Payments Are Moving To Real-Time Around The World, The U.S. Plays Catch-Up

Payment systems are moving to real-time around the globe, according to a the fifth annual “Flavors of Fast” report from FIS, the financial technology powerhouse. The annual report was begun by Clear2Pay, which FIS acquired in 2014.

FIS found 40 active real-time payment programs around the world, up from 25 in 2017 and nearly three times as many as the company’s inaugural 2014 study. In addition it identified five payments programs under development, plus another 16 expected to be live in the next 12-18 months.

The report rated the faster payments systems around the world, rating India 5, the highest rating, Australia 4+ and Singapore 4+. Somewhat improbably, the United States got a 4 rating even though its system isn’t operational at scale. It launched some small segments at the end of last year but lags well behind other countries, including the UK which celebrated the 10th anniversary of its faster payments system this year.

“We rated the countries at a point in time,” explained Elena Whisler, head of global product management, open payments at FIS, “meaning that we rated the country as is regardless if they were just launched. The main reasons US is currently a 4 is because it hasn’t got ubiquity yet,” she added in a bit of understatement.

The main reason for slower adoption in the U.S. is the lack of a mandate, said Whisler. The Fed when it started work on faster payments, focused on what faster payments would need but it did not require financial institutions to participate. TCH and other closed networks have stepped up to provide infrastructure, she added.

“Now banks have the question, when something isn’t mandated and doesn’t go through a compliance budget cycle, banks need a business case, which is difficult to do with real-time payments. It’s difficult to have a business case when we don’t know where value will come from.”

At a Federal Reserve meeting on faster payments in Chicago last week, the Federal Reserve Board invited public comment on actions the Federal could take to support faster payments in the United States.

In its official announcement, the Fed said:

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Money 2020 USA Hackathon Aimed At Financial Health And Inclusion

The Money 2020 USA Hackathon in Las Vegas this year set a challenge of financial inclusion.

Reshud Dani and Jay Lohokara

“Help Visa create a future where consumers, families, or small businesses are able to reach their financial goals using innovative solutions. Join us to help solve the challenge of financial exclusion. Think about a use case for the following categories: cash free solutions, credit, access to financial education and business skills, identification verification.”

Sponsors included Synchrony, PayPal and Envestnet|Yodlee

Sunday morning at The Venetian’s Marco Polo ballroom looked seriously casual as developers put final touches on their apps or just slept at the tables while colleagues did the work. Many sported the Visa Developer Squad Hoodie and Visa Developer Blankets in blue and gold. Empty Coke cans and pizza box decorated table tops.

Working and napping after a long night

For the second year in a row, one of the top Visa teams that advanced to the Money 2020 hackathon finals won the overall grand prize (out of 80 top teams). In an effort to help send instant payments overseas, ViSync created an app designed to simplify and improve the remittance process to help migrant workers send money back to their home country, including the ability to set controls on how money is spent by the receiver and to enable the receiver to become banked.  The team used Visa Direct and Visa Transaction Controls APIs.

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Nerdwallet Wants To Make Comparison Shopping For Financial Services Simple

“Most people don’t want to learn about personal finance in detail; they just want to know they aren’t screwing up,” said Tim Chen, who is CEO of Nerdwallet, the comparison site for financial products from credit cards to mortgages.

For a self-professed finance nerd, this lack of consumer obsession is something of a disappointment.  But he and the 80-plus researchers and writers have learned to live with it and by listening to their consumers they design advice that meets users’ needs and leaves them alone to enjoy life.

For example, Nerdwallet personal loan product page sorted loans by interest rates.

“All our consumers hated it. They wanted it sorted by monthly payments, which seems odd until you put yourself in their shoes and see what is going on month by month,” Chen said. “We have to meet them where they are. If you start by wagging your finger, that’s a good way to get them to hit the back button on their browser.”

Nerdwallet has three million members and more than 100 million visits each year, Chen said. Onstage at Money 2020 with Angela Strange of Andreesen Horowitz, she said the airline industry is far ahead in comparison shopping and its engines like Kayak and Expedia save consumers $10 billion.

Chen said the comparison engines in financial services are barely scratching the surface.

