While Apple reportedly struggles to get the iPhone X off its feet and into the market, stumbling on obstacles it knew would come about, such as developing proper facial recognition and delivering on its aggressive production schedule, global stock markets are fluctuating on the back of several factors, from the disastrous hurricanes to bad European weather and Brexit talk. Black Friday, Cyber Monday and Christmas are still ahead of us however.
Here Lee Wild, Head of Equity Strategy at Interactive Investor, provides an overview of the current global stock economy, as US markets and Japan’s Nikkei put London into perspective:
“The mood on many global stock markets might well be described as exuberant, but not irrational. Yes, it took less than six weeks for the Dow Jones to add the last 1,000 points to top 23,000, but latest US company quarterly earnings are beating expectations - look at IBM's fightback overnight - and president Trump's tax plans could still deliver a boost to the bottom line.
“Japan's Nikkei has just hit a two-decade high, but exports there have risen for a tenth straight month amid demand for Japanese technology.
“That puts what's happening in London into perspective. Investors are right to be concerned about a recent spate of high-profile profit warnings, and Brexit presents its own set of special circumstances, but many companies are delivering strong results and valuations are not excessive.
“Of course, the market will correct at some point. Chatter has picked up in recent weeks following profit warnings from blue-chips GKN, Mondi, ConvaTec and Merlin, but this bunch are not a fair indicator of the market as a whole.
“Unilever's highly-rated shares have come off the boil as bad weather affected sales of its Magnum and Ben & Jerry's ice creams in Europe during the third-quarter, while hurricanes in Florida and Texas held back the Americas. However, underlying sales in emerging markets still grew 6.3% and volumes were up. With just a few months of the financial year left, annual group underlying sales are still expected to grow 3-5% and profit margins improve.
“Don't be surprised to see a pullback between now and Christmas in some markets which have raced ahead this year, but it's unlikely to be the crash everyone is predicting. While inflation is currently outstripping wages growth, the UK unemployment rate is at its lowest since 1975 and any small rise in interest rates will not pull the rug from under this market.”
Here Lee Wild, Head of Equity Strategy at Interactive Investor discusses corporate American investment ahead of third quarter reports.
Decent economic data has kept records tumbling on Wall Street, and who’s to say this run will unwind any time soon. Overnight, it’s talk Donald Trump could name Fed governor and market’s choice Jerome Powell as Fed chair Janet Yellen’s replacement that’s driving sentiment.
Winning streaks like this are always difficult for investors, as the head keeps asking how much higher? It requires calm and nerve to hold stocks in these situations, even more to continue buying.
Valuations are toppy in areas of the market both in the US and over here, but history is littered with examples where investors tried to call the market peak and failed. The experts who’ve predicted a crash for more than a year have been wrong, and investors who’d followed their lead will have missed out on substantial profits.
So, there are still plenty of good quality stocks to buy, which are growing profits, pay decent dividends, and have great prospects. That said, corporate America begins reporting third-quarter results in a couple of weeks, and the numbers had better be good, given the size of earnings beats already baked into stock prices.
It’s a big day for ex-dividends in London, among them the third of Next’s 45p special payouts and WPP’s generous interim, which lands highly-paid boss Martin Sorrell another huge windfall.
Even with the impact of ex-divs, the FTSE 100 has significant momentum right now and there’s a great chance it will break above 7,500 soon, putting it within 100 points of a new record. Miners and supermarkets are flavour of the month Thursday.
With little of interest coming out of the European Central Bank’s September policy meeting, it’ll be interesting to see if today’s minutes give any clues as to tapering plans or thoughts about how to handle the strong euro.
After that there’s a jumble of data out of the US, although the chance of any major upset is slim. Many traders could be tempted to keep their powder dry ahead of tomorrow’s US non-farm payrolls.
Following the recent disasters that hit the US mainland, Finance Monthly reached out to Nalanda Matia, Lead Economist at Dun & Bradstreet, to gather thoughts on the overall impact felt by supply chains throughout the various industries, regions and markets.
