July 11

Nine British banks are betting on Mastercard’s new Consumer Fraud Risk platform, which flags risky transactions to prevent authorized push payment scams in real-time.  

As the UK prepares to roll out regulation to require banks to reimburse victims of authorized push payment (APP) scams, Mastercard is stepping up to the plate with new fraud fighting technology.  

APP scams, where victims get swindled into willingly sending money to bad actors under false pretenses, is particularly hard to police and accounts for 40% of UK bank fraud losses, according to Mastercard. Its algorithm – trained on years of account-to-account transaction data – flags and blocks suspicious transactions before money leaves a potential victim’s account.  

Since early tester TSB started using the system four months ago, it has detected 20% more APP fraud and estimates that the tool could save UK banks about £100 million per year. “It’s a good example of the power of sharing data,” according to head of fraud Paul Davis.  

Eight other big UK banks have signed up, including Lloyds and NatWest, and Mastercard plans to roll out the tool globally in the coming months. Meanwhile, 17 Australian banks launched a similar fraud reporting network earlier this year.  

NatWest’s new partnerships allow it to offer free perks to customers while furthering its own climate-related goals.

UK bank NatWest wants to stand out by helping its corporate clients reduce costs by becoming more sustainable.  

It just debuted new partnerships with tech firms Perse and Absolar to offer free, personalized recommendations on cutting energy usage and exploring solar power, respectively.  

“We look forward to giving businesses the tools they need, both to save money and to decarbonize their operations,” the head of business banking at NatWest, James Holian, said. Offering these services also helps NatWest make progress on its own mission to tackle climate change.  

As sustainability becomes a bigger priority for both consumers and businesses, FinServs have launched a handful of tech-driven tools in the past year, including personal carbon footprint tracking and a carbon credit transaction network.  

To manage the flood of generative AI ideas, execs need to prioritize projects based on ROI and consider building tools in-house.

2023 is all about GenAI.  

“I don’t think I’ve had a partner or vendor meeting this year where I wasn’t pitched a generative AI play,” Rocket Mortgage CIO Brian Woodring told The Wall Street Journal. In some cases, features seem tacked on just to take advantage of the hype, he added, without compelling reasons why GenAI is the right tool for the job.  

He’s also been inundated with vendors selling products that Rocket Mortgage realized it could “confidently and more cheaply build in-house,” like a tool that analyzes data from phone calls, he said.  

To avoid GenAI overwhelm without missing out on the potential benefits, FinServs should ruthlessly prioritize projects, build light-weight experiments that allow them to fail fast, and carefully track ROI.  

For example, JPMorgan is using GenAI to analyze emails for signs of fraud, because it has become such a prevalent type of attack lately, while Goldman Sachs is letting engineers use it to write code, because it calculated that “superhumanizing” high-salaried developers gives it a high ROI yield. 

Experts estimate that quantum computers may one day be able to break current encryption systems in seconds, so banks have a strong incentive to fight fire with fire and find ways to use the technology to keep secrets safe.

Quantum – an emerging computing paradigm that promises to perform calculations at blistering speeds – is one of the biggest cyber threats of the next decade, so HSBC is testing ways to “stay ahead of the curve” in protecting itself.  

The bank is trialing an advanced security system powered by Amazon’s AWS, Toshiba, and telecom giant BT Group that uses a technique called quantum key distribution (QKD) to protect data privacy.  

HSBC’s test involves sending information – like mock financial transactions and video communications – between its HQ and one of its data centers, while maintaining encryption and blocking eavesdroppers through QKD. JPMorgan and Danske Bank have also successfully experimented with the technique. 

As Insights Distilled has previously reported, other FinServs are testing quantum in different areas of their businesses as well, with varying results:  

A former exec said UBS abandoned its experiments because they didn’t provide strategic advantage, while Credit Agricole found it could achieve “faster valuations and more accurate risk assessments” using quantum techniques, and Mastercard is experimenting with ways to use the tech to improve its loyalty and rewards program. 

UBS wants to help Numarics shape its finance and admin software, which pairs machine learning with human auditors, as the bank tries to cozy up to small and medium-sized businesses.

UBS wants to help small businesses reduce the time and money it takes to complete daily tasks, and it’s teaming with a startup to make it happen. 

The bank’s partnership with (and investment in) Numarics will help it offer more digital financial services as part of its aim to “go beyond traditional banking and help [SMBs] manage their day-to-day business efficiently,” according to UBS exec Alain Conte.  

UBS’ partnership with Numarics highlights its current focus on SMBs as a source of growth (earlier this year, the firm pivoted away from catering to a wider swath of wealth clients and cancelled its plan to acquire robo-advisor Wealthfront). 

It’s also just the latest example of FinServs rolling out digital tools and partnerships to win over the SMB market, as Insights Distilled has previously reported. For example, Amex recently released a cashflow management hub based on its Kabbage acquisition, Westpac is working with Rich Data Co on AI-powered business loans, Standard Chartered has partnered with upSWOT on personalized tools for SMBs, and Barclays is partnering with UK fintech Liberis to make cash advances faster and easier.