You could spend six hours reading about 529 college savings programs for your kid and still not know the ins and outs, he added. Nerdwallet users want to be triggered that the 529 exists, but they don’t want to learn all about them, just enough to find the best accounts.

“Education for education’s sake is overly complex. This is one areas where user research has been shocking. I am such a nerd and I love learning the ins and outs of all these things, but that’s not what the average person wants to learn.”

Tim Chen, CEO of Nerdwallet

For individuals, Chen said, Nerdwallet and other comparison sites have made financial products shoppable.

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Shazam! Experts Fell For a Fake Product From A Nonexistent Company In A Fraud Test

Cyber security pros and risk analysts should be better than the average person at detecting fraud, but a little over three percent submitted their personal identification information to sign up for an app described as “Shazam for voice identification.”

Credit Trulioo, a global identity and business verification company, which launched an online fraud experiment to evoke some interest around International Fraud Awareness Week. (It was also National Nurse Practitioner Week and Dear Santa Letter Week and almost overlapped with Intimate Apparel Marketing Week.)

Trulioo said that despite the abundance of online resources and press coverage on fraud and fraud prevention, the Federal Trade Commission (FTC)  received nearly 2.7 million fraud complaints in the United States last year.

So Trulioo set out to learn whether fraudsters, under the guise of a fake company, offering a fake product, could convince internet users to disclose their personal information.

It created a web page for a fictitious company called Agile ID Technologies, offering a fictitious mobile app, “Aurdentity”. Marketed as “Shazam for voice identification”, the fake mobile app claimed to use voice recognition technology to not only identify people when exposed to their voice, but also retrieve background information about them.

Trulioo ran a week-long campaign that delivered ads to compliance professionals, fraud and risk analysts, and other individuals who showed an interest in data privacy, cybersecurity and technology, and may even have had credentials. They were directed to a fake company’s web page where visitors were asked to sign up for Audentity by providing their personal information including name and email addresses. None of the information was recorded or stored, unfortunately eliminating the possibility of followup interviews.

The campaign resulted in a total of 2,139 unique visits to the fictitious company’s website. Of those visitors, 66 people completed the sign-up form.

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Gates Foundation Supports Expansion Of An Open Mobile Banking Platform in Africa

Two of Africa’s largest mobile operators and mobile money providers, Orange Group and MTN Group, have announced they will use open source financial services technology that was sponsored by the Bill and Melinda Gates Foundation.

The two companies call their joint venture Mowali (mobile wallet interoperability), to enable interoperable payments across the continent. Mowali makes it possible to send money between mobile money accounts issued by any mobile money provider, in real time and at low cost. It gets off to a strong start with more than 100 million mobile money accounts between the two providers in 22 of sub-Saharan Africa’s 46 markets. It sees the potential to reach the 338 million existing mobile money accounts in the continent.

It uses Mojaloop, an open sources payment platform that the Gates Foundation launched at the SWIFT Sibos conference in Toronto last year.

Kosta Peric of the Gates Foundation

“Interoperability of digital payments has been the toughest hurdle for the financial services industry to overcome in support of financial inclusion, said Kosta Peric, deputy director of financial services for the poor at the Gates Foundation. “This is a signal that a new wave of innovation, which can help alleviate poverty and drive economic opportunity, is coming.”

At the launch during Sibos last year Peric said that in Kenya it is estimated that M-Pesa helped 194,000 households move out of extreme poverty. Mowali can extend that mobile money reach to more people.

“Systems like M-Pesa are great, but most are a closed loop,” said Peric.

Mowali is a digital payment infrastructure that connects financial service providers and customers. It functions as an industry utility, open to any mobile money provider in Africa, including banks, money transfer operators and other financial service providers.

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Social Security? The Numbers Say To Get In Early As Possible

Take Social Security as soon as you can — at 62 advises Steve Maersch, contradicting just about everyone in the retirement advice business. He even lists some of them: The Wall Street Journal, Forbes, Kiplinger magazine, Consumer Reports, Motley Fool, Vanguard Group, CNNMoney, Suze Orman, AARP and Boston College’s Center for Retirement Research. (Steve has been a personal friend for years, and making these arguments as long as I have known him. Someone said if he knows so much why didn’t be write a book, so he has.)

