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By David Poole, Head of Growth, MYPINPAD

Each year sees seemingly unprecedented technological advancements coming to market and 2016 was no different. It was a year defined, first and foremost, by the quest for new and dynamic user experiences. Not only did we see new augmented and virtual reality products, the Internet of Things saw dynamic new M2M technology such as smart cars and home apps.

David Poole

David Poole

In the background, though, security continues to be vitally important. While not as headline-grabbing as the latest gadget or IoT labour saving device, security is critical in keeping the technology we use safe and reliable.

Throughout 2016, security issues have been at the heart of our fintech industry. Below, we examine four of the most pressing ones.

  1. Data Breaches

According to the Identity Theft Resource Centre, there were 522 reported breaches by the middle of July this year, exposing over 13 million records.[1]Worryingly, the likelihood of a material data breach involving 10,000 lost or stolen records in the next 24 months has risen to 26%.[2]

Not only have data breaches become more frequent, but their impact has become greater. Once a data breach occurs the consequences for the affected organisation can be devastating. IBM’s eleventh annual Cost of a Data Breach Study revealed that the average consolidated total cost of a data breach for a company for 2016 is $4 million.[3]

Data breaches will remain a part of digital business life and we can expect to see more organisations in 2017 implementing more preventive security methods, as well as new technologies being developed and implemented for this purpose.

Many companies will focus on employing stronger and multi-layered authentication, as encouraged by the Second Payments Directive (PSD2), which will also mean that even if they face some inevitable breaches, access to accounts will be nullified as the stolen partial information won’t be enough to be usable.

  1. CNP fraud

Last year, Aité Group reported that US credit card fraud had increased 100% from just seven years ago. The study identified point-of-sale and rising card-not-present (CNP) fraud as contributing factors; which now represents 45% of total US card fraud.[4]

The same trend is true for the UK. Figures from Financial Fraud Action UK show that fraud has been soaring non-stop since 2006, and this figure is growing each year. In the first half of 2016 fraud had risen by 25% and card fraud, which includes card-not-present fraud, was up by 31%.

The vast majority of CNP fraud cases involve the use of card details that have been fraudulently obtained through methods such as unsolicited emails, telephone calls or digital attacks. E-commerce is one of the main targets for fraudsters. An estimated £261.5 million of e-commerce fraud took place on UK cards in 2015, accounting for 46% of all card fraud and 66% of total remote purchase fraud.[5]

As e-commerce continues to grow, so too will CNP fraud.[6]Despite this, many retailers and banks are holding back on tightening their security, fearing fallout from consumers rejecting friction in their checkout experience. Yet 2017 will see merchants realising the premium that consumers place on security and their willingness to sacrifice a little convenience to gain a lot of security. The value of a brand can be enhanced by getting the security experience right. So more and more companies will continue to implement two-factor authentication, as Google, Apple, Paypal, Amazon and most social media did in 2016.[7]

  1. Biometrics and identity management

Apple Touch ID triggered a new biometrics security revolution, to the point where it is forecasted that by 2021, 99% of US smartphones will be biometrics-enabled.[8]

2016 saw business explore biometrics as never before yet many are still sceptical regarding storing and encryption of biological data.

Even though it is much harder for hackers to access and use, if accessed, it is extremely valuable, since biological data can’t be changed or replaced in the event of a breach. Yet the power and simplicity of biometrics will surely see further adoption in 2017.

However, biometrics on their own, like all security methods, are not infallible. Even if sensors get stronger against fake fingerprint attacks and the technology is refined, if biometrics are to start making headway as a secure authentication technology, the technology will have to be coupled with other forms of authentication, such as password or PIN.

  1. Machine learning

Machine learning is a branch of artificial intelligence (AI) study that concentrates on algorithms which enable computers to “learn” without being given specific programming. Being exposed to new data enables the computer to grow, change, develop and solve problems independently of new programming.

By analysing historical transaction data, machine learning is increasingly being used to detect fraudulent payment behaviour. While it takes one person about 5 minutes to check just one transaction, a machine can check larger amounts of data in nanoseconds, saving time and money and making the analysis feasible in real time to prevent an attack.[9]

The possibilities for machine learning in the field of ID and verification are considerable. Taking, as an example, the mobile phone, we each have our own quirks whilst using our device. We will hold the device in a certain way, enter keystrokes in a specific manner and have countless other characteristics that can be “learned”.

Machine learning is still in its infancy and needs to be developed in real life use cases but it could allow the inclusion of an additional layer of security to ID&V processes. If taken forward, not only would your device recognise your passcode or biometric information, it would also recognise if this information has been entered in a recognised fashion. We expect to see further developments on how AI and machine learning could be used to satisfy security needs.


