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UNDERSTANDING THE IMPLICATIONS OF THE SAFE HARBOUR RULING

Understanding the implications of the Safe Harbour ruling

Rich Stuppy, Chief Operations Office, Kount

Introduction

“The most serious European backlash yet since the Snowden internet spying scandal.”

This is how the Financial Times, a journal not usually given to hyperbole, has described the European Court of Justice’s (ECJ) ruling on the Safe Harbour pact, declaring it invalid.

Safe Harbour was designed as a “streamlined and cost-effective” way for US firms to get data from Europe without breaking its rules. Companies in the US were able to self-certify that they had put the appropriate data privacy measures in place. In the wake of the Snowden allegations, the top European court has ruled that Safe Harbour is invalid.

The ECJ has declared the Safe Harbour pact invalid because it does not, in their judgment, provide adequate data protections under EU law.  One of the primary drivers of this judgment was the belief that United States government agencies like the National Security Agency (NSA) have the ability to access data from people in the EU with impunity.  This decision will have near term and far reaching consequences which will likely cause serious harm to the economies not only on both sides of the Atlantic but across the globe.

What the ruling means

  • Individual European countries can now set their own regulation for US companies’ handling of citizens’ data, vastly complicating the regulatory environment in Europe.
  • Countries can choose to suspend the transfer of data to the US — forcing companies to host user data exclusively within the country.
  • The Irish data regulator will now examine whether Facebook offered European users adequate data protections, and it may order the suspension of Facebook’s transfer of data from Europe to the US if so.

Why the ECJ made its ruling

The ECJ struck down the agreement, which had been in place since 2000, in part due to fears of US mass surveillance. In essence, it is the European reaction to the Edward Snowdon revelations about US surveillance.

The court declared the Safe Harbour agreement invalid because it stopped Europe’s national data protection watchdogs intervening on behalf of citizens who complained their privacy had been infringed.

How has industry reacted?

Reaction from the communications industry has been a mixture of negative and cautious. Some industry spokespeople have reacted critically to the judgement, such as Chris Padilla, IBM’s vice-president of government and regulatory affairs. He said the decision “jeopardises these vital data flows” and would damage Europe’s plan for a digital single market. He added that the ruling would lead to “a highly uncoordinated approach to internet regulation in Europe,” creating significant commercial uncertainty.”[1]

Others, though, are adopting a “wait and see” approach with the Internet Association favouring this approach. President, Michael Beckerman said: “In light of this far reaching European Court of Justice ruling, the Internet Association calls on the US and EU to join forces to implement a revised Safe Harbour framework and to issue interim guidance to stakeholders pending this implementation.”[2]

What will the consequences be?

The short term consequence will be uncertainty.  This uncertainty will cause thousands of companies and millions of consumers in the US and the EU to reconsider decisions they have made about how to conduct business.  For example, companies that have mutually pledged to implement strong data protection practices will re-examine the commitments to those practices and may choose to cease transferring data to the US.  This is a real concern for all parties because the services have been duly vetted and chosen based on the economic benefits they provide.  Stopping or curtailing the use of these services is an economic loss for all sides.

The most unfortunate aspect of these losses is that the companies involved have built their businesses based on sound data protection practices. Those practices include strong controls, such as encryption strong authentication combined with progressive policies and practices about data protection and use.  Companies on both sides of the Atlantic have understood for years that data protection isn’t optional it is mandatory.  Years of work may have been shredded in the near term because of decisions made by their governments.

Mid-term consequences will be the rush for companies to utilize one of a few accepted ways to ensure adequate data protection or consent to transfer data.  These include;

  1. Unambiguous consent of the data subject;
  2. Arguments that the transfer is necessary for the performance of a contract between the end customer and the applicable merchant; or
  3. Use of model contract clauses.

To those unfamiliar with the landscape, these options might appear to be reasonably straight forward.  Yet most people who have been involved in crafting trans-Atlantic data exchange agreements would tell you they are anything but straight forward.  They are solvable, but only with time and money.

Longer term consequences may include a new type of protectionism inhibiting global trade.  This would take the form of de facto tariffs on the transfer of data. Data is the lifeblood of modern business.  It is not hard to imagine a scenario where governmental authorities dramatically increase the cost of transferring data to other countries in order to provide “unnatural” advantages to domestic industries. The overarching effect of such policies would be to create less competitive and efficient industries resulting in losses to all parties. These headwinds come at a time when success is difficult enough.

Conclusions

The ironic and sad fact is that all of the consequences, uncertainty, waste and loss associated with the ECJ decision have very little to do with the thousands of security minded and law abiding people and companies engaged in business.  Their primary driver for the decision was the revelations of rampant spying laid bare by Edward Snowden and the like.  The problem is not a commercial problem.  It is a nation state issue.  Unfortunately no court has the ability to force the national security apparatuses of their countries to engage in a dialog to fix these practices.