Maersch, a retired copyeditor at the Milwaukee Journal, earned an average of $24,800 over his 31-year career and is now a millionaire, partly by using borrowed funds — at one time more than $500,000 when he was earning in the mid twenties — to invest in the company’s stock program for employees, — and then selling as fast as he could once the company went public. This is completely at odds with much financial advice which says never invest in the company where you work because that just increases your personal risk, what Maersch calls the Enron warning. But the U.S. has 11,300 companies partly or entirely owned by employees, he notes. Presumably most of them are honestly run.

The math — no, make that the arithmetic since Maersch has no patience for the complications investment professionals often indulge in — requires nothing more than a calculator to see how this works. Maersch’s accountant yelled at him to start taking Social Security when he turned 62, and he did. Between the ages of 62 and 65 Maersch collected $54,700 which invested in Vanguard’s Wellesley Income Fund was worth $67,083.

From 62 through 69, Maersch collected $111,543 in Social Security. Based on actual returns for the Wellesley fund that would have grown to $155,000. His investment returns will more than make up for the higher Social Security payments he would have received by waiting until he was 70 and even after taking those make-up amounts out of the fund, the investment continues to grow.

Another factor to consider is mortality — 10% of us will die between 62 and 69 added Maersch who has been to funerals for several friends who died in their sixties.

David Blanchett, head of retirement research at Morningstar, told me he disagrees with taking Social Security early. Delay taking it as long as possible, he said.
“The bad outcome is you live to be 100 and you have spent all of your wealth. If you delay claiming for eight years Social Security rises 76 percent.”

Maersch crunched the numbers for old age, taking it out to age 110.

“In this scenario, at age 110, wait-till-seventy’s Social Security would be $47,477 a year. Mine would be $34,044, or $13,433 less. My Social Security/Wellesley account — after making up this shortfall and those of the preceding 39 years — would be worth more than $425,000.”

He is not a buy and hold investor but follows the January Barometer. On Jan. 31 if stocks are outperforming bonds, he stresses stocks, If bonds are outperforming, he goes strongly into bonds. He lays out the numbers in his book.

“The January Barometer has its critics. A long article in the Wall Street Journal in 2017 declared the January Barometer to be a myth. The author did everything but run the figures.”

His book, which is easy and often amusing reading, and under 100 pages, offers some other practical advice: buy used cars (after having them checked by a mechanic); buy a freezer; keep your accounts at a credit union rather than a bank; invest only in low-cost funds with fees under 1 percent (he is entirely in a few Vanguard funds), use dollar stores, budget stores and outlet stores and keep your finances on an index card that you update monthly with savings, income, debts, investments and upcoming expenses.

He recommends two books by Jack Bogle, founder of Vanguard, and also Tony Robbins’s MONEY Master the Game and Unshakeable. Robbins is the first finance author he has read who stresses the importance of charity.

When the Milwaukee Journal CEO in 1986 saw an impending change in tax law that would make charitable donations less valuable, he encouraged employees to put $25,000 of their stock into donor-advised funds with the Greater Milwaukee Foundation. Maersch and his wife, Judy, did. The Foundation withdraws 4.75% each year.

“This year (2018) Judy and I will write more than $5,000 in grants, and our total donations will then exceed $100,000…When Judy and I pass on, our fund will continue and a living tombstone, producing grants to help minority students with college expenses.”

It is a thought-provoking book that could inspire you to pull out a calculator and see for yourself.

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Does Anyone Outside PR Firms Think Surveys Are Newsworthy?

In a recent blog at Articulate Communications I wrote about the number of surveys that public relations firms send out, and how useless many of them are. I just reviewed my Inbox to see what the recent evidence is…the results are below and include six surveys I have received so far today. They include such stunning news as John Hancock on mindfulness and  a bit on risk analysis that survey 499 residents of Tianjin, China on how they view self-driving cars.  Really, what  could I have done without these survey press releases?

I publish occasionally at the Articulate Communications blog  on issues of financial technology, banking and associated public relations and marketing topics. In the past I have written about design thinking, how to avoid bank PR-speak and whether banking and innovation belong in the same sentence.

Here are some recent surveys I have received and ignored, at least until now.

