need to thoroughly check the underlying data. This is to ensure the data is fully representative of all factors that could inform the business decision where a lack of or erroneous data might impact the algorithm in a negative way. As an example, would rejecting data from subjects who did not include a mobile phone number or email address matter? That decision may make future sales contact easier, but could it mean that a generational bias had been introduced skewing the analysis?

It’s important to ensure that the algorithms that feed into an AI system’s underlying data minimise bias as much as possible. Those involved in AI research and implementation have had considerable success in addressing the bias challenge. Many have created algorithms that can effectively detect and reduce bias. Progress has also been made in the regulatory environment to help mitigate the potentially negative effects of bias on AI.  

The EU’s GDPR regulation, for example, gives consumers a right to explanation on how automatic decisions have been made based on their data. How much impact this has had to date is unclear, but those rights, and the penalties for not recognising them, should be a factor in ensuring efforts are made to design out bias.

Testing the system against expectations as it develops and involving a diverse group of stakeholders in the evaluation is critical.

A problem from the top

There’s also an argument that we need to rethink AI and how it’s often approached from the top of the global status hierarchy. It is too heavily influenced by the biases of first-world cultures. This results too often in AI systems outputs reflecting those biases to the detriment of the less well off in society. Recent real world examples include the high profile facial recognition issues of a certain blue chip tech company. Situations like this should be addressed to ensure the inclusion of a widely diversified spread of society. Incorporating inputs from a wider, more globalised and diverse data set can address this.

Additionally, building AI models from original data can help to eliminate bias. This allows far more scope for ideas and actual evidence to feed into AI systems that can evolve to offer insights beyond the typical first-world perspective. This inversion of the scientific principle, looking for patterns of interest to explore rather than testing a hypothesis, remains a powerful application of data science for identifying new behaviours and groups of customers.

This data driven approach would also build far more flexibility and responsiveness into AI systems and open them up to a far more comprehensive and diversified set of global considerations and imperatives.

Breaking down the data silos

However to be data-driven, and make use of the greatest possible diversity of data, it is essential to focus on developing systems that break down data silos and enable the integration of the broadest possible range of data sets. The tools already exist to rapidly configure integrations between a huge range of systems – without heavy lifting by software developers, so data teams have this diverse data within their grasp.

Businesses need to consider new sources of data and new ways of interpreting and understanding it. Ultimately those who invest in ensuring they can access a wide diverse pool of data will benefit the most by identifying the true value of AI.

Please follow and like us:

https://thefintechtimes.com/the-ai-ethics-conundrum/

India’s SME fintech sector flourishing – Facebook and Tiger Global take stakes

https://dailyfintech.com/2019/06/26/indias-sme-fintech-sector-flourishing-facebook-and-tiger-global-take-stakes/

The convergence of simplified business banking with accounting is happening at a phenomenal pace.

The latest player to get the global investment market excited is Indian neobank startup Open, which recently announced a $30 million funding round, led by Tiger Global.

Today the neobank allows new customers to seamlessly link or open a new business current account online, powered by Indian bank ICICI. From within the online banking platform, they can then issue simple invoices and receive payments, streamlining how the banking and accounting arms of their business interact with each other.

The approach taken by Open is almost identical to UK neobank Tide, which now claims 1 in 12 new UK business accounts’ is opened via its platform.

Open isn’t the only neobank in India worth watching.

InstantPay plays in a similar space to Open, minus the accounting bundling, with its suite of services extending beyond SMEs to corporates and individuals.

NiYO wants to own the banking relationship with salaried employees in India, offering 50% salary advances via its platform, at 0% interest. It also has a multi-currency Visa travel card and a tax-saving feature for employee expense management. Bank owned challenger brand Yono by SBI is also going after the consumer market.

Tiger Global aren’t the only US firm doubling down on Indian fintech. Facebook, who see opportunity in the tangential social commerce space, have taken a stake in Indian startup Meesho.

Meesho are effectively redefining the definition of a SME, enabling a new generation of Indians to establish home run businesses, reselling goods via its marketplace. Suppliers list goods, and resellers then market those goods out to their community of Whatsapp, Facebook and Instagram connections, setting their own margins. Collectively, resellers have access to 7 million customers on their platform, so a big carrot for suppliers to access.

The influence of cultural norms on how fintech’s develop is fascinating, and demonstrates the gulf that is expanding between how the west and the east think about innovation. Many take from the other (Open arguably from Tide), but undoubtedly some of the most interesting and novel applications in finance, like Meesho, are happening in the developing nations. There is no doubt in my mind this innovation will accelerate economic parity with more developed countries, and possibly even place western nations at a disadvantage from a financial infrastructure perspective, in the not too distant future.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a new superannuation startup in Australia.

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

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https://dailyfintech.com/2019/06/26/indias-sme-fintech-sector-flourishing-facebook-and-tiger-global-take-stakes/

JPMorgan To Test Crypto Coin By End Of Year

https://www.pymnts.com/cryptocurrency/2019/jpmorgan-to-test-crypto-jpm-coin/

JPMorgan plans to test its proposed cryptocurrency, the JPM Coin, by the end of the year, according to reports.

Umar Farooq, the head of digital treasury services and blockchain at the company, said the firm will run a pilot of the coin with select customers near the end of 2019, if regulators allow it.

Since revealing plans for the coin in the middle of February, the bank has seen interest from customers all around the world. Many clients are interested in the coin’s ability to potentially speed up bond and securities transactions.

Farooq has said the cryptocurrency could make bond delivery instant, and that a number of stocks will become fully digital in the next five to 20 years. He also said he thinks the possibilities for blockchain are “endless.”

In other JPMorgan news, the firm has shut down its youth-focused endeavor called Finn. The pilot program began in October 2017, and a nationwide rollout began in June of last year. The Wall Street Journal reported that the company started telling clients on June 5 that it was shuttering Finn, which had been rolled out as no-fee banking app. According to the financial publication, those customers are having funds transferred to other Chase accounts, across savings and checking options.

The move comes as banks are bringing digital offerings (especially mobile ones) to their portfolios, as physical banks are on the decline. The Finn offering is seen as a hybrid offering, as it revolved around a digital app and also offered branch access. In one feature set, Finn consumers had free access to a partner network outside of the Chase ATM network. Beyond that, the competitive landscape had been marked by Goldman Sachs and Ally Financial, among others, noted for offering higher interest rates on their accounts.

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https://www.pymnts.com/cryptocurrency/2019/jpmorgan-to-test-crypto-jpm-coin/