How developers are helping traditional banks modernise

Bitcoin and blockchain tend to grab headlines in the world of banking. Cryptocurrency is the poster child of “disruptive technology” in the traditionally slow-moving finance industry. But, there are other areas where developers and software engineers must update business-as-usual in banking in order to survive.

According to one survey, 80% of bankers agreed that their institution “needs to complete an assessment over the next three years, but only 15% expected that to lead to a modernisation effort.” Security threats, the demand for mobile banking, and outdated core banking systems are all driving banks to consider massive overhauls to their IT systems. These are the biggest modernisation challenges facing financial institutions – areas where developers and remote software teams can play a significant role in keeping banks competitive.

Making updates to “legacy structures”

In the same survey, 60% of bankers reported that at least one of their major technology challenges is directly tied to aging core systems. “Maintaining legacy systems accounts for 78% of a bank’s IT budget, and 70% of bankers feel their core processes cannot quickly adapt to change,” reports Ripple.

Over time, banks have resisted major changes to their core banking system, the backend system responsible for processing transactions, updates to accounts, and maintaining other financial records. Core banking systems are in charge of processing deposits, loans, and posting credits, as well as updating other reporting and ledger tools.

As consumer-driven capabilities like mobile deposit and peer-to-peer transfer have grown, these core banking systems have had ad hoc updates – but no complete transformation. Core deposit systems were built in the 1970s, written in “old, inflexible programming languages” like Cobalt and PL/I. Oracle’s analysis also found that these “decades-old legacy core systems are inflexible, and each time a bank wants to launch a new product, they must ‘hard-code’ the system, which can take 12 months or more.”

There’s no simple solution to updating a bank’s core system: it’s a massive technological undertaking, but one that banks must invest in to serve its customers well. Engineers can help banks develop an agile, consumer-centric approach to core banking. There are multiple approaches to solving the problem of archaic core systems, and software teams can phase in iterative changes that evolve a bank’s core infrastructure without too much service interruption.

Modernising Fraud Protection

Fraud prevention remains one of the most difficult technological challenges facing banks as cybercriminals get more sophisticated in targeting consumers. To illustrate the challenge banks face in keeping consumer account information safe, Kasperky Lab hacked a “large, publicly-traded financial company in less than 15 minutes.”

The traditional approaches many banks have taken do not work. Authentication requirements and verification processes fail to prevent fraud and provide a negative customer experience. Instead, writes one security expert, “banks should focus on creating better systems and techniques to collect and analyse internal and external data, develop more meaningful algorithms and profiles, execute penetration testing against current strategies, detect changes in transaction patterns and develop more effective solutions.”

To protect consumers from malware and fraud attacks, banks must shift from a reactive to a preventative operations approach. Developers can help banks prepare by modernising the systems that store user data, moving information onto an encrypted cloud. IBM’s AI tool, for example, is said to offer a faster analysis of advanced persistent threats and attacks. Developers must integrate the latest technology into banks’ security systems to modernise.

Digital account opening

Developers will play a critical role in helping traditional banks keep up with the demands of customers on-the-go. Digital account opening is one process where developers and software engineers can have an immediate impact.

Digital account opening (DAO) is the process of opening a bank account without ever stepping foot inside a bank. DAO involves taking the following steps:

  • Collect a customer’s personal identification information
  • Evaluate and approve (or reject) a customer from a risk/fraud perspective
  • Verify the customer’s identity
  • Accept funds digitally and immediately, either through a debit/credit card or with mobile deposit
  • Sync with the core banking system

Many banks are capable of letting customers open an account online through a web browser. Yet, mobile-optimised account opening is an area where the industry has lagged behind. There are some very good reasons why this process is so difficult. Application fraud and strict anti-money laundering laws make it difficult for banks to meet regulatory requirements. An, there are significant security risks: in 2018, banks faced a more than $31 billion in global fraud loss.

But developers who help banks modernise to provide DAO will have an immediate financial impact. One report found that 69% of those surveyed wish to perform all their banking through online and mobile channels. BAI found that around 75% of millennials and more than 65% of Gen Xers prefer to use a digital channel to open a deposit account. The core consumer of the future will expect to be able to open an account, take out personal loans, and transfer funds from any device at any moment. Developers must find a way to build the infrastructure to allow banks to offer DAO.