Mother Nature hasn’t been kind to the United States in the past month or so; Hurricane Harvey left a trail of destruction on several counties in Texas, while Hurricane Irma devastated parts of the Sunshine State, most notably The Keys. The stormy season doesn’t look like it will abate anytime soon. The market impacts of these natural disasters are significant, particularly on densely populated and urban cities.
While the financial repercussions of Irma are still being counted, let’s take a closer look at the impact of Harvey, including affected industries, the supply chain and the future outlook of the affected areas.
Impacted industries
Early estimates have placed the impact of Category 4 Hurricane Harvey at around $75 billion, with losses from insured and uninsured residential and commercial properties making up the majority. With the addition of other costs associated with business interruptions, lapses in employment gains, and additional flooding or damage to contents of the properties, the toll could be much higher.
The top industries in the state with the largest number of jobs that have been potentially impacted by the hurricane are services; manufacturing; wholesale and retail trade; mining; construction; finance, insurance, & real estate and agriculture, forestry & fishing.
Supply chain concerns
The disruption in energy exports and other supply chain activities as ports in the state remained closed to vessel traffic until floodwater damage was assessed affected consumers and trade, creating build-ups and delays.
Many industry supply chains will take a hit as the transportation industry looks to get business back to normal. The Houston area in particular accommodates several major airports with flights to more than 70 international destinations. With some of these airports closed for a few days, the air transportation sector faced considerable backlog that they’re still coping with today.
Waterborne transportation is also in crisis due to the closure for several days of all major ports in the Houston and Corpus Christi areas. Large container ships headed to Houston to load cargo were stranded or diverted to nearby ports to wait out the storm and port closures. This caused severe supply chain disruptions in both parts of the United States and internationally. Based on the diverse nature of cargo that goes through the Houston area ports, the supply chain interruptions were not just limited to energy or chemicals, but extended to other commodities, such as agricultural products.
Business and economic impact
The parts of the United States affected by Hurricane Harvey have relatively high populations and are economically developed areas, which has contributed to high economic losses, perhaps one of the highest economic costs incurred due to a natural disaster in the US. With thousands of businesses and their employees stricken, the economic outlook for the region as a whole is expected to be lacklustre, but this prognosis may be true only in the short term.
Looking more closely at what businesses were affected, the vast majority were micro and small businesses with fewer than 10 and fewer than 100 employees, respectively. Also, close to 40% of the affected businesses are fairly young – within the first five years of their life cycles.
According to our estimates, the county of Harris, TX seems to have undergone the maximum disruption as far as the number of affected businesses are concerned. The county contains more than 60% of the businesses that have been declared at risk.
What to expect from Irma
While Irma seems to have been a slightly stronger storm in terms of wind, its financial impacts – without diminishing its severity – might be slightly less than Hurricane Harvey’s. Dun & Bradstreet estimates over two million businesses to have been in the monster hurricane’s path. This includes 49 counties in FL, three in Georgia, four in PR and two in Virginia that have been declared as disaster regions by FEMA.
Early estimates regarding these businesses are that nearly 60% of the jobs affected are in Services and Retail – with the affected regions in scenic and tourist-frequented areas. Pre-Irma, about 12% of the businesses located in the path of the storm were in the riskiest class of the Dun & Bradstreet Delinquency Predictor score. Because of the hurricane, these businesses, which were already at risk of becoming severely delinquent, will have an increasingly difficult time meeting their obligations.
Early estimates put the damage from Hurricane Irma in Florida and the surrounding areas at closer to $50bn, but the exact number is hard to predict exactly at this stage. As the southern coastal states count the cost of these disasters, we envisage a number of months until all services, transportation systems, supply chains and the economy are back to normal.
Although these current disasters are not expected to leave a permanent imprint on the economy of the United States, the immediate consequences of these increasingly frequent events cannot be ignored.
In a new white paper, Vodafone – supported by Bernard Vrijens, Professor in public health at the University of Liege, Belgium – claims that new connected solutions based around the Internet of Things (IoT) will help people to follow their medical treatment programmes more closely. This latest development could improve millions of lives and save billions of dollars.