Overall, in 2017 we expect to see:

  • Continued growth of payment card fraud, particularly in CNP and data breaches, as well as increased investments in security and authentication measures to avoid them
  • New developments in biometrics and expansion of current methods
  • Broader implementation of 2-Factor and multi-layered authentication, something you have, something you know, and something you are
  • Developments of machine learning applied to authentication
  • Increased focus on fostering innovation and encouraging competition by regulators











‘Spooky’ AI tool brings dead relatives’ photos to life



'Spooky' AI tool brings dead relatives' photos to life 1

By Umberto Bacchi

(Thomson Reuters Foundation) – Like the animated paintings that adorn the walls of Harry Potter’s school, a new online tool promises to bring portraits of dead relatives to life, stirring debate about the use of technology to impersonate people.

Genealogy company MyHeritage launched its “Deep Nostalgia” feature earlier this week, allowing users to turn stills into short videos showing the person in the photograph smiling, winking and nodding.

“Seeing our beloved ancestors’ faces come to life … lets us imagine how they might have been in reality, and provides a profound new way of connecting to our family history,” MyHeritage founder Gilad Japhet said in a statement.

Developed with Israeli computer vision firm D-ID, Deep Nostalgia uses deep learning algorithms to animate images with facial expressions that were based on those of MyHeritage employees.

Some of the company’s users took to Twitter on Friday to share the animated images of their deceased relatives, as well as moving depictions of historical figures, including Albert Einstein and Ancient Egypt’s lost Queen Nefertiti.

“Takes my breath away. This is my grandfather who died when I was eight. @MyHeritage brought him back to life. Absolutely crazy,” wrote Twitter user Jenny Hawran.

While most expressed amazement, others described the feature as “spooky” and said it raised ethical questions. “The photos are enough. The dead have no say in this,” tweeted user Erica Cervini.

From chatbots to virtual reality, the tool is the latest innovation seeking to bring the dead to life through technology.

Last year U.S. rapper Kanye West famously gifted his wife Kim Kardashian a hologram of her late father congratulating her on her birthday and on marrying “the most, most, most, most, most genius man in the whole world”.


The trend has opened up all sorts of ethical and legal questions, particularly around consent and the opportunity to blur reality by recreating a virtual doppelganger of the living.

Elaine Kasket a psychology professor at the University of Wolverhampton in Britain who authored a book on the “digital afterlife”, said that while Deep Nostalgia was not necessarily “problematic”, it sat “at the top of a slippery slope”.

“When people start overwriting history or sort of animating the past … You wonder where that ends up,” she said.

MyHeritage acknowledges on its website that the technology can be “a bit uncanny” and its use “controversial”, but said steps have been taken to prevent abuses.

“The Deep Nostalgia feature includes hard-coded animations that are intentionally without any speech and therefore cannot be used to fake any content or deliver any message,” MyHeritage public relations director Rafi Mendelsohn said in a statement.

Yet, images alone can convey meaning, said Faheem Hussain, a clinical assistant professor at Arizona State University’s School for the Future of Innovation in Society.

“Imagine somebody took a picture of the Last Supper and Judas is now winking at Mary Magdalene – what kind of implications that can have,” Hussain told the Thomson Reuters Foundation by phone.

Similarly, Artificial Intelligence (AI) animations could be use to make someone appear as though they were doing things they might not be happy about, such as rolling their eyes or smiling at a funeral, he added.

Mendelsohn of MyHeritage said using photos of a living person without their consent was a breach of the company’s terms and conditions, adding that videos were clearly marked with AI symbols to differentiate them from authentic recordings.

“It is our ethical responsibility to mark such synthetic videos clearly and differentiate them from real videos,” he said.

(Reporting by Umberto Bacchi @UmbertoBacchi in Milan; Editing by Helen Popper. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit


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Does your institution have operational resilience? Testing cyber resilience may be a good way to find out




By Callum Roxan, Head of Threat Intelligence, F-Secure

If ever 2020 had a lesson, it was that no organization can possibly prepare for every conceivable outcome. Yet building one particular skill will make any crisis easier to handle: operational resilience.

Many financial institutions have already devoted resources to building operational resilience. Unfortunately, this often takes what Miles Celic, Chief Executive Officer of TheCityUK, calls a “near death” experience for this conversion to occur. “Recent years have seen a number of cases of loss of reputation, reduced enterprise value and senior executive casualties from operational incidents that have been badly handled,” he wrote.

But it need not take a disaster to learn this vital lesson.

“Operational resilience means not only planning around specific, identified risks,” Charlotte Gerken, the executive director of the Bank of England, said in a 2017 speech on operational resilience. “We want firms to plan on the assumption that any part of their infrastructure could be impacted, whatever the reason.” Gerken noted that firms that had successfully achieved a level of resilience that survives a crisis had established the necessary mechanisms to bring the business together to respond where and when risks materialised, no matter why or how.

We’ll talk about the bit we know best here; by testing for cyber resilience, a company can do more than prepare for the worst sort of attacks it may face. This process can help any business get a clearer view of how it operates, and how well it is prepared for all kinds of surprises.

