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Global economy faces US$3.5 trillion cyber attack risk - Industry roundup: 20 October

Global economy exposed to US$3.5 trillion from major cyber attack

Insurance and reinsurance marketplace Lloyd’s has published a systemic risk scenario that models the global economic impact of a hypothetical but plausible cyber attack on a major financial services payments system, resulting in widespread disruption to global business and potential global economic losses of US$3.5 trillion.

The three countries that experience the highest five-year economic loss from the scenario are the United States (US$1.1 trillion), followed by China (US$470bn) and Japan (US$200bn). The recovery time for individual countries or regions depends on the structure of their economy, exposure levels and resilience.

Cyber attacks continue to threaten businesses and governments, with year-on-year costs around maintenance, prevention, and response to attacks increasing. Cyber remains a risk that can potentially affect all areas of society, as it is both a complex and connected risk impacting areas such as supply chains and geopolitics.

Cyber insurance is a growing market, estimated at just over US$9bn in gross written premiums last year, and forecast to hit between US$13bn and US$25bn by 2025, according to a Lloyd’s statement. However, this still represents a small portion of businesses and society's potential economic losses.  


75% of US businesses to use real-time payments in next 5 years

Corporates in the US plan to drastically increase their use of real-time payments in the next five years to benefit from lower transaction costs, improved transparency into the payment process, increased efficiency, and better cash flow. This is according to the 2023 Real-time Payments Survey by the Association for Financial Professionals (AFP), sponsored by The Clearing House.

The Research Department of AFP surveyed corporate treasury practitioners about their current and planned use of real-time payments. The survey found that 99% of corporates with annual revenues of US$1bn to US$9.9bn expect to send real-time payments in the next five years.

Over three-quarters (77%) of corporates expect to receive B2B real-time payments in the next five years, while 76% expect to send real-time payments within the same time frame.

Regarding drivers for real-time payments, 80% of corporates cited payment transparency as a critical feature of real-time payments. Meanwhile, half (50%) of respondents indicated that the lower cost of transactions is a benefit of using real-time payments.


Samuel selects ION’s Reval for global treasury and risk management

ION Treasury has implemented its Reval solution for Samuel, Son & Co., Limited (Samuel), a metals distributor and industrial products manufacturer. With finance teams facing increased uncertainties and liquidity risks, Samuel selected Reval to support the company’s continued expansion, its need for global cash visibility, and to optimise funding and liquidity decisions. 

Reval is an end-to-end SaaS treasury management solution providing enterprise risk management, cash forecasting and positioning, payments, and bank management modules. With out-of-the-box market data, a modern user interface, standard integration capabilities, data-driven machine learning, and artificial intelligence, ION says that Reval equips corporations to increase the efficiency of their treasury operations, make data-driven decisions, and integrate across the finance function.

“In today’s unpredictable macroeconomic climate, Reval was the right choice to support our treasury needs due to its comprehensive range of integrated capabilities across all treasury disciplines,” said Elaine Wright, Vice President and Treasurer at Samuel. “The Reval implementation project ran smoothly from start to finish. ION’s dedicated internal project management team, comprising subject matter experts with solid expertise, closely collaborated with my team during months of hard work. The project was managed exceptionally well, resulting in a successful, within budget, timely implementation.”


AusPayNet to align ISO 20022 message usage guidelines by the end of 2027

AusPayNet, the self-regulatory body for the Australian payments industry, has welcomed the publication of harmonised ISO 20022 data requirements for cross-border payments by the Bank for International Settlements (BIS) Committee on Payment and Market Infrastructures (CPMI).

AusPayNet CEO Andy White said global adoption of the CPMI ISO 20022 data requirements would help reduce inefficiencies along the cross-border payment chain caused by misaligned message flows, inconsistent data usage, and inconsistent implementation and adoption of the ISO 20022 messaging standard.

“By facilitating straight-through-processing, implementation of the CPMI ISO 20022 data requirements will also improve processing of cross-border payment messages, helping the G20 achieve its targets for cross-border payments,” White said.

AusPayNet will align its ISO 20022 message-usage guidelines with the CPMI ISO 20022 data requirements ahead of the end-2027 CPMI timeline for global adoption. In a statement, the body encouraged other market infrastructures and payment service providers participating in cross-border payments to align their ISO 20022 message usage guidelines with the CPMI ISO 20022 data requirements to realise the full benefits of harmonisation for end-users globally.


Audit delays put a third of banks at risk of fines and reputation loss

A significant number of banks are still not sufficiently prepared for compliance audits, according to research from SmartSearch. The repercussions include the risk of business downtime, as teams are diverted to deal with the audit, and the looming threat of “eye-watering” fines and criminal prosecution. 

The survey of 500 compliance decision-makers across multiple sectors found that one-third of banks would take over a week to compile a compliance audit if they found themselves at the centre of an investigation.

Challenger banks appear better equipped than their traditional counterparts to handle sudden audit requests. The survey revealed that 39% of traditional banks and 34% of challenger banks said they would require more than a week to handle an unexpected audit request. Some 40% of the same banks also confessed that during onboarding, their identity verification processes are heavily dependent on dated manual checks.