June 14 from the Society for Risk Analysis: Survey Says: Self Driving Cars Should Reduce Traffic Fatalities by At Least 75 Percent to Stay on the Roads…The survey was distributed to a convenience sample of residents in Tianjin, China. Of the 499 respondents…The broadly acceptable risk criterion for SDVs is set as two orders of magnitude lower than current global traffic risk…

June 14 — Not quite sure what this John Hancock release has to do with anything, but here it is:
According to the John Hancock Mindfulness Survey, Americans are missing out on the benefits of mindfulness, as only 12 percent of respondents practice meditation or mindfulness when they are stressed. Of those who do, nearly 70 percent cite meditation and mindfulness as the most effective activity for managing their stress, ranked above listening to music, sleeping or exercising.

June 14 Kount’s 6th Annual Mobile Fraud & Payments Survey Finds Complacency and Regression Among Merchants’ Mobile Fraud Mitigation Strategies…about 35 percent of merchants still do not track mobile fraud… Only half of surveyed merchants believe the mobile channel requires additional or specialized tools, compared to between two-thirds and three-quarters of merchants in each of the past studies…

• Most notably, merchant support for Apple Pay has gone down from 48% to 35%
• Google Pay (previously Android Pay), is down from 38% to 25%
• Support for PayPal increased (from 48% to 64%) while 10% accept AliPay and 10% accept other e-wallets.

June 14 Remitly Study Reveals 9 in 10 Immigrants in the U.S. Believe the American Dream is Still Achievable

Remitly found more than half of first-generation immigrants (60 percent) would still recommend relocating to the U.S. to a friend, family member, or colleague…Sixty-two percent of immigrants trust mobile technology to handle their finances

June 14 A global poll of SMEs and microbusinesses, conducted by global booking software platform, has discovered that tech skill shortages and the cost of administration are among the biggest threats to entrepreneurship in Britain after Brexit.

• The biggest surprise to business owners was needed to do ‘too many things at once’, with 43 per cent registering that as their biggest grievance ahead of admin at 39 per cent.
• 57 per cent of respondents chose time constraints (doing everything yourself) as the biggest challenge to growing a business ahead of not being able to hire the right staff (24 per cent).

June 14 A new survey among more than 100 founders of London tech startups, conducted by Studio Graphene in partnership with City RoadCommunications, has revealed the main staffing challenges and concerns that are holding back London tech companies. It found:
• 33% of the founders believe there is a shortage of skilled tech workers in London
• Worryingly, 30% also say their growth has been hampered as a result of them not being able to hire the right employees
• Finding people who fit the startup culture was also cited as a major issue:
◦ 39% of founders of London tech businesses say it is hard to find people who have the right mind-set and work ethic to be employed in a startup

June 12 Temenos
Latin American banks are racing to deliver digital banking to the masses says report released today by Temenos
• Regional change is driven by changing customer behaviour and demands according to 55% of banking survey respondents
• Latin American banks see a bigger impact coming from new entrants than their peers in the rest of the world (48% vs. 36% globally)
• For established banks, new payment players are the biggest threat according to 51% of respondents, followed by neo-banks (23%)
• Survey respondents think that in-house innovation centres (51%), accelerator/ incubator programs (48%), and creating closed bank hubs (48%) are the best way to innovate

June 11 Extend’s Millennials Report Shows Only 11% Of Millennials Have A Business Credit Card From Their Employer
The survey also found that nearly 25% of participants borrow a colleagues’ business credit card to make business purchases

• 44% buy travel, 55% food and car services, 56% business supplies or online services, and 24% pay for invoices (eg, marketing services, online research, conferences, etc.)
• 39% spend more than $500 a month on business expenses that are ultimately paid by their employer
• 30% find it difficult to have access to a mean of payment from their employer
• 25% borrow a business credit card from colleagues to make these business purchases while 67% use their personal credit card and then get reimbursed

May 2018 GlobalData

– 52.3% of global HNW investors reside in North America, but growth is more pronounced in Latin America, where the number of HNW individuals is forecast to grow by 48% between 2017 and 2021.
– Professionals make up 5 million individuals of the global HNW market, 4.8 million being entrepreneurs.
– 28.3% of HNW clients have been acquired through client referrals, making it the most successful channel.
– A longstanding advisor relationship is the most effective means of client retention, followed by portfolio performance and a firm’s brand image.


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