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FLYING THE NEST: IT’S TIME TO DECOUPLE TOKENIZATION FROM HCE

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FLYING THE NEST: IT’S TIME TO DECOUPLE TOKENIZATION FROM HCE

Hans Henrik Hoffmeyer’, senior vice president at Nordic payment services provider,Nets

Hans Henrik Hoffmeyer’

Hans Henrik Hoffmeyer’

In the world of mobile payments, tokenization has gained notoriety as the underlying technology enabling banks to secure mobile NFC payments using host card emulation (HCE). There is no contesting that this is a big deal; the combination has triggered a profound shift in the mobile payments ecosystem, reducing deployment complexity and giving banks a commercially attractive route to market.

But if banks want to harness the true power of tokenization, they must first separate the two technologies in their minds. Tokenization is the enabling technology; it can be used to secure any kind of value transaction. Securing HCE-based NFC payments in Android mobile wallets is just one application. An important one, for sure, but only one.

This is an important distinction. Nets’ Nordic and Baltic territories consist of some of the most ‘digitally ready’ markets in the world. The Nordics boasts 99% domestic broadband penetration, for example, and 69% of the population use digital channels to access public services, including healthcare. This means that new digital products are adopted very quickly. Take mobile transactions, for example. Currently these are growing at more than 90% every year and the region is attracting more than 1000 new mobile payment users every day. In contrast, manually performed transactions are decreasing at a rate of 19% per year and, by 2020, Nordea Bank estimates that 60% of all transactions will be performed via mobile devices.

With populations as digitally advanced as this, banks and their digital payment partners, like Nets, need to look beyond the payment itself and consider how mobile wallet solutions can cater for wider applications and services if they are to meet customer expectations and stay ahead of the curve.

As a result, Nets, together with the more than 200 Nordic and Baltic banks that we serve across these geographies, consider the mobile wallet to be far more than a mere payment instrument on a mobile device. To us, it is a facility where loyalty and other value added services can interoperate, and a host of additional services can also reside, relating digital identity, mobile banking and, of course, payments.

Currently, Nets connects more than 300,000 merchants with Nordic and Baltic banks, putting us in a great position to support both sides of the payment transaction. As a result, our customers are already talking to us about providing the ‘full stack’ mobile wallet solution, as a single, fully outsourced white-label managed service, including:

  • The tokenization service that secures the bank’s underlying transaction infrastructure.
  • The catalogue of integrated service options that tokenization can be enable, like the integration of digital receipts, customer profiling analytics, HCE-NFC security, and the capability to securely integrate with merchant-linked value added services, like loyalty.
  • The provision of (or integration with) the bank’s chosen end-user interface. This could be a bespoke ‘bank-pay’ mobile wallet application, or participation in an OEM-Pay solution, like Apple Pay.
  • Access to merchant-linked value added services, via Nets payment network, on a platform that enables them to quickly integrate and develop combinations of loyalty offers in accordance with the customer’s specific appetites.

Based on this model, which is all enabled and powered by tokenization, the future integration of other smart devices and wearables into the mobile wallet ecosystem becomes eminently feasible. Other concepts can also start to be introduced, like smart tokenization, where conditions and states can be built into the payment token to establish specific circumstances for validation, opening up a whole new realm of digital possibilities.

But before all of this, banks need to appreciate what tokenization can enable today. That starts by ‘decoupling’ it from HCE. Once this has been achieved, the real potential of this amazing technology can begin to sink in.

Banking

Bank of Ireland limits 2020 loss with strong second half, shares rise

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Bank of Ireland limits 2020 loss with strong second half, shares rise 1

By Padraic Halpin

DUBLIN (Reuters) – Bank of Ireland limited its underlying 2020 loss to 374 million euros ($452 million) after a return to profitability in the second half, the bank said on Monday, sending its shares more than 5% higher.

