fintech Tag

As customers’ financial behaviors evolve to include digital banking and financial technologies—like peer-to-peer payment, virtual currency, mobile payments and mobile wallets—tokenization is one of the most important new technologies merchants can leverage to stand in the way of cybercriminal access to customer payment information. What is Tokenization? It is recommended that consumers use a paper shredder to destroy bank account statements, checkbook registers, tax forms, payment receipts and similar documents that include sensitive data because any account number reflected on the document that wasn’t destroyed beyond recognition could be used fraudulently. Similarly, when a shopper buys something online, they are required to divulge confidential and sensitive information, such as their address and ATM card info. Giving out this information online is risky since it may be stolen and used fraudulently. Much like a paper shredder renders account information meaningless so that it’s made nearly impossible to re-assemble, repurpose or identify, the same theory applies to tokenization—through technology. Basically, tokenization is the process of replacing sensitive data with unique identification symbols that capture all the vital information about the data without compromising its security. The algorithmically generated number used to replace the sensitive data is called a token. How It Works Typical consumer credit/debit (ATM) cards come with names, 16-digit personal account numbers (PANs), expiration dates and security codes — any of which can be "tokenized." When a merchant swipes a customer's credit card, the PAN is automatically replaced with a randomly generated alphanumeric ID (“token”). The original PAN never enters the merchant's payment system; only the token ID does. The merchant can use this special token ID to keep records of the customer....

Recent technology advancements have pointed us in the direction of linking our DNA to everything we do. Biometrics technology is already working its way into our daily lives; from smartphone “touch ID” to cars that unlock with your handprint. It is no surprise then that many financial institutions and governments have already embraced biometric authentication as the standard for verifying the identity of customers opening accounts, requesting services, and making payments. There will be 770 million biometric authentication apps downloaded annually by 2019 (according to Juniper’s research).  Payment services are increasingly taking advantage of biometrics to improve security and convenience by eliminating the need for users to enter passwords or use other cumbersome manual authentication methods. Thanks to companies like Apple and Samsung, many banks are already allowing touch ID to authorize payments and money transfers, and some banks in Europe are allowing ATM withdrawals with the same fingerprint authorization (no card or PIN required). And vendors could certainly benefit from using the technology to authorize payments and cut down on fraud. Biometrics are unique human physical characteristics, such as fingerprints, that can be used for automated authentication. Their growing use in payment solutions is driven largely by increase of touch ID hardware in mobile phones, although they can also be incorporated into other devices such as ATMs and payment terminals. Benefits of Biometrics As Means Of Payment. They free users from having to remember and enter multiple passwords: many of us have memorized more than 5 different passwords for different platforms.  Some users may have as many as 200 online accounts, each requiring secure controls over access. Biometrics eliminates this as only...

Africa is far behind in terms of provision of financial services for its bulging population, and it needs to urgently deliver a robust financial infrastructure that enables prosperity for the people.  For almost a decade, the global community and national governments have made concerted efforts to expand financial inclusion—creating a financial system that wors for all and opens the doors to greater stability and equitable progress. The progress towards financial inclusion in East Africa is evident. In Kenya and Tanzania, it is easier than ever to access financial services with only a mobile phone. But it is far different in West Africa, where the slower pace of development of mobile money has meant limited financial inclusion for some of the poorest communities on the continent. Although the root cause of this predicament is multifaceted, new thinking and innovation in financial services, which includes the provision of appropriate financing instruments targeted at this group of the population, has become critical these past years. It is clear that the main impediments to financial inclusion in Africa are the high cost of opening and maintaining formal bank accounts, the long distances to bank branches and the daunting list of personal information that banks require to support applications to open an account. Sometimes, the erratic nature of Central Bank financial policies and regulations also discourages people from engaging with formal financial institutions. These constraints have stimulated a high level of demand for alternatives to the traditional banking and financing system.   Mobile Phones to the Rescue While mobile phones are quickly becoming more affordable, digital financial solutions that are tailored to very poor and remote communities are urgently...

