Monday, 29 May 2017

A holistic approach to future-proofing the financial system

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.

 

 

 

from 

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

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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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A quick response to the problem | Consult Hyperion

Someyears 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.

Well, I might not go so far as to call [QR codes] evil, but they certainly have the potential to enable person or persons unknown to act with evil intent.

From A quick response to the problem | Consult Hyperion

I 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 project we were working on at the time, that the mobile operators do the same. But none of this happened, and QR codes became popular precisely because any app could read them. Now 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 the case 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 come in via QR.

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Even the man who invented QR codes says that they are an interim technology.

From Never mind the last mile, what about the last millimetre? | Consult Hyperion

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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 noted some surveys that showed that NFC generated better results for merchants, but only once consumers could get it working. As my good friend Osama Bedier, then head of Google Wallet, pointed out at that time, this is was some barrier because of the amount of “futz” it took to get NFC working.

‘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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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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Sunday, 28 May 2017

Bank of America preps data sharing service

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

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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.

Saturday, 27 May 2017

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

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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.

Annotated: What Mark Zuckerberg's Harvard speech really said

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.

Friday, 26 May 2017

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

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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.

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

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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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The problems with ending encryption to fight terrorism

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The only means of barring UK citizens from using the service would be a Chinese-style "great firewall", cutting Britain off from the rest of the internet. In 2015, before entering the cabinet, Brexit Secretary David Davis warned of ending encryption: "Such a move would have had devastating consequences for all financial transactions and online commerce, not to mention the security of all personal data. Its consequences for the City do not bear thinking about."

From The problems with ending encryption to fight terrorism

Walls just don’t work.

Thursday, 25 May 2017

How does PSD2 affect bank customers' digital identity?

BBVA, for example, use the same model that Consult Hyperion has been using with its clients to help them think through their strategies. The “Three Domain Identity” (3DID) model maps “real”, virtual and digital identities to identification, authentication and authorisation processes. BBVA describe these as follows:

Identification: definition of the attributes that confirm, beyond any shadow of a doubt, that the user is who they say they are and not someone different pretending to be them. 

Authentication: verification through credentials that the user is the customer they say they are (username and password, OTP, digital certificates and others). 

Authorization: the financial service providers (TPP) with a license to operate must be given authorization by the customers before they can access their accounts. They need to have proof of consent, which can be obtained through access tokens. "

via BBVA: How does PSD2 affect bank customers' digital identity?

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3DID 2017

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Tuesday, 23 May 2017

Tulips, Myths, and Cryptocurrencies – Stratechery by Ben Thompson

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Mackay was right that there were insanely high prices: those prices, though, were for options... that October crash was in-fact a financial disaster for many, including some public officials who had bought tulip futures on a speculative basis;"

Tulips, Myths, and Cryptocurrencies – Stratechery by Ben Thompson

This is correct. But as I point out in my book "Before Babylon, Beyond Bitcoin", while the tulip bubble wasn't what people think it was, "the well-known crisis caused by tulip mania led to regulated derivatives markets". The solution to the problem wasn't to ban derivatives, but to regulate them.

Sunday, 21 May 2017

Has Denmark cracked the code to the mobile wallet? | American Banker

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"‘Because Apple doesn’t allow access to the NFC chip in its handsets, we’re using Bluetooth Low Energy technology as a method to connect the terminal to the phone, which results in the exact same experience as any other NFC handset payment,’ he said."

Has Denmark cracked the code to the mobile wallet? | American Banker

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The WELL: Bruce Sterling: State of the World, 2009

Writer, cyberpunk progenitor, very nice guys and genius social commentator, once said:

"You know what's truly weird about any financial crisis? WE MADE IT UP. Currency, money, finance, they're all social inventions."

The WELL: Bruce Sterling: State of the World, 2009

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Saturday, 20 May 2017

The HAL test

I’m sure you’re all familiar with the famous “Turing test”. It is named after Alan Turing, one of the greatest ever Englishman, a pioneer of computer and a man who Winston Churchill himself said did more to defeat the Nazis than any other single person. Turing devised his test as a thought experiment to see whether a person could tell whether they were talking to a computer or not. The idea is that if the computer passes the test, then it’s intelligent.

I think about the Turing test all the time, especially when I’m using the chatbots to talk to my mobile phone provider or my bank. On the one hand I don’t really care whether I’m talking to a person or to a bot so long as they can tell me whether my data package will work in the Ivory Coast or what a SWIFT code is in general and what my account’s SWIFT code is in particular (although they were unable to explain why someone needed a SWIFT code to send money to and couldn’t just use my e-mail address). Anyway, I think about the Turing test when I’m doing that sort of thing. But I do find myself wondering from time to time whether I am talking to a person or not since in most cases the scripts that they have to follow are so narrow that they might as well be a machine.

I wonder if it is going to work the other way round in the future? I wonder if the chatbots will set up a HAL test to try and find out if they are talking to a robot or a human being? Whereas in order to pass the Turing test computers have to answer questions like “how are you feeling” and “what’s the weather been like where you are recently” and “isn’t always the same with Arsenal, trying to walk the ball into the net”, to pass the HAL test people will have to answer questions like “how many different ways will this protein molecule fold given that catalyst” and “if Elon Musk leaves for Mars tomorrow and it takes him nine Earth months to get there then how much older will he be when he lands”?