Ireland’s largest bank by assets also announced the closure of one-third of its branches in Ireland, 10 days after NatWest said it would wind down its Irish arm Ulster Bank.

The bank set aside 1.1 billion euros to cover possible loan defaults due to COVID-19 disruption, the bottom of its forecast range and which it expects to capture the majority of credit impairment risk associated with the pandemic.

An underlying 295 million euros second half profit limited the damage as lending and business income improved, trends Chief Financial Officer Myles O’Grady said continued into 2021, even though Ireland was in a long lockdown again.

“It’s clear that there is some impact from this lockdown but the signals overall are encouraging. We do think (the second half) will be a return to a more normalised level of activity,” O’Grady told Reuters.

Shares in the bank were 5.1% higher at 3.6 euros by 0910 GMT.

The bank cut it costs by 4% year on year in 2020, meaning it achieved its 1.7 billion euro annual cost target one year early. It set a new goal of cutting costs further to 1.5 billion euros by 2023.

That will partly be achieved by branch closures, with its Irish network cut to 169 from 257 from September and Northern Irish presence more than halved to 13. It struck a deal with the Irish post office to offer customers access to banking services at An Post locations.

The head of Ireland’s Finance Services Union described the announcement of closures in the middle of a pandemic as a “shameful act” that needed to be reversed.

Bank of Ireland’s core Tier 1 capital ratio, a key measure of financial strength, stood at 13.4% versus 13.5% at the end of September. The bank said it expected capital to remain broadly in line with those levels in 2021.

The bank’s guidance for this year should support the restart of distributions to shareholders in relation to full-year 2021 results, Chief Executive Francesca McDonagh said, adding that future distributions will likely include share buybacks.

($1 = 0.8272 euros)

(Reporting by Padraic Halpin; Editing by Edmund Blair)

 

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Banking

Functions and Features of Offshore Banks to Know About

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Functions and Features of Offshore Banks to Know About 2

By Luigi Wewege, Senior Vice President, and Head of Private Banking of Belize based Caye International Bank

 

Have you been mulling over the idea of establishing an offshore checking or savings account? Maybe the idea of having an investment account with an offshore bank has been on your mind. If so, now is the time to explore these options more fully.

You’ll find that the features and functions of offshore banks have quite a bit to offer. Here are just a few examples to keep in mind.

Account Types That Are Familiar Plus More

One of the first things you’ll notice is that all of the domestic account types you’re familiar with are also available internationally. Along with those, you’ll find accounts that have some features that aren’t found at home. Some of them will help you grow your accounts or save money faster.

From time deposit accounts to special retirement funds, there’s something for just about everyone. Bank officials are happy to explain how each account type works and what it can do for you.

Competitive Interest Rates

Depending on how much you can deposit into an account, the interest rate that applies can be higher than what you receive at home. This is especially true if you opt for accounts that come with tiered interest rates. As you exceed and maintain certain balance levels, it’s possible to lock in higher interest rates.

Think of what this could mean if the plan is to save money for your retirement years. As you add to the balances and let them remain in the account, more interest is earned. Start that when you still have at least a couple of decades left to work full time, and the result could be a significant nest egg to use during those retirement years.

Easy Online Management

The days when managing offshore accounts required the post or some other slower method are gone. The best offshore banks provide online management to their clients. That means you can transfer funds between accounts with ease.

Think of how nice it would be to initiate a funds transfer that moves money from a domestic account to an international one. This can be done any time of the day or night. You will know when it posts to the account, often on the next business day. How much simpler could it be to get money in those accounts?

With the Best in Security Measures
Security is a priority with offshore banks. Data is encrypted correctly, account access is monitored, and there are plenty of safeguards in place. Other than authorized bank personnel and yourself, no one is getting into your accounts.

Top offshore banks evaluate and update security measures regularly. This makes it possible to remain ahead of the most recently launched threats and prevent hackers from accessing your funds.