The World Health Organisation has said that adherence – the action of complying with a medical treatment regime – for long term conditions such as hypertension, cancer and HIV stands at only around 50%, meaning half of patients do not follow their doctor’s instructions. As a result, patients’ chances of recovery and relief are reduced. Better approaches to adherence have been estimated to bring 50% of the non-adherent population onside1.
Bringing together smart devices, connectivity and the cloud, the Internet of Things (IoT) can lead to more effective healthcare, according to the white paper. It will encourage patients to follow their treatment programme more accurately by providing them with individualised information on their therapy. By encouraging them to continue with their full course of treatment, this approach could potentially save up to an estimated $290 billion in otherwise avoidable medical spending, in the US alone each year[i].
The data-driven and IoT enabled adherence management outlined in the white paper would offer benefits to patients, clinicians, medical device companies and those that pay for the provision of medical services. It could lead to more independence for patients, better treatment, more effective drug development and ultimately lower healthcare costs.
University of Liege Professor of public health Bernard Vrijens said, “Healthcare providers currently monitor four main vital signs: body temperature, pulse rate, respiration rate and blood pressure. The IoT means they’ll soon be able to accurately measure a fifth – adherence. I believe that that the importance of connectivity in the both medical devices and in patient engagement cannot be under estimated. This is a pivotal moment on the road to more individualised healthcare.”
Vodafone IoT Director Erik Brenneis added, “This is a great example of how the internet of things has the potential to help people live healthier lives and access more effective medical treatment. We hope that the vision and creativity of people like Professor Vrijens will quickly become a reality with the IoT. We believe that we are on the threshold of a significant change in the way chronic diseases are managed.”
(Source: Vodafone)
President Trump claims to have well over $10 Billion dollars but his finances are still kept very secret. So how much money does Donald Trump really have? Watch this video and find out.
Following this week’s news on a two year high for the Brent crude oil, Richard King, Trading Manager for Inprova Energy, discusses the current impact of oil price volatility on company energy bills worldwide.
Brent crude oil prices hit a two-year high of more than $58 a barrel on Monday 25 September. Although prices have since reduced slightly, analysts don't expect prices to fall back.
Outlook for oil prices
Oil price increases have been largely driven by cutbacks in supply from the oil exporting cartel OPEC. Market experts predict that OPEC will continue its deal to cut production beyond March 2018 as part of its strategy to rebalance oversupply in the global oil market. Market analysts expect the oil price to be within the range of $55 to $60 a barrel for the remainder of the year, with potential for higher levels in 2018.
In a further boost to recovering oil prices, US producers are struggling to fill the supply gap, and the independence referendum in Kurdistan has the potential to disrupt Middle East oil supplies due to the Iraqi government's call to boycott Kurdish supplies. Mounting political tensions between North Korea and the USA could also be a bullish force.
Impact on energy prices
This is having a knock-on effect on UK business energy market prices. Both gas and electricity contracts for delivery in the next few months have posted significant gains of 2-3%. This has reversed recent decreases in energy prices, linked to the currency improvements for Sterling against both the US dollar and the Euro.
Energy market volatility
Oil prices are firmly linked to wholesale energy prices, which will, undoubtedly, increase energy market volatility in future months. In addition, as we head into winter and uncertain weather conditions, and continue to face energy supply reliability problems from continental Europe, further price swings are inevitable.
Such volatility is becoming the new norm. During the past 12 months there was a 45% price swing in the wholesale power market, which was more than twice as volatile as the average movement of the five years prior.
Smarter energy purchasing
While overall electricity and gas commodity prices remain well below the levels reached in 2014, the sizeable commodity price movements underline the imperative of getting timing right when purchasing energy.
Flexible procurement strategies can be less risky than fixed purchasing because there is the facility to buy energy little and often when wholesale prices are favourable, rather than gambling that the prices are best on the day that you fix your