Frankly, we have no hope of passing this test whatsoever. So while computers will be able to fool us that they are human, there’s no way that humans will be able to fool their computers. I anticipate anti-human discrimination just around the corner: we’ll get shunted into the infobahn’s slow lane will the chatbots accelerate away to infinity in the overtaking lane. Next time you want to find out how much it costs to post a Christmas card to Malta by second class mail, you will undoubtedly be better off getting your chatbot to talk to the Post Office’s chatbot than trying to talk to it yourself.

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

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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)

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'Spiritual Experience': Hot, Wild Ethereum Summit is Sign of the Times - CoinDesk

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On a panel about the supply chain, Brian Iselin, president of Slavefreetrade.org took off his pants to make a point about how blockchain could potentially remove slave labor from the supply chain.

From 'Spiritual Experience': Hot, Wild Ethereum Summit is Sign of the Times - CoinDesk

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Monday, 15 May 2017

RBTE 2017: Sainsbury’s throws down gauntlet to mobile payments industry - Essential Retail

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"Adam Bialy, head of payment technology at Sainsbury’s, revealed at an RBTE 2017 panel discussion that retailers currently see mobile payment vendors as a ‘threat’.

The retailers’ perspective is that many people have joined the payments industry just because they want a piece of the data,’ said Bialy."

RBTE 2017: Sainsbury’s throws down gauntlet to mobile payments industry - Essential Retail

This is a very interesting perspective. As I mentioned in an online discussion about this the other day, it isn’t the loss of transaction fees that bothers the incumbents (because they all have ideas for value-added services that will replace the missing income) but the loss of data (because without the data they can’t make any value-added services). These are real fears.

Sunday, 14 May 2017

One Way or Another: New Legislation Seeks to Change America's Circulating Coinage

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"According to a 2011 GAO study, the replacement of dollar bills with dollar coins would save an estimated $5.5 billion in costs over 30 years[4]."

One Way or Another: New Legislation Seeks to Change America's Circulating Coinage

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Chinese hackers made $3 million trading on confidential M&A dat...

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"Three Chinese citizens who traded on insider information by hacking into the systems of two New York-based law firms have been fined $8.8 million by the Securities and Exchange Commission… The three defendants gained access to all e-mail accounts at the unidentified firms "

Chinese hackers made $3 million trading on confidential M&A dat...

Well, I’ve said it before and I’ll say it again. Lawyers who use e-mail to exchange confidential data with clients should be censured by their professional bodies. If you want to send important documents to a client, or send an important message, or pass on some information, then use Signal or Telegram or WeChat or for that matter WhatsApp.

Wednesday, 10 May 2017

'How did a fraudster impersonate me at a Lloyds branch and withdraw £8,000?'

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"Last year there were 22,525 cases of 'facility takeover fraud', where criminals steal their victims' details and impersonate the innocent party to withdraw money from their accounts, make payments in their name or upgrade products or contracts."

'How did a fraudster impersonate me at a Lloyds branch and withdraw £8,000?'

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"More than 50pc of account takeovers recorded were carried out over the phone, typically to call centre staff. Just 30pc of attacks occurred online and rest of the cases involved tricking employees face-to-face"

'How did a fraudster impersonate me at a Lloyds branch and withdraw £8,000?'

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Tuesday, 9 May 2017

Trust, again

In his book “Sapiens — A Brief History of Humankind”, the historian Yuval Noah Harari  talks about the cognitive revolution, which he defines as the point as which “history declared its independence from biology” because human beings gained the ability to think about things that do not exist, such as Consult Hyperion. He says

Corporations do not exist in nature any more than Catholicism or human rights. These are stories. Lawyers are shaman who tell stranger tales.

Well, yes. Limited liability companies are, I agree with Mr. Harari wholeheartedly, one of our species most ingenious inventions.

Monday, 8 May 2017

Macau to implement facial recognition at ATMs

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"Macau is to introduce facial recognition for UnionPay cardholders at ATMs in an attempt to curb money laundering in the island territory."

Macau to implement facial recognition at ATMs

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Saturday, 6 May 2017

Decentralized Blacklistable Anonymous Credentials with Reputation

In their recent paper "Decentralized Blacklistable Anonymous Credentials with Reputation", Yang et al put forward another way to do this.

When a user wants to access a service of a SP, he first gets the latest requirement of the SP from the ledger, then he checks its validity and whether he satisfies it. If both tests are passed, he then proves to the SP that he satisfies its requirement.

The proof itself can of course be stored on the ledger as well - you may need, for example, to show that someone was indeed age-checked before they were served alcohol.

Thursday, 4 May 2017

Tuesday, 2 May 2017

Cashless economy: The cafes where cash is off the menu

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"Browns increased wages by 10 per cent, to compensate staff for missing out on cash tips but Gotto has calculated that while wages and card payment fees have increased, Browns of Brockley saves about £300 month-on-month which would have been spent on bank deposit fees and payments for staff who cash up."

Cashless economy: The cafes where cash is off the menu

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Digital gains after note ban overstated: RBI data - Times of India

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"However, an analysis of the RBI data on digital transaction volume and value in March 2017 (latest available data) as against that of October 2016 shows that the overall volume had gone up just 1.43 times"

Digital gains after note ban overstated: RBI data - Times of India

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