Yet what is critical is that any industry involved in the transfer and storage of data doesn’t panic. Yes we are working in a new landscape and yes our industry has just become far more complex.

But a cool head and a clear vision is vital if we are to navigate this new landscape successfully and forge new agreements.

There are challenges ahead but being aware of them means we will be better able to overcome them.

[1] Financial Times

[2] BBC News

Business

Return to work: Flexibility, preparation and communication are key

Return to work: Flexibility, preparation and communication are key 1

By Matt Weston, Managing Director, Robert Half UK

As lockdown restrictions ease for the foreseeable future, conversations across the business world are starting to turn to how employers can safely and seamlessly prepare for their workforce to return to the office.

Research from Robert Half has found that over half (54%) of employees are worried about working in close proximity to their colleagues, while a similar proportion are eager to return to the office due to loneliness working from home (45%) or concerns about missing out on career opportunities (30%).

Unsurprisingly, after everything companies and their employees have done to successfully adapt their operations and working practices to social distancing rules over the last few months, immediately returning to the old ways of working will likely neither be sensible or practical. With safety being the key priority for the ‘new normal’ of office life – communication, flexibility and preparation should be the main focus areas for employers.

With this in mind, what are the challenges and opportunities that employees anticipate as they prepare for the return to work, beyond government and industry supplied health and safety best practice? Furthermore, how can employers best support their staff during this period?

Keep people at the heart of change

It is important to recognise that your workforce has been working through an intense period of uncertainty and change for months, which can be incredibly unsettling. On top of this, working for weeks in isolation without the usual physical interactions with team members could be potentially detrimental to employee engagement and mental wellbeing.

Having adjusted to keep staff connected with one another from a distance with virtual team building exercises, video calls and daily check-ins, as teams begin working in hybrid models with some in the office and others remote, staff engagement will need to adapt again.

Managing people with greater sensitivity and maintaining positivity throughout will be crucial. To help instil a sense of normality and engagement, encourage maximum collaboration between individuals (in accordance with social distancing rules), and make sure teams feel part of company goals and opportunities through regular meetings and communication – no matter their location.

Continuing to invest in technology and offering flexibility will also be important to ensuring that people can continue to work remotely or on-site, either in accordance with their own wishes or as part of your staggered return-to-office plan.

Communicate, communicate, communicate (and listen)

Reassuring staff that they are able to safely return to the office will require continuous communication. From expectations of the physical office, to expectations of how to operate within hybrid teams, these new expectations and new workplace requirements should be communicated to all staff clearly to avoid confusion.

Regular email updates, updates on the company’s intranet and social media channels, as well as frequent town hall meetings (either online or in a smaller setting) could be key elements of an effective communications approach.

Also, consider a feedback channel to allow staff within the team to offer thoughts on their experience of returning to the office and any suggestions on improving the process. Whether on a company-wide basis or a team-by-team approach, schedule regular check-ins to engage with employees’ questions and concerns.

Maintaining open communication channels with your team will be essential for keeping up employee morale and ensuring clarity. For example, if some employees aren’t comfortable with coming to the office every day, then they should have plenty of opportunities to voice their concerns and have them dealt with promptly, respectfully and fairly.

Staggered return-to-office planning

Depending on the size of business and density of office space, maintaining home working arrangements across teams on an alternating basis could make it easier to implement safe social distancing. This involves select teams working remotely while others work on-site on any given day.

An alternating approach to remote working might also reduce the risk of staff feeling pressured or overwhelmed by an immediate return to the office five-days-a-week. After all, some families might be juggling temporary disruptions to childcare arrangements and public transport systems will likely become crowded again. So, a transitionary period will help everyone adjust to post-lockdown office working.

Finally, if you have developed your technology infrastructure to facilitate remote working, you would do well to continue to leverage these new capabilities as in all probability, a mixture of remote and at-office work will be needed for some time.

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Business

Contis enters RBS Capability and Innovation Fund bid seeking £35 million for disruptive SME growth strategy  

Contis enters RBS Capability and Innovation Fund bid seeking £35 million for disruptive SME growth strategy   2

Leading payments provider, Contis, has applied for two grants from the RBS & BCR Alternative Remedies Package, totalling £35 million.  

Unlike most applicants who will deploy funds through a single brand, Contis is taking a completely different approach. The funding will be used to drive fintech innovation in the UK by developing an off the shelf, B2B electronic and card payment technology platform for SMEs. With Contis’ powerful tech stack and regulated status, this will empower hundreds of fintechs to support the SME market with groundbreaking technologies, payments and lending capabilities. Contis today services over 800,000 consumer accounts, 14,500 business accounts and processes £4bn in transactions per year, demonstrating a proven track record.   

