Mobile payments to beat the fraudsters

Back in February, eWise launched a mobile app that allows consumers to pay for goods, services or bills online or face-to-face...nothing new here, you cry.

However, the clever people at eWise have developed a system that means the customer does not need to provide any personal information to third parties.

It’s a pretty neat package really, as proven in a demonstration I received earlier this week. The app allows customers to view their balance, choose an account from which to transfer the money, and pay through OBeP technology.

The launch followed that of eWise payo, an online payment solution developed with VocaLink. The solution would see a consumer choose to pay by payo on a merchant’s payment page, from which they are redirected to payo’s payment page. They can then choose the account they wish to pay from and complete the transaction. They are then sent back to the merchant website. No

So mobile ecommerce transactions, P2P payments, bill payments and T-Commerce can now be conducted thanks to the mobile app incorporating this technology. The consumer uses their smartphone camera capability to scan a QR code generated by the merchant or individual – they then loop through to the payo system, choose an account to pay from, and pay.

I met with John France, managing director at eWise European Payments Division, to look at the technology, and he revealed that, as yet, no bank has signed up, although they are in talks.

I’m not quite sure what the problem is – whether it comes down to banks unsure of venturing into new territory, a lack of funds etc – but you would think that a payments mechanism that could potentially crack the fraud ring, particularly against a backdrop of the fraud statistics over the last couple of weeks, banks would be falling over themselves to invest.

"Unified presentations"

Now I’m a pretty patient person, but when it comes to listening to a 40-minute live webinar, I just don’t have the time. In all honesty, I tune in and out, and generally ignore a lot of what is going on (sorry if you run webinars...).

My biggest difficulty, and I’m going against beliefs that are commonly held about women, is that I just can’t seem to multitask when it comes to webinars – I have to listen to the audio, watch the person on the web (if possible), refer to the original invitation to remind myself what I’m ‘attending’ the discussion for in the first place, and research relevant parts of the conversation, all at the same time. As for taking notes, that just adds to the complications!

So imagine my excitement when I was introduced to communications whiz-kids, Kulu Valley?

Presented to me today was a Software-as-a-Service proposition, allowing customers to create and publish content direct from their desktops using a browser-based solution. 

Clients can record a video overview of their key messages, and combine that with supporting documents and links. So, as I suggested (and am allowing Kulu Valley to use as a USP should they wish to!!!), they are providing ‘Unified Presentations’...think about it. With this solution, you can also take advantage of “chapterisation” – so say at 2 minutes into the presentation you make a point that is particularly important – those using the presentation can jump straight to this point in the audio/video.

Fantastic – can see the potential for internal and external communications, but most of all, a nice way of making hugely long explanations snappy and relevant.

Guest blog: Basel III – The compliance conundrum

by Linh Ho, director of product marketing at OpTier
 

Critics have not been kind to Basel III. Whilst few will argue that championing greater visibility and tighter regulation of liquidity controls is a bad thing.  It’s widely believed that the legislation lacks teeth and is, in truth, a fairly weak ‘knee jerk’ reaction to the economic crisis. Regardless of sideline criticism, implementation of the legislation in some form will be vital to the future of the banking system. In practice, it is potential confusion around the cross over between Basel II and III that will be the real sticking point.

The fact is, even if analysts and banks do come around to the new legislation ideals, they are likely to have trouble implementing the processes effectively within their current IT environment. As Alison Ebbage noted in her recent article for FST, one of the key challenges that banks face in their drive towards Basel III, is fragmented and siloed IT infrastructures. The article noted that this can make things cloudy in terms of generating a holistic view of events happening across trading platforms. This poses a significant operational risk to banks.

In terms of mitigating unforeseen risks, the onus is still very much with the banks to ensure that their internal processes and failures don’t let them down. In particular, The Accord specifically cites business disruption, data loss and security breaches arising from system failure as events that banks need to protect themselves against. As these processes are very much enabled by technology, IT needs to ensure its got its own back.

If banks are to enforce the latest legislation, simplifying these complicated IT landscapes will be the key to success, but it’s certainly a tricky business. For years banks have invested in sprawling systems, adding more and more layers as they were needed. In this situation, identifying how, why and where an IT problem has occurred is arduous, time consuming and expensive. With a complicated mismatch of systems and pressure to implement new regulations, I’d bet my bottom dollar that most IT managers wish they could clear out their IT cupboard and start again. In this day and age, a rip and replace strategy isn’t viable. So, with operational risk a much overlooked - yet pivotal - part of Basel III, what’s a bank to do?

Flipping IT management on its head is a good starting point. Rather than thinking about individual applications and how they’re performing, banks need to generate an end-to-end view of all business transactions in real-time. Traditionally this hasn’t been possible because IT management has been just as siloed as the systems it monitors. Because of these siloes, blind-spots have been created for IT, making it harder for IT to quickly find and fix problems. This situation has made it very difficult to avoid downtime or application slowdown. Steering clear of these potential threats is crucial in order to reduce risk, which in turn makes it easier to monitor compliance processes. If comprehensive records of IT performance are the norm, potential areas of risk can be readily identified and acted upon. By ensuring these records are in place and are constantly updated, the humble IT department will become recognised as a vital, reliable and valuable business unit.

