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Visa security concerns – Industry roundup: 29 April

“Deep recession”, Deutsche Bank’s new forecast

Deutsche Bank, the first major bank to predict a recession to impact the United States, has announced a change to their previous viewpoint, stating that they anticipate a “major recession” in late 2022 to early 2023.

A report titled “Why the coming recession will be worse than expected,” written by a team led by David Folkerts-Landau, Chief Economist and Research, Deutsche Bank, indicated that the bank predicts the economy could recover in mid-2024. However, the situation is expected to worsen before it improves. Folkerts-Landau stated that other major banks are maintaining a more optimistic forecast of the US economy, while Deutsche Bank appears to be the extreme pessimist and feels others need to justify why the economy won’t end in a recession. Goldman Sachs stated a 35% chance of a recession within the next two years, but the Chief Investment Officer from Morgan Stanley considers the US far from recession.

According to the US Bureau of Labor Statistics’ April report on Consumer Price Index (CPI), inflation has beleaguered the US economy since 2021, reaching a 40-year high of 8.5% last month, compared to 7.9% in February 2021. Despite this increase in consumer prices, Deutsche Bank noted that the US employment market is very strong and that unemployment will drop to its lowest level in 70 years.

Deutsche Bank created an index to decipher the gap between inflation and unemployment over the last 60 years. According to the index, the Fed is now “much further behind the curve” than at any point since the early 1980s, when inflation forced the central bank to increase interest rates to record highs, impacting the economy drastically. Currently, inflation has exceeded the Federal Reserve's target of 6% for the sixth straight month, having an ultimate goal of 2%. However, the Fed has tried to counter rising prices by raising interest rates. The central bank raised rates in March, and another half-point rate hike is expected in May, stated Fed Chairman Jerome Powell.

Optimizing cash and liquidity management through a self-service API via Kyriba and ICD

Kyriba, a global provider of cloud-based financial and IT solutions, announced the launch of a new API connector with ICD, an independent portal provider of money market products, to reportedly provide CFOs and treasurers with real-time visibility of cash and short-term investments. The API integration is said to enable finance teams the ability to research, trade, analyse and report on investments. Additionally, joint clients will be able to transfer excess bank balances into money market funds via their Kyriba Dashboard with ICD.

With interest rates rising, customers are looking for more investment options, advanced real-time analytics, and efficient automated sweeps. Félix Grévy, Head of Connectivity and Open APIs, Kyriba, commented that “the API development with ICD is part of a larger effort to ensure clients have the best opportunity to improve returns on their excess cash.” Sebastian Ramos, EVP, Global Trading and Products, ICD, stated that “with single sign-on and deep integration with Kyriba, their joint clients limit risk and add efficiencies to their cash and liquidity management processes.”

ICD identified some of the API benefits, such as

  • minimizing operational and financial risk with real-time visibility into money market funds and cash,
  • capitalizing on daily surplus cash earnings, improving data accuracy, optimizing forecasts, and optimizing working capital,
  • increasing efficiency and saving time through built-in

Ramos further added that through dedicated resources and an open API platform, the Kyriba Marketplace should enable ICD to build applications and serve mutual customers. The new ICD Portal API provides customers with a quick and easy implementation.

Central Bank of the Philippines to test wholesale CBDC

Bangko Sentral ng Pilipinas (BSP) announced they will launch a wholesale pilot of their Central Bank Digital Currency (CBDC) called CBDCPh as part of its efforts to promote the stability of the Philippine's payment system. Benjamin Dionk, Governor, BSP, commented that the central bank pilot will test the feasibility using the CBDC for large-scale financial transactions 24 hours a day with a limited number of financial institutions.

According to BSP, approximately 20.1% of monthly retail transactions in the Philippines used digital payment methods in 2020, up from 10% in 2018. Dionkno added that unlike retail CBDCs, wholesale CBDCs are restricted to banks and other financial institutions. Furthermore, the central bank anticipates using a wholesale CBDC to help reduce friction in cross-border money transfers, equity securities payments and intraday liquidity facility (ILF). Currently, ILF is not yet fully automated in the central bank.

Banking Circle acquires SEPAexpress to grow its financial network

Banking Circle Group, a UK-based fully licensed next generation financial technology platform for global commerce, is acquiring SEPAexpress, a provider of white-labelled account-to-account (A2A) payments for payment service providers (PSPs), merchants and businesses across Europe.

Companies are continuously seeking ways to digitize their customer and supply chain interactions, making the need for innovative financial solutions more essential. The Banking Circle Group, with offices around the world and over €200 billion in payment flows, states that the SEPAexpress alliance complements their systems with a wide range of e-commerce solutions including embedded finance, business payments, card issuance and B2B BNPL.

According to reports, SEPAexpress, which launched in 2017, is now looking to further expand its A2A space with open banking and upcoming Request to Pay and embedded risk management services, enabling it to serve a global network of more than 200 payment companies, banks and markets.

Visa prioritizes cybersecurity due to digital security concerns

According to the FBI Internet Crime Report, internet fraud in general increased by 69% in 2020 alone. Despite this surge in cybercrime, Visa reported a record low in cyber fraud, as it invested more than US $9 billion in security innovation and analytics over the last five years.

Paul Fabara, Chief Risk Officer, Visa, commented that the security of the payments industry has been heightened post-pandemic, leading to the growing importance of all digital payments – from $0.40 downloads to corporate exchange worth millions of dollars. Additionally, Fabara stated that more than three-quarters (78%) of those who received unsolicited links clicked on them, and more than half (51%) used the same password for most online activities. According to the FBI report, more than four out of five (81%) global businesses experienced increased cyber threats during the pandemic or downtime during a cyber incident (79%).

Fabara emphasized that much attention is geared towards innovation at the cutting edge of finance and payments, with services such as Tap-to-Pay, crypto and buy now pay later. However, minimal attention has been focused on products, platforms and services that ensure that all new forms of money movements are safe, secure and private.

Visa, collaborating with 1,000 cybersecurity professionals, states that they are focused on offensive and defensive protection. They reportedly engaged in “ethical hacking attempts” with its in-house engineers and investigated fraudulent attempts, IP addresses and GPS data in order to detect fraudulent attacks. According to Visa, vulnerability testing alone saved customers US $31 million in fraud prevention in 2021. Additionally, in one case, Visa used the Visa Account Intelligence Tool to prevent approximately $2.2 billion in customer fraud attempts.

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