Protection From Political and Market Upheavals

It’s no secret that political shifts and marketing changes impact the financial world. One way you can minimize the effect on your wealth is to house part of it in offshore accounts. Whatever is happening at home will not impact the funds you have placed in offshore accounts.

No matter what happens to your domestic assets, your offshore funds and holdings remain intact. Regardless of the losses you might incur at home, you’ll still have your offshore balances to help you get back on your feet.

Safeguard Against Legal Troubles at Home

No one is immune from being the defendant in a lawsuit. It could be a personal injury suit or a civil action against you. It could even be problems with a tax agency that leads to seizing your bank accounts or garnishing your wages. While it would be impossible to protect your domestic assets from these types of issues, your offshore assets are different.

In most instances, a judgment in a civil suit or a tax garnishment will not result in the seizure of any of your offshore accounts. They remain outside the jurisdiction of a domestic court.

A Wider Range of Investment Opportunities

Setting up accounts in the right offshore location allows you to take advantage of many investment opportunities that aren’t available at home. It’s not just the possibility of greater returns that captures your interest. The options themselves are broader than what you can access using any domestic banking or investment firm.

From real estate to currency trading, some options are likely to be of interest. Many of them can be managed through one or more arms of your international bank. Since many offshore banks have personnel who can provide information about investment opportunities, it’s easy to access factual data to help you decide if a particular investment fits in with your overall financial goals.

Possibly Superior Rates of Exchange When You Travel

Here’s something to consider if you tend to travel abroad regularly. When it comes to the exchange rate between different currencies, using your offshore checking account balance rather than a domestic one may be a better choice. That’s because there may be a more favorable exchange rate between your offshore account and the nation where you’re visiting.

A better exchange rate increases your buying power and lessens the overall cost of your trip. You’ll spend less on big-ticket items like hotels, air or rail travel, and meals.

Benefit from Opening an Offshore Bank Account

You don’t have to be rich to establish and grow offshore bank accounts. You’ll find banks that allow you to open an account with relatively modest balances and add to them with ease.

Over time, these balances help you achieve greater financial stability and ensure a more secure future.

 

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Banking

Banks in EU to publish world’s first ‘green’ yardstick from next year

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Banks in EU to publish world's first 'green' yardstick from next year 3

By Huw Jones

LONDON (Reuters) – Banks in the European Union would have to publish a groundbreaking “green asset ratio” (GAR) as a core measure of their climate-friendly business activities from next year, the EU’s banking watchdog proposed on Monday.

As the trend in sustainable investing gathers pace, regulators want investors to get more reliable information on a bank’s exposures to climate change as storms and other weather events affect the value of their assets and liabilities.

The European Banking Authority (EBA) said the ratio, put out to formal public consultation on Monday, will measure the amount of climate-friendly loans, advances and debt securities compared to total assets on a lender’s balance sheet to reach a percent figure.

“I believe it’s the first time regulators are asking for a green asset ratio,” said Piers Haben, EBA’s director of banking, markets, innovation and consumers.

“The numbers may well be single digit for banks at first and that’s why context will be important. When a bank talks about where it wants to be in 2030, that is going to be really interesting on the green asset ratio.”

The new EU “taxonomy” would be used to define which assetsare environmentally sustainable.

EBA said that many stakeholders have a legitimate interest in the physical and transition risks that banks are exposed to from climate change.

Banks are likely to face pressure from investors to show what steps they are taking to increase their GAR over time, though few lenders are expected to reach 100%.

The watchdog was responding to a request from the EU’sexecutive European Commission on how to implement upcomingrequirements on climate-related disclosures by banks.

The GAR would published in a bank’s annual report, starting from 2022 based on data up to Dec. 31, 2021.

Banks will also have to publish three other indicators showing the extent to which fees from advisory services, major trading operations and off-balance sheet exposures are derived from climate-friendly activities.

(Reporting by Huw Jones; Editing by Ana Nicolaci da Costa)

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