UK businesses are facing a challenging economic environment with the impacts of Covid-19 and Brexit. As large corporations and entire sectors are affected, SMEs will play a vital role in the recovery. Contis’ approach is completely disruptive, offering three channels to maximise support for SMEs and sole traders, through three unique brands, all powered by APIs from Contis’ modular and configurable engine. 

1.       Canvas for Business 

Contis is a super-vendor in the world of fintech, offering payments through proven banking rails and card scheme capabilities including issuing pre-paid, debit and virtual cards. They’re linked to digital delivery like Apple Pay and Google Pay, and a trusted tech stack that boasts 99.99% uptime.  

With funding from the Capability and Innovation Fund (CIF), Contis’ technology and regulated services will be made available to the whole fintech community, enabling them to provide dedicated SME accounts with the latest leading-edge capabilities delivered via Contis’ wholly owned, secure, cloud-based technology and apps. Contis’ solution has a firm eye on the need for SMEs to compete internationally, particularly after Brexit, and offers FX integration as standard.  

Canvas for Business will increase competition by providing fintechs serving the SME market with technology that outstrips the big banks. Contis will also provide credit referencing capabilities and empower fintechs to lend to their SME client base through Contis’ own credit licence. Without the constraints of legacy systems, it will enable simple connectivity to accounting and payments solutions, as well as to unlimited future innovations.  

2.       Engage for Business 

Over 150 Credit Unions currently use Contis’ Engage service and technology, and hold an estimated £400 million in undeployed cash reserves. Developed with CIF funding, Engage for Business will enable Credit Unions to launch business accounts and payments products for the first time, and allow excess funds to be redeployed in the SME sector through business support loans. This will revolutionise access to funding for sole traders and small businesses. 

3.       Freedom for Business 

With CIF funding, Contis will also offer large scale SMEs a direct-to-market solution where Contis holds the relationship and provides a bespoke offer to meet the business’ exact needs. 

Contis’ application to the Capability and Innovation Fund is focused on creating the widest possible impact for UK SMEs by fulfilling their accounts & payments needs and driving innovation in SME financial services. 

Through the grant, Contis will empower over 200 fintechs and Credit Unions to provide credit, simplify payments integration into everyday business needs, offer digital credit referencing, provide budgeting tools to SMEs, enable automated payments, give predictive insight on cash flow, provide rewards to SMEs on spending, and much more. 

Peter Cox, Founder and Executive Chairman of Contis said: “Our mission is to democratise payments and financial services for all SMEs, so they’re spoilt for choice with innovative and affordable solutions that meet their exact needs. Our approach, based upon proven technologies, will broaden and disrupt the services available to SMEs far beyond the capabilities of existing providers such as the big banks.  

“By driving competition and innovation, while improving the availability of funding, our approach will increase the services on offer to SMEs and make them more affordable, therefore becoming easier for every entrepreneurial person with vision to run their own businesses.” 

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Business

Four years of digital transformation in four weeks: UK lockdown puts pressure on brands to digitally deliver

Four years of digital transformation in four weeks: UK lockdown puts pressure on brands to digitally deliver 3

Nearly a third (32%) of consumers would switch providers if a brand’s website is unavailable for more than 24 hours

A study released today reveals the scale of omni-channel pressure brands now faced as a result of the Covid-19 pandemic, as consumers flock to apps and websites to as the priority destination to transact with brands.

The UK has experienced a huge leap in use of online services thanks to lockdown, with the public appearing to have less concern for the availability of a brand’s physical location. Research by Sungard Availability Services (Sungard AS) uncovers a “window of availability” that UK businesses now have before consumer loyalty changes:

  • If a brand’s website is down for 24 hours – 32 percent of consumers would switch provider
  • If a brand’s app is down for 24 hours – 28 percent of consumers would switch provider
  • If a physical store is closed for 24 hours – 20 percent of consumers would switch provider

The results by industry paint an interesting picture of the availability timeframes brands are expected to adhere to:

  • For online retailers, excluding grocery retailers – 23 percent of consumers would switch provider if they could not access online services for 12 hours, rising to over a third (34 percent) after 24 hours
  • For financial services and entertainment streaming platforms – 21 percent of consumers would switch provider after 12 hours, rising to 33 percent after 24 hours
  • In the case of online grocery shopping – 20 percent would switch provider after 12 hours, rising to one third 33 percent after 24 hours

The findings also highlight that as digital reliance increases, so will consumer expectations towards availability in the future. Over the coming two years, a third (33 percent) of consumers expect online financial services to always be available, rising to 35 percent for streaming services.

“UK consumers have become reliant on the constant availability of online services, and lockdown has only served to heighten this,” comments Chris Huggett, SVP, EMEA at Sungard AS. “What used to be a choice between physical and digital has now firmly accelerated into digital environments across various industries. As online worlds continue to outpace bricks and mortar as the face of businesses, ensuring constant availability and clear communications on downtime will be key for brands to build trust and loyalty.

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