The Financial Conduct Authority (FCA) began the year with a staunch focus on anti-money laundering (AML), handing out fines for compliance failures. The common thread in the FCA's actions has been punishing firms for their shortcomings on AML compliance, even in cases where no explicit proof of money laundering occurs. Principle 3 of the FCA’s Principles for Business requires a firm to “take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems”.


Oh yes they did! BNP Paribas and 321founded launch fintech Panto

BNP Paribas and the 321founded Corporate Startup Studio have launched Panto, a fintech designed to facilitate and optimise payments for all marketplaces. The fintech aims to penetrate the European payments market rapidly and intends to position itself as a made-in-Europe alternative. Guillaume Massis (formerly of Intuit and co-founder of Airtag) has taken over the startup's management.

Panto provides payment functionalities for marketplaces through an API that can be rapidly implemented. It offers payment acceptance and access to multiple payment methods adapted to each market, as well as automatic redistribution of payments between third-party sellers and the marketplace as instant or standard transfers.

Management features include automated onboarding of third-party vendors from a proprietary KYC process and global fraud management powered by AI, and a unified view of all payments, for single-point management of reimbursements, reconciliation, financial reporting and performance indicators.

Initially, Panto is targeting European B2C e-commerce players, in particular the leading marketplaces that are BNP Paribas customers. At a later stage, the fintech could extend to the European B2B and C2C markets with international sellers. Panto is scheduled for launch in the first half of 2024. Until payment institution approval is obtained, the fintech will operate as an agent of BNP Paribas.

“With Panto, we want to contribute to the creation of a leading player in marketplaces and, more generally, in the platformisation of commerce,” said Neil Pein, Head of Payments Transformation and New Digital Businesses, BNP Paribas Group. 


Rabobank and SurePay strengthen collaboration to improve fraud prevention

Rabobank has announced the further intensification of its collaboration with SurePay to improve fraud prevention. The cooperation aims to increase data coverage so that IBANs from more EU countries can be checked. 

The partnership will also introduce the Fraud Risk Indicator, which provides banks with additional risk indicators, facilitating the detection of fraudulent activity by criminals. Moreover, the system helps reduce the number of false fraud reports, or ‘false positives’.

A statement released by the pair says that the choice for closer cooperation makes sense, given that every payment is already checked against SurePay’s IBAN-Name Check system. The Fraud Risk Indicator is an additional check for each IBAN-Name Check. From a technical point of view, this extension has a limited impact on Rabobank, as it builds on the existing API integration.

While IBAN-Name Check is still in its early stages in many European countries, this is the third extension Rabobank is implementing on top of the IBAN-Name Check system.


Airwallex to acquire Mexico payments firm MexPago

Airwallex has signed a definitive agreement to acquire MexPago, a Mexico-based payment service provider and an Institution of Electronic Payment Funds (IFPE) license holder. The transaction is subject to regulatory approvals and customary closing conditions.

This acquisition should enable Airwallex to expand its financial infrastructure into Latin America and advance its mission to empower and support businesses to grow and operate across borders. It is an essential part of Airwallex’s broader growth strategy in the Americas, where the company has seen more than 460% year-on-year revenue growth. 

Airwallex’s San Francisco office continues to serve as a strategic hub for the company’s growth in the region. Among the more than 80 employees in the US, Airwallex announced the appointment of several senior leaders in San Francisco who are responsible for guiding Airwallex’s strategy at the global level and expansion in the region.


NAB and Greener to help small businesses reduce carbon emissions

NAB says it has become the first Australian bank to partner with Greener, a dedicated sustainability solution provider, to offer its small business customers an opportunity to assess and accelerate their sustainability plans.

Founded in 2022, Greener assists small businesses to create step-by-step climate action plans, reduce carbon emissions, cut costs and become more sustainable. Partly funded by NAB Ventures, Greener recently launched its new digital solution, Greener for Business, to help Aussie small businesses better understand their adverse environmental impact and mitigate it in a simple, affordable way.

NAB’s partnership with Greener alerts its small business customers to the benefits of the Greener for Business tool, which provides guidance on developing an action plan to reduce energy and waste and improve electrification, packaging and logistics emissions. The online tool also features exclusive offers from suppliers to help save on costs and improve sustainability.


Goldman Sachs becomes direct member of Nacha

Nacha has announced that Goldman Sachs has joined its growing community of direct members. Nacha now has 46 direct members, consisting of financial institutions and payments associations.

The direct membership programme at Nacha is designed to provide financial institutions and organisations with an opportunity to shape the future of the ACH Network. Nacha's direct members can vote on proposed Nacha operating rules, contributing to the ACH Network's efficiency, security and reliability. Direct members can also nominate, elect and serve on Nacha’s Board of Directors, which provides strategic guidance for the ACH Network and the governance of Nacha as a payments industry association. 

“As Goldman Sachs continues expanding payment clearing capabilities that support our businesses, we look forward to engaging Nacha and partnering with other financial institutions to drive innovation that will help shape the evolution of ACH payment processing in the US,” said Michael Sklow, Managing Director in Corporate Treasury Operations at Goldman Sachs. “By joining Nacha as a direct member, our clients and customers will also benefit as we remain at the forefront of innovative changes through a commitment to provide the highest level of customer service and enhanced straight-through processing capabilities.”

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