Although the term “blockchain” has really grown in popular imagination in the last few years, the technology itself is just 10 years old, given that it was first conceptualized in 2008. Blockchain is the basis of the Bitcoin protocol. (see here for our post on the ABC of blockchain). Interestingly, although blockchain is one of the most discussed topics in recent times, a vast amount of people within the industries that stand to benefit most from blockchain are also completely uninformed about it. This is amazing since blockchain technology has the potential to completely revolutionize industries like healthcare and insurance. Another industry that blockchain stands to benefit enormously is finance. This incredible new technology stands to benefit the industry by saving them enormous amounts of money by streamlining their processes. Why Blockchain in Financial Services? Many of the industry’s processes are overdue for an upgrade or in some cases complete replacement to withstand new volumes, hacks and security threats. Blockchain is far more impregnable and recoverable as no centralised version of this information exists.   Transfers facilitated by central authorities such as banks have not changed in the last 150 years! An international transfer can still take as long as five days to settle, entailing risks like credit risk, exchange rate risk etc., and the industry needs to reduce heavy transaction fees and transaction times. Blockchain can make these transfers visible securely immediately, which other technology cannot.   In the future, people are going to make a lot of smaller payments. That’s going to increase economic activity. That, in principle, makes a larger pie with lower fees, higher volumes and a demand for...

Recent technology advancements have pointed us in the direction of linking our DNA to everything we do. Biometrics technology is already working its way into our daily lives; from smartphone “touch ID” to cars that unlock with your handprint. It is no surprise then that many financial institutions and governments have already embraced biometric authentication as the standard for verifying the identity of customers opening accounts, requesting services, and making payments. There will be 770 million biometric authentication apps downloaded annually by 2019 (according to Juniper’s research).  Payment services are increasingly taking advantage of biometrics to improve security and convenience by eliminating the need for users to enter passwords or use other cumbersome manual authentication methods. Thanks to companies like Apple and Samsung, many banks are already allowing touch ID to authorize payments and money transfers, and some banks in Europe are allowing ATM withdrawals with the same fingerprint authorization (no card or PIN required). And vendors could certainly benefit from using the technology to authorize payments and cut down on fraud. Biometrics are unique human physical characteristics, such as fingerprints, that can be used for automated authentication. Their growing use in payment solutions is driven largely by increase of touch ID hardware in mobile phones, although they can also be incorporated into other devices such as ATMs and payment terminals. Benefits of Biometrics As Means Of Payment. They free users from having to remember and enter multiple passwords: many of us have memorized more than 5 different passwords for different platforms.  Some users may have as many as 200 online accounts, each requiring secure controls over access. Biometrics eliminates this as only...

Blockchain technology is one of the most talked about yet misunderstood topics in recent times, commonly associated with Bitcoin and other cryptocurrencies. Blockchain is commonly used interchangeably with bitcoin, even though they refer to two very different things. Bitcoin is a form of virtual currency, more commonly known as cryptocurrency, which is decentralized and allows users to exchange money without the need for a third-party. All bitcoin transactions are logged and made available in a public ledger, helping ensure their authenticity and preventing fraud. The underlying technology that facilitates these transactions and eliminates the need for an intermediary is the blockchain. What is blockchain? Blockchain is a public electronic ledger that can be openly shared among different users and that creates an unchangeable record of their transactions, each one time-stamped and linked to the previous one. Each digital record or transaction in the thread is called a block (hence the name), and it allows either an open or controlled set of users to participate in the electronic ledger. Each “block” represents a number of transactional records, and the “chain” component links them all together with a hash function. As records are created, they are confirmed by a distributed network of computers and paired up with the previous entry in the chain, thereby creating a chain of blocks, or a blockchain. Blockchain can only be updated by consensus between participants in the system, and when new data is entered, it can never be erased. The blockchain contains a true and verifiable record of each transaction ever made in the system. It is a database that is validated by a wider community, rather than...

The financial sector is constantly coming up with useful and innovative ways of providing its services to the population. The advent of fintech (the use of technology in the financial industry) has provided a way for all entities to have access to financial products and services at a reasonable rate. Although these services have included more people in the money sector, thereby disrupting the financial world, there is still a huge portion of the world population which is largely unbanked. Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way- (worldbank.org). According to a survey by Enhancing Financial Innovation and Access (EFInA), about 40.1 million or 41.6 percent of Nigerian adults are financially excluded, and 48.6 percent are financially included, while 58.4 percent are said to be financially served. This shows the sheer amount of people without access to financial services. In Nigeria people have found ways to have access to financial services and become financially inclusive; either by getting a job (their salary is paid through a bank account) or starting a business (open an account to obtain payments or credit). They then become increasingly financially inclusive by growing to having insurance, a credit account, a brokerage account, and mortgage etc. The way financial services are delivered has changed tremendously in the past century. These changes are underscored by transaction costs, which have evolved based on changes in communication and computing technology. The developments in communication and computing technology have contributed significantly in bringing...