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WHAT’S NEXT FOR BANKS IN THE UK?

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Howard Berg

By Howard Berg, SVP, Gemalto

The mobile is now at the centre of a number of everyday activities in our lives; from communications to gaming, to navigation, to payments.In fact, it’s become so interwoven in our lives that it’s now hard to imagine a world without mobile or our trusty mobile device. The smartphone, particularly, hascatalysedchange like few other inventions, and is a trend thatshows no sign of abating anytime soon.

Arguably, banking has been impacted more than any other industry. Coupled with the rapid rise of home banking following broadband penetration in the 2000s, the 2010s have shown us that all banks in countries with widespread mobile internet need a mobile presence. According to the UK’s Office of National Statistics[1], half of adults and more than three-quarters of 25-34 year olds now manage their money online.

While these figures are exciting, they only analyse the usage trends of over 18s – with no specific insights into the behaviours of teenagers, young adults, or even the slightly older ‘born digitals’ – a consumer base that banks need to pay attention to, given they’re set to be the future wave of customers. Indeed financial institutions across the UK and the globe need to pay close attention to the habits of these consumers who have grown up with the internet and would struggle to imagine a world without it. It’s imperative for the banks to see how these people who have grown up withdigital services view mobile banking, as it could be the key differentiator between them choosing one bank over another.

With smart mobile devices playing such a leading role in young people’s everyday lives, it makes sense that banking habits are changing to follow suit. According to recent Gemalto research[2], accessing banking services either online or via an app is already seen as “essential” for a quarter (24.2%) of young consumers.Convenience undoubtedly plays a large part in thisas their funds are accessible at anytime, but there are other factors at play such as a mobile device helping them to maintain better control over their finances.

Although they have truly embraced mobile devices and mBanking, it would be wrong to assume young people are aware of the risks when it comes to security. Manyseem concerned about the risks they face when using a mobile banking apphowever, the need for an easy to use service outweighs their fears and willingness to do anything about it.There needs to be a balance.

Howard Berg

Howard Berg

For example, recent findings from[3] Gemalto research showed one in three respondents would be happy to access online or mobile banking services via public Wi-Fi services. This is an easy and convenient way for young people to access their banking details,but they could be at risk in case of an unsecure connection. It’s therefore important for banks to make sure they have security solutions in place to face the growing demand of mobile banking. Regardless of Wi-FI connection, the app needs to be be secured to mitigate known threats.

When looking to the quality of mobile banking, young people want a fully featured service with access to all the functions they have come to expect from the online or in-branch experience. In a world where the pace, quality and intuitive nature of apps have been defined by innovative, agile consumer technology companies, such as Google, YouTube Facebook, Spotify and Twitter, financial services companies still need to work hard to catch up. Apps from competitors can be downloaded and installed in seconds and banks need to realise that a fiddly, unresponsive or unreliable app could well cost them customers quickly.

Securitycannot be an after-thought when designing an app, it must be included in the discussion and built in from the start to ensure a positive user experience; whilst ensuring compliance needs are also being met.

This shifts the sands of customer retention. In the past, people banked with the same institution their parents used, and their grandparents before them. This all changedfollowing the financial crisis and the arrival of new technologies, which has opened up the market.

Consumers can switch banks easily thanks to recent regulation making it significantly simpler to do so, but a sense of dissatisfaction with the consumer experience, service and products will have underlined each and every move.

Non-traditional financial services companies such as Apple, PayPal and Google are entering the financial services space and blowing the market wide open, and you have a market context in which financial services institutions need to be much more proactive about engaging with their customers – particularly the digital natives.

Banks should be using the mobile channel to cost-effectively engage and deliver product offers and general content to the right customers at the right time, driving organic growth and customer retention – and ultimately increasing revenue.

This can come in various forms from dynamic messaging programs to deliver “tappable” tailored offers and content, to the pre-login mobile apps screen, to contextual messages to customers based on their profile, activities and attributes. Mobile can also been used to engage people in non-sales experiences as well, for example, messages about digital fraud prevention or value-added content such as guides for first-time home buyers or parents.

The impact of the younger generations through their use of smartphones and tablets on the financial services industry has been huge, and as mobile adoption grows, so too will the demand to access financial services on these devices. Financial institutions across the UK and the globe need to take serious notice of mobile technologies, and understand that the importance of not just having a mobile app, but a fully built out feature set and user friendly service. The experience for the customer needs to be the best it can be, without compromising on security – this will result in a great banking experience for consumers both young and old, and will pave the way for a mobile future.

[1]www.ons.gov.uk/ons/rel/social…rd/…/social-trends-41—e-society.pdf

[2]www.gemalto.com/brochures…/Gemalto_mGeneration_Whitepaper.pdf

[3]www.gemalto.com/brochures…/Gemalto_mGeneration_Whitepaper.pdf

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

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'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”.

‘ANIMATING THE PAST’

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 http://news.trust.org)

 

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

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REMOTE WORKING STRATEGY REQUIRED TO STRENGTHEN CYBER RESILIENCE

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

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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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