Guest Blog: Basel III must aid, not hinder global trade

By Jamuna Ravi, President and Geo-head, Banking and Capital Markets, Europe, Infosys Technologies Ltd

Basel III’s main objective is to re-establish the rules and ensure the global economy doesn’t become a victim of a financial fall out of the kind that was experienced in 2008. Regulators have been quick to exert their authority to make sure banks have sufficient capital to return deposits in the event of a crisis, are able to survive a protracted liquidity freeze, and are less dependent on the vagaries of short-term credit markets. These rules had to be implemented, especially in retail banking, where it was necessary to curb high risk mortgage and credit card lending. However, when taking a three hundred and sixty degree view of the financial market place, the new ‘rules’ appear restrictive and could even be accused of squeezing life out of a recovering economy.

Whilst the mature markets are expecting flat GDP rates in the near term and are battling with deflation, currency crisis’s and resorting to quantitative easing, the emerging markets are experiencing exponential growth. It is predicted that emerging markets’ GDP will grow at a rapid pace of 6.3 per cent in 2011 and 6.2 percent in 2012[1]. Yet, this economic growth could be seriously threatened by the Basel III regulation, thanks to the impact the rules will have on the trade finance business.

The emerging markets dependency on trade is significant and Basel III is likely to result in an increase in trade finance pricing and consequently a reduction in the volume of trade finance, due to the new capital and liquidity ratio requirements. Standard Chartered Bank estimates that trade finance pricing will increase by between 15 and 37 per cent and the impact of this could see the volume in activity reduce by six per cent, which would result in a reduction in global trade by $270 billion per annum. This equates to a 0.5 per cent reduction in the global GDP[2].

Also, a study conducted by the Chamber of Commerce found that based on the trade finance activity of nine global banks from 2005 to 2009, out of the 5.2 million transactions which took place, only 1,140 defaulted and only 445 of those defaults were during the banking crisis from 2008 to 2009[3]. Basically, the statistics prove that the existing trade finance system works, but it will become ten times more expensive to do a low-risk trade guarantee than it previously was, due to new regulations that are based on a set of rules for the mass finance industry, that don’t accommodate for the niche markets within it.

Emerging markets are breathing life into the existing economy and are an integral part of the global market moving forwards. They are recognised for their innovation, talent and creativity in enabling mature markets to establish new, more profitable business models through collaboration. Basel III regulations on leverage, liquidity ratio and treatment of off-balance-sheet items fail to distinguish between new ‘hot money’ financial instruments (like CDOs and SPVs) and the more stable and time-tested instruments (like LCs and trade-finance guarantees). Any adverse impact to International Trade Finance may lead to slow down of growth in emerging economies through a second and third level impact to infrastructure and capital goods financing.

As the governmental authorities thrash out the final detail of the Basel III regulations they need to take into consideration the potential hindrances that the new rules could have on existing financial structures that already work and aid economic growth.

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[1] Philip Suttle, Chief Economist of the Institute of International Finance (IIF), 24 January 2011

[2] Regulate and be Damned, The Wall Street Journal Europe, 07 February 2011

[3] Regulate and be Damned, The Wall Street Journal Europe, 07 February 2011

Guest Blog: Embracing ‘Change’ in the Financial Market

By Varghese Thomas, global head of financial services at Savvis

“In this world nothing can be said to be certain, except death and taxes.” Benjamin Franklin, 1789. An obvious addition to the list in the financial market is “change”. What changes are we talking about?

1. Regulatory and Structural Change - In the U.S. we have the Dodd-Frank Wall Street Reform Act, plus the SEC’s ongoing review of potential curbs on high frequency trading, naked access and dark pools. In Europe it’s the MiFID review, UCITS and longer term Basel III, essentially resulting in a number of structural changes within the financial markets that firms must address. Liquidity fragmentation, municipal bonds and over-the-counter (OTC) instruments moving to exchanges, and multi-asset class trading are just a few examples that spring to mind. No doubt some uncertainty will lead to reviews and even further change down the track - which market participants, and the solutions providers who service them, must be in a position to respond to in a timely fashion.
2. Environmental Change - What I’m referring to are firms’ own operating environments. We regularly hear our clients say that they’re under pressure to do more with less. Couple this with a need to be able to respond rapidly to their business units’ constantly changing requirements, it’s no wonder that IT departments in a number of firms struggle to deliver quickly, when they’re already stretched just “holding down the fort.” For instance, the rapid growth in existing and emerging markets in Asia has many financial institutions redeploying or increasing resources in order to participate. Firms will need the flexibility and reach of their IT partners to manage through the various challenges to operate in new environments.
3. Technological Change - Moore’s law has shown that computing power continues to increase as associated cost and footprint decreases. Add to this the proliferation in high frequency/automated trading systems - in which proponents look to shave microseconds off the time it takes to receive and act upon a price - and it’s obvious that trading firms need to be able to leverage best-of-breed technology to remain competitive. Given the previous point, it can be difficult for many firms to allocate resources to constantly assess and implement new IT infrastructure.

In order to embrace constant change, organisations should look to a service provider which they can work closely with to tailor solutions to meet their needs, freeing resources to focus on their own core competencies and be able to respond to further changes as they arise.

Varghese Thomas is global head of financial services at Savvis