Assumptions and the mechanisms they should produce are the best way to prepare for the unknown. But, as the boxer Mike Tyson once said, “Everyone has a plan until they get punched in the mouth.” The aim of cyber resilience is to build an effective security posture that survives that first punch, and the several that are likely to follow. So how can an institution be confident that they’ve achieved genuine operational resilience?

This requires an organization to honestly assess itself through the motto inscribed at the front of the Temple of Delphi: “Know thyself.” And when it comes to cyber security, there is a way for an organization to test just how thoroughly it comprehends its own strengths and weaknesses.

Callum Roxan

Callum Roxan

The Bank of England was the first central bank to help develop the framework for institutions to test the integrity of their systems. CBEST is made up of controlled, bespoke, intelligence-led cyber security tests that replicate behaviours of those threat actors, and often have unforeseen or secondary benefits. Gerken notes that the “firms that did best in the testing tended to be those that really understood their organisations. They understood their own needs, strengths and weaknesses, and reflected this in the way they built resilience.”

In short, testing cyber resilience can provide clear insight into an institution’s operational resilience in general.

Gaining that specific knowledge without a “near-death” experience is obviously a significant win for any establishment. And testing for operational resilience throughout the industry can provide some reminders of the steps every organization should take so that testing provides unique insists about their institution, and not just a checklist of cyber defence basics.

The IIF/McKinsey Cyber Resilience Survey of the financial services industry released in March lasy year provided six sets of immediate actions that institutions could take to improve their cyber security posture. The toplines of these recommendations were:

  1. Do the basics, patch your vulnerabilities.
  2. Review your cloud architecture and security capabilities.
  3. Reduce your supply chain risk.
  4. Practice your incident response and recovery capabilities.
  5. Set aside a specific cyber security budget and prioritise it
  6. Build a skilled talent pool and optimize resources through automation.

But let’s be honest: If simply reading a solid list of recommendations created cyber resilience, cyber criminals would be out of business. Unfortunately, cyber crime as a business is booming and threat actors targeting essential financial institutions through cyber attacks are likely earning billions in the trillion dollar industry of financial crime.A list can’t reveal an institution’s unique weaknesses, those security failings and chokepoints that could shudder operations, not just during a successful cyber attack but during various other crises that challenge their operations. And the failings that lead to flaws in an institution’s cyber defence likely reverberate throughout the organization as liabilities that other crises would likely expose.

The best way to get a sense of operational resilience will always be to simulate the worst that attackers can summon. That’s why the time to test yourself is now, before someone else does.

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Thomson Reuters to stress AI, machine learning in a post-pandemic world




By Kenneth Li and Nick Zieminski

NEW YORK (Reuters) – Thomson Reuters Corp will streamline technology, close offices and rely more on machines to prepare for a post-pandemic world, the news and information group said on Tuesday, as it reported higher sales and operating profit.

The Toronto-headquartered company will spend $500 million to $600 million over two years to burnish its technology credentials, investing in AI and machine learning to get data faster to professional customers increasingly working from home during the coronavirus crisis.

It will transition from a content provider to a content-driven technology company, and from a holding company to an operational structure.

Thomson Reuters’ New York- and Toronto-listed shares each gained more than 8%.

It aims to cut annual operating expenses by $600 million through eliminating duplicate functions, modernizing and consolidating technology, as well as through attrition and shrinking its real estate footprint. Layoffs are not a focus of the cost cuts and there are no current plans to divest assets as part of this plan, the company said.

“We look at the changing behaviors as a result of COVID … on professionals working from home working remotely being much more reliant on 24-7, digital always-on, sort of real-time always available information, served through software and powered by AI and ML (machine learning),” Chief Executive Steve Hasker said in an interview.

Sales growth is forecast to accelerate in each of the next three years compared with 1.3% reported sales growth for 2020, the company said in its earnings release.

Thomson Reuters, which owns Reuters News, said revenues rose 2% to $1.62 billion, while its operating profit jumped more than 300% to $956 million, reflecting the sale of an investment and other items.

Its three main divisions, Legal Professionals, Tax & Accounting Professionals, and Corporates, all showed higher organic quarterly sales and adjusted profit. As part of the two-year change program, the corporate, legal and tax side will operate more as one customer-facing entity.

Adjusted earnings per share of 54 cents were ahead of the 46 cents expected, based on data from Refinitiv.

The company raised its annual dividend by 10 cents to $1.62 per share.

The Reuters News business showed lower revenue in the fourth quarter. In January, Stephen J. Adler, Reuters’ editor-in-chief for the past decade, said he would retire in April from the world’s largest international news provider.

Thomson Reuters also said its stake in The London Stock Exchange is now worth about $11.2 billion.

The LSE last month completed its $27-billion takeover of data and analytics business Refinitiv, 45%-owned by Thomson Reuters.

(Reporting by Ken Li, writing by Nick Zieminski in New York, editing by Louise Heavens and Jane Merriman)


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