This article was originally published at https://www.indexcode.io/

Bitbuy and Cred launch High-Yield Crypto lending platform

Bitbuy, one of Canada’s leading cryptocurrency trading platforms, and Cred, a licensed San Francisco based leader in cryptocurrency lending and borrowing, today announced a strategic partnership that will accelerate the growth of the cryptocurrency economy and open finance in Canada.

Through this partnership, Bitbuy will become the first Canadian cryptocurrency trading platform to allow their users to earn interest on their cryptocurrency holdings. Canadians that hold Bitcoin, Ethereum, Bitcoin Cash, among others, will be eligible to earn up to 10% annualised interest on their holdings through a trusted and dependable provider.

“Enabling Canadians to earn from cryptocurrency is a natural step for Bitbuy. Identifying an experienced partner with an existing protocol in Cred allows us to expedite this process. We’re excited to instantly provide Canadians with this service offering,” said Adam Goldman, Bitbuy president, and founder.

The offering will be made available immediately through a co-branded microsite, with plans to develop a fully customised integrated solution in early 2020. No account minimums will be required, and interest will be paid every three months. Each initial term will be for six months, with the ability to roll over the cryptocurrency assets.

“It’s great to add Canada to the 179 countries we serve, and we’re excited that we found the right partner in Bitbuy to help Canadians earn money on their cryptocurrency simply by loaning it out,” said Dan Schatt, co-founder, and president of Cred.

The partnership comes as savings, lending and earning have emerged as some of the most popular new offerings within the cryptocurrency industry worldwide.

“There is an increasing number of Canadians who own cryptocurrencies and plan to hold these assets for the long-term. Lending will allow them to keep their assets safe while earning interest. Why not earn money while you HODL?” said Goldman.

Cred, founded by former executives of PayPal and Goldman Sachs, has taken numerous steps to ensure that its investments are always secure and fully compliant. The company, which has secured more than $300 million in lending capital, has implemented the industry’s most comprehensive set of risk management, information security, and insurance protection.

“At the end of the day, people should trust what happens in the world of cryptocurrency as much, if not more, as they do in the world of fiat,” Schatt said. “That’s why we’ve spent a lot of time and effort making sure your investments are safe with us.”

Bitbuy and Cred are equally committed to ensuring that Canadians have easy access to industry-leading products and services. As the cryptocurrency economy continues to evolve, the two companies plan to collaborate on more initiatives and offerings.

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Cryptocurrency in 2019: Things to Expect

Cryptocurrencies continue to surprise us with their behavior through the years. Amidst all the instability and unpredictability in terms of performance, trading, litigation, regulation, and taxation, miners and investors brave the odds and explore what these cryptocurrencies have to offer. Pessimists and optimists alike have much to say about the future of cryptocurrencies like bitcoin – such as bitcoin’s supposed nearing end because of the consistent drop in bitcoin price after reaching its peak. But it’s more viable to focus on observable trends in order to have an idea on what to expect as far as these cryptocurrencies are concerned. Here are some of them.

The Market

The word “bubble” is thrown around in the finance world, and if you’re wondering what it means, it is simply the cycle created by the fast escalation of asset prices followed by a contraction. The bubble deflates when investors cease to buy at elevated prices and massive sell-offs occur. As for bitcoin, yes it is a bubble, and it indeed popped. The market is expected to calm down a bit after the Crypto bubble and cryptocurrency trading will remain profitable.

Cryptocurrency as Payment

Retailers are starting to accept cryptocurrency as payment. At this point in time, including cryptocurrency in the list of payment methods can potentially boost income, in the same way that establishments that accept credit cards do have a wider reach than those who do not. Now you can book flights, purchase household goods, get web domains, buy computer products, and so much more with bitcoin. As of December 2018, more travel services, web services, food, and general merchandise have started to accept bitcoin payments. Those with a Microsoft account, for example, have the “Redeem Bitcoin” option upon checkout and can add up to $100 at a time via Bitpay.

