BIS and BoE project develops prototype API layer for retail CBDC systems 

BIS has announced that Project Rosalind has demonstrated that a well-designed API layer could work with different private sector applications and central bank ledger designs and that a set of simple and standardised API functionalities could support diverse use cases.

The completed initiative, a joint experiment run by the BIS Innovation Hub London Centre and the Bank of England around central bank digital currencies (CBDCs), developed 33 API functionalities and explored more than 30 retail CBDC use cases. These use cases covered various domains for individuals and businesses, such as peer-to-peer transfers, retail payments for goods and services and small-value business transactions.

A diverse range of payment options were tested, such as making retail CBDC payments online, in stores and offline, using near-field communication and via interactions with point-of-sale, QR codes, mobile phones, smartcards, biometric devices and smart assistants. Some of the use cases also explored private sector programmability and micropayments.

The project looked at how a universal and extensible API layer could be developed to connect central bank and private sector infrastructures, facilitate payments in CBDCs and support innovation. It was based on a two-tier CBDC model where the central bank issues CBDC and provides the ledger infrastructure, and the private sector offers user-facing services. The project also experimented with and provided valuable lessons on many vital aspects of a retail CBDC system, such as API design, privacy models, security, standards, offline payments, private sector programmability, and ecosystem roles and responsibilities.

 

NFL secures US$78m in loans from minority banks

The US National Football League (NFL) has announced it is borrowing US$78m from 16 minority depository institutions (MDIs), community development financial institutions (CDFIs) and minority- and women-focused banks to support and expand business opportunities with diverse enterprises across the country. The NFL worked with Bank of America to identify these financial institutions that provide vital investments to diverse individuals, businesses, and communities.

The NFL says it is establishing relationships with diverse financial institutions to provide new economic opportunities typically only available to larger financial institutions and to increase the diversity of its banking partners. Additionally, the new business opportunities will help fund growth, increase investment back into the communities they serve and create broader visibility for the institutions themselves.

The NFL collaborated with Bank of America to identify these banks and structure a new three-year term loan facility that provides not only financial returns generated from interest but also access to the League and its Clubs for future endeavours. The NFL and Bank of America also consulted with National Black Bank Foundation (NBBF), a leading organization that provides legal, regulatory and operational support services to Black-owned banks. NBBF seeks to support historically undercapitalized banks and has been an invaluable partner to the League as it advances its diversity and social justice efforts.

“The NFL is thoroughly committed to improving diversity across all aspects of the League, and that includes doing business with diverse suppliers and partners,” said Joe Siclare, Executive Vice President of Finance and League Policy at the NFL. “We are excited that this programme will help enhance the reach of these institutions while investing in the local communities that they serve."

 

Citi TTS selects Pismo to enrich global demand deposit account solutions

Citi Treasury and Trade Solutions (TTS) and Pismo, a banking and payments software company, have jointly announced their relationship in which Citi will use Pismo’s technology platform to help strengthen its corporate demand deposit accounts (DDA) to clients worldwide.

Citi TTS continues to migrate its solutions, services, and infrastructure to create “always on” capabilities aimed at improving the overall client experience and provide clients with the ability to operate DDA capabilities in real-time with 24x7 processing. Upgrading the current DDA infrastructure is a core element of the TTS technology revamp strategy, allowing for better scalability and increased processing volumes.

The partnership aims to deliver a scalable, microservice-based ecosystem free of market-specific hardcoded applications, allowing for faster delivery of enhancements, easier product integration, and a globally consistent experience. Through high volume 24x7 processing and real-time data availability, corporates should be able to make more efficient cash management decisions while using Citi’s global network.

Pismo’s cloud-based core solutions are initially planned to be deployed by Citi in the US market.

 

Ripple and Colombia’s central bank explore blockchain use cases

Ripple has partnered with the Banco de la República, Colombia’s central bank, to explore blockchain technology use cases. In conjunction with Colombia’s Ministry of Information and Communications Technologies (MinTIC), the bank will pilot use cases designed to enhance Colombia’s high-value payment system using the Ripple CBDC Platform, powered by the XRP Ledger (XRPL). This pilot will be developed as part of the third phase of blockchain experimentation led by MinTIC.

Under the guidance of the Directorate of Digital Government, MinTIC, the project will run through the end of 2023. The goal of the third phase of MinTIC’s experimentation of blockchain will be to educate national and territorial public entities through interactive and collaborative real-world application experiments of how blockchain technology’s speed, scalability, and transparency can revolutionise payment systems and data management. 

Developed with these capabilities, the Ripple CBDC Platform - an end-to-end solution for central banks - will be experimented and tested in a controlled environment without compromising public resources. 

“Potential efficiencies can be evaluated through the results obtained in the development of a solution with blockchain technology, which manages to improve and complement the processes in the entities in a safe and efficient way,” said Mauricio Lizcano, MinTIC Minister. “In addition, it will provide a technological solution (Prototype), which will allow simulations of different use cases in the high-value payment system.”

 

APP scams top payments fraud league table as fraudsters change tactics

One in every five global consumers fell victim to payments fraud in the last four years - 26.9% of whom are victims of authorised push payment (APP) scams, which is the number one fraud threat globally - according to the 2023 Prime Time for Real-Time report published by ACI Worldwide, in partnership with GlobalData.

APP scams happen when scammers coerce legitimate users to initiate a payment to a destination account under their control. APP scams can take many forms, the most common being social engineering - such as phishing or impersonation scams. Push payments offer rapid settlement and reconciliation for faster payment services and real-time payment systems. While the window of opportunity to catch fraud is shorter, advanced AI capabilities coupled with the rich data that ISO 20022 enables and the signals that the digital channels and devices provide allow for unprecedented precision and speed in detecting and addressing fraudulent activities.

More than £1.2bn in the UK were stolen through fraud in 2022, with over one-third contributed by APP scam losses. In June 2023, the UK Payment Systems Regulators announced new reimbursement requirements for APP scams within the Faster Payments system. It requires payment firms to reimburse all in-scope customers who fall victim to APP fraud with a cost-sharing of 50:50 between sending and receiving payment firms. The banking industry needs a united front against APP scams, and with the regulators stepping in, it provides a stronger impetus for financial institutions to collaborate and shut fraudsters down.

In Australia, disrupting scams is the government's strategic priority. Australians lost more than AU$3bn to scams in 2022. In May 2023, the Australian Banking Association announced the new Fraud Reporting Exchange platform, allowing banks to halt multiple fraudulent transactions as part of the same scam and share intelligence to assist with loss-prevention efforts. In the June 2023 report “A Strategic Plan for Australia's Payments System,” the government has committed to a long-term, coordinated approach bringing together industry players to enable disruption of scams through better collaboration and information sharing. It outlines a plan to establish the National Anti-Scam Centre and develop cross-sectoral, industry anti-scam codes for banks, telecommunications and digital platforms.

Other markets have had to watch APP scams grow to epidemic proportions before scrambling to tackle the problem after the fact. The launch of the FedNow Service is expected to be a significant catalyst for real-time payments growth in the US, with the volume of real-time payments projected to grow at a CAGR of 32.6% between 2022 and 2027. With the launch of the FedNow Service coming soon, the banking and finance industry in the U.S. is in a prime position to modernise its risk management technology and to collaborate and strengthen its controls to implement robust fraud strategies.