Snippings

Nobuchika Mori, Commissioner of Japan’s Financial Service Agency, writing in the Financial Times in May 2017, called for a fundamental change in the way that regulators relate to financial services marketplaces. He says that…

Regulators have made the global financial system more resilient by major regulatory reforms… But all this should not be the end of the story. It is now time to shift the focus from regulation to supervision.

From A holistic approach to future-proofing the financial system

I would rephrase this slightly, in the language of big data and blockchain, always-on digital identities and roboadvisors, to call for an era of shared ledgers, translucent transactions and ambient accountability, in which the traditional boundaries around accounting and auditing dissolve to form a new way to manage markets to the benefit of society.

This new era is what I have labelled the era of “the glass bank”. I’ve written before about the origins of this concept and the way in which it came to crystallise my thinking around the response to the Great Financial Crisis (GFC). Central to my thinking is the

In his magnificent “Fraud: An American History from Barnum to Madoff”, Professor Edward Balleisen (associate professor of history at Duke University) talks about the way in which the notion of transparency in accounting formed a fundamental response to the frauds of the modern age and an enabler for the steady shift from the centuries-old age of caveat emptor to the modern age of caveat venditor. 

Ambient accountability is the logical next step.

 

 

 

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Kenya’s telecommunications giant Safaricom has announced its plan to expand its mobile money transfer services, M-Pesa, to other African countries after a successful transfer of its 35 percent stake to Vodacom, a South African subsidiary of UK’s telecommunications company Vodafone Group.

From Kenyan Telecom Giant Safaricom Planning to Expand M-Pesa Services across Africa – Face2face Africa

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Some years ago I wrote an article pointing out that NFC ought to be safer than QR codes because NFC included a standard for digitally-signing tags (although I did also note that no-one used it) whereas anyone could easily create bogus QR codes.vI said at the time that you could “imagine a situation in which a powerful player like Apple, using Passbook, forces a scheme for digitally-signing QR codes and sets up a structure for key and certificate management”. I also suggested, in connection with a couple of projects that my colleagues were working on at the time, that mobile operators do the same, at least until NFC inevitable replaced QR.

While I have no inside information on the subject, I do expect a future iPhone (and, for that matter, iPad) to have NFC. NFC is a convenience technology, and Apple loves convenience

From Quick response | Consult Hyperion

 

I also noted that some surveys showed NFC generated better results for merchants, but only once consumers could get it working. As Osama Bedier, then head of Google Wallet, pointed out, this is was some barrier because of the amount of “futz” it took to get NFC working. Well, only a few years later iPhones do indeed have NFC but QR is everywhere. QR codes became popular precisely because any app could read them, precisely because anyone can use them, precisely because there is no security infrastructure, precisely because there is no futz. The result in China, where there was little card infrastructure in place beforehand, was the near-ubiquity of QR in the world’s biggest mobile payments market.

“Ogilvy & Maher and Ipsos concluded in a survey of China’s mobile payment market that ‘[Chinese] mobile payment has permeated all aspects of life and changed basic, everyday habits.’”

From “How Chinese Mobile Payments Are Quietly Conquering the World”.

It seemed to me that thought fraud would be an inevitable consequence of the QR-centric approach, and so it turned out. Last year I read in the South China Morning Post that in March 2017 some 90m Yuan were stolen via QR code scams in Guangdong alone (a suspect in one case was found to have replaced merchants legitimate bar codes with fake ones that embedded a virus to steal personal information) and that in China, a quarter of viruses and trojans were coming in via QR.

Now, while even the man who invented QR codes says that they are an interim technology,  there’s no denying that they are here to stay. Hence it makes sense to find a way to make them more secure, and the obvious way to do this is two-factor authentication (2FA). It turns out that the Chinese regulators have come to the same conclusion and have implemented the equivalent of the European Union (EU) Second Payment Services Directive (PSD2) Regulatory Technical* Standards** (RTS) on Secure Customer Authentication (SCA).

“Under new rules released by the People’s Bank of China [in December 2017], all transactions over 500 yuan (US$76) will be subject to additional levels of verification. As the transaction value passes each trigger point – 1,000 yuan, 5,000 yuan and unlimited – so the security checks will increase.”

From “China’s central bank tightens security in US$5.5 trillion QR code payment services | South China Morning Post”.

 

This makes obvious sense. Just as in the UK we have contactless for low-value payments but 2FA for higher-value payments (ie, chip and PIN for cards or CDCVM for mobile), so QR will be used for low-value payments but 2FA will be required for higher-value payments. Of course, in the Chinese system, QR works just as well on-line as in-person whereas in our system we don’t use chip and PIN online (but should do – ApplePay in-browser is easy and safe) so we still have some way to go to catch up with leading edge of fintech.

* Not “technical” in the sense that you or I would mean it.

** Not “standards” in the sense that you or I would mean it.

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The UK’s largest cashless parking service, RingGo, purports to process more than 2 million parking sessions every month, and has been used by more than 6 million individual motorists.

From ‘It’s the worst place to park in the world’ – why Britain is at war over parking | World news | The Guardian

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Bank of America says it is working with multiple financial data aggregators to provide customers with the ability to connect data from their accounts to third-party financial management applications. The US bank is following in the footsteps of Chase, Wells Fargo and Capital One, each of which has enabled data exchange deals with the likes of Intuit, Xero and Finicty… The bank bills the effort as a key plank in its API strategy, in which data will be shared using a unique token that removes usernames and passwords from circulation.

From Bank of America preps data sharing service

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FortyTwo Data refers to figures from WealthInsight, which predicts that global spending on AML compliance will hit £6.4bn billion this year.

From Regtech could save banks £2.7bn on AML compliance | Global Trade Review (GTR)

This sounds low to me.

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“The agent found that Justice had sent more than $21,000 in cash via FedEx to the woman he believed to be Chay. He also placed orders and paid for nearly $6,000 worth of items on Amazon.com, and had them sent to her home in Long Beach.”

Defense contractor pleads guilty to giving secrets to ‘Russian spy’

This is such a great story. He thought the FBI guys were Russian agents and he thought the woman he was communicating with online with a European model.

So. If we implement an identity infrastructure that can show him that his lady love is not a European model, how can that same identity infrastructure not show him that the Russian agent is an FBI guy.

In his Harvard speech, the Facebook guy Mark Zuckerberg said that

How about modernizing democracy so everyone can vote online

From Annotated: What Mark Zuckerberg’s Harvard speech really said

I’m assuming he means on Facebook. Instead of having to walk a few hundred yards to the polling station around the corner, I’d be able to just “like” the Monster Raving Looney Party and go back to sleep.

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“I literally couldn’t care less what consumers think about privacy. They have no idea what they are talking about.” 

From Companies, not consumers, should take the lead on data privacy – Blog – MEF

What a way to open a panel session about trust. But this is typical straight talking from the “ceaselessly entertaining and thought-provoking Dave Birch” (Tim is much too kind). He was opening the debate at MEF’s ‘Trust in a data-driven economy’ leadership session during MWC 2017.

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Analysis carried out for UK Payment Markets 2017 forecasts that debit cards will become the most frequently used payment method in late 2018, three years earlier than previously predicted due in large part to the increasing popularity of contactless.

From UK payments market: Contactless cards set to overtake cash in 2018

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