Cybersecurity

In the recent years, crypto traders and holders have seen security threats such as phishing and mining malware. Cryptocurrencies, in theory, are secure; however, we expect that new crypto exchanges and platforms will bring about new cybersecurity threats and challenges.

Blockchain

The blockchain industry has always been associated with cryptocurrency, and in 2019, it is expected to work on its image as an industry that has a lot more to offer. If the industry wants to operate on a larger scale, it needs to be communicated that the blockchain technology has a lot of uses that are unrelated to cryptocurrency.

Taxation and Regulation

2019 is set to be the year of more widespread, formal, and international crypto regulation. In cryptocurrency news this year, Malta became the first country to have a clear regulatory framework for cryptocurrencies. Countries such as Russia and India have also begun to draft national legislation for cryptocurrencies; and we expect other countries to follow suit – giving way for cryptocurrency to become more legitimate. Preventing money laundering, fraud, and terrorist funding is a prime motivation in putting these regulations in place. If cryptocurrencies are safely policed, more and more people will be confident to use and adopt them.

Contact us at Hogan Injury for expert legal advice.

None of the content on https://www.hoganinjury.com/ is legal advice nor is it a replacement for advice from a certified lawyer. Please consult a legal professional for further information.

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Bitcoin and Cryptocurrency Litigation

Bitcoin and other cryptocurrencies are gaining more attention as days pass. Aside from the advantages that cryptocurrencies have like anonymity and easy international transactions, people are enticed by the fact that it can become a good investment. Apart from trading bitcoins for cash, you can also use bitcoins to buy gift cards, book flights, and hotels, buy furniture, or even buy real estate properties. Bitcoin purchases are not taxed at the moment since there is no way for third parties to identify, track, or intercept transactions that use bitcoins. Transaction fees are considerably lower as well compared to credit card transactions or services like Paypal.

Although there are many advantages in using bitcoin or other cryptocurrencies, just like any other investments, you should always be careful with your transactions. Since cryptocurrency is not regulated, many unscrupulous people have taken advantage of this and incidents of fraudulent cryptocurrencies, and other types of scam related to cryptocurrency have happened. One example of this is Prodeum, a cryptocurrency start-up that scammed its investors in just one weekend.

Because of these scams, law firms have now been involved in helping the victims. Cryptocurrency litigation has now become something that some lawyers specialize in. There are a lot of factors to consider when a cryptocurrency dispute arises. Aside from fraudulent Initial Coin Offering (ICO), lawyers could get involved if the cryptocurrency was used to launder money or hide assets; they could also get involved when there is an issue with the company, commercial, or intellectual property laws being violated in relation to cryptocurrency.

Here are some things that you can do as a cryptocurrency user to avoid being scammed:

  1. Research. – Just like with any other investments that you will make, research is essential. When investing in an ICO, make sure to read and dissect their white papers to ensure that you’re working with reliable people. Take time to research the people behind the ICO, their whole team, board members, and other investors. It’s vital for you to learn as much as you can about the company before investing so that there will be no unpleasant surprises.
  2. Be vigilant. – Cryptocurrency is still primarily bought and sold at exchanges. Because cryptocurrency is something new and the fuss around it is its value, many people get scammed by the promise of unrealistic prices. If an exchange promises incredible discounts or offers that seem too good to be true, it probably is. Another thing that you can do to avoid bitcoin exchange scams is to check the exchange’s URL. If a website’s address starts with HTTPS instead of just HTTP, that means that the traffic is encrypted and therefore has more protection.
  3. Only use trusted sources. – Hardware wallet is a physical device that stores your private keys. Hardware wallets offer more protection from hacking since there is no way for hackers to access them when you’re not online. However, hackers have now found a way around that. Some hackers sell hardware wallets that have a backdoor for them to access all your cryptocurrency and the best way to avoid this is only to accept hardware wallets from trusted sources.

In need of expert legal advice? Contact us at Hogan Injury.

None of the content on https://www.hoganinjury.com/ is legal advice nor is it a replacement for advice from a certified lawyer. Please consult a legal professional for further information.

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LCI backs cryptocurrency as a legitimate payment option

The cryptocurrency industry in India has been somewhat precarious lately, with a great deal of uncertainty regarding its future. A small glimmer of hope for the future global currency is starting to shine, however, from an unlikely source. Cryptocurrency was listed as a legal payment option last month in legislation being considered to legalize sports gambling in the country.

In a report entitled “Legal Framework: Gambling and Sports Betting including Cricket in India,” the Law Commission of India (LCI) is considering digital payments – including crypto – in preparation of the legalization of sports gambling. The report was drafted following investigations by police into allegations of million-dollar bets on the part of the Indian Premier League (IPL), which discovered that IPL cricket matches were the target of “black money” for gambling, effectively bypassing the government’s attempts to control illegal gambling.

Upon the revelation that the controls were ineffective, Indian Supreme Court judges submitted a proposal to legalize sports gambling in the country. It appointed the Lodha Committee, in conjunction with the Board of Control for Cricket India, to explore the recommendation.

The committee reported that there is a distinct, but subtle, boundary between recreational betting and match fixing. It asserted that it would be possible for match fixing to still be illegal while making recreational betting a legal activity that could help to generate tax revenue.

The LCI, in its report, put cryptocurrency in the same category as credit and debit cards, as well as Internet banking. It said, “Similar restrictions should also be prescribed for the purpose of the amount one would be allowed to stake while using electronic money facilities of the likes of credit cards, debit cards, net-banking, VCs, etc.”

According to Nischal Shetty, founder of peer-to-peer crypto exchange WazirX, “It is the first time that a body appointed by the government has given recognition to virtual currencies that they have value and can be used for a transaction. Therefore, it is a very positive sign, especially considering the report has come out after a lot of deliberation.”

The crypto community had expected to hear the court’s decision on the subject of cryptocurrency this month. However, they will now have to wait until September 11 at the earliest.

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Bitcoin will see a major bull run in 2018, Experts claim

The year 2018 has been off to a bad start for all cryptocurrencies. Whereas some people already despair, good things will come to Bitcoin and altcoins. Various experts are convinced all of the top currencies will mount a strong comeback during late 2018. It is always important to keep the bigger picture in mind.

Top Crytocurrencies Will Continue to Dominate

There is a lot more to cryptocurrency than just the Bitcoin price. Unfortunately, the value of BTC dictates how the rest of the ecosystem will evolve in the coming months and years. Getting rich quick with cryptocurrency may not happen in 2018 as of right now. Even so, industry experts are not too worried about the current bearish market. In fact, one could say the markets are going through their regular volatility as of right now. BRD CMO and Co-founder Aaron Lasher comments:

“The game isn’t over, Digital scarcity is a major innovation in money and value, and we’re in the initial stages of a multi-decade trend towards tokenization of assets.”

Over the past seven days, all top currencies lost a fair amount of value. Declines range from 11.6% to 15.9%, with Ethereum getting the worst of it. Additionally, over 80% of the top 100 currencies ranked by market cap have decreased in value over the past week. Bitcoin is dragging everything down, as it always has in the past. This trend will not relent until the Bitcoin price effectively recovers the lost ground.

This is where things will get interesting later this year. It is not the first time Bitcoin has gone through a lengthy bearish cycle. At one point, the value per BTC dropped by almost 99%. Surviving that proved to be rather easy, hence this current dip doesn’t seem too problematic. These are still the very early stages for Bitcoin and other cryptocurrencies.

The Impending Bitcoin Bull Run

Several things are going Bitcoin’s way as of right now. The launch of ETFs allows institutional investors to speculate on cryptocurrencies. Although the demand seems rather low right now, things are gradually improving. With a regulatory body to be formed for these products, things can only improve from here on out.

Speaking of regulation, Bitcoin is still a hot topic among government officials. Any regulatory measure will legitimize the cryptocurrency industry as a whole. Not everyone is in favor of this particular trend, though, but it is a “necessary evil” to take this form of money mainstream in the future.

Currencies other than Bitcoin are still evolving as well. Ethereum is set to undergo some big changes, including a switch to proof-of-stake. Additionally, there are rumors Vitalik Buterin may effectively introduce a hard cap supply for Ether. Ripple is still making inroads in the financial sector as well. Litecoin has seen a few setbacks due to Litepay falling apart, but the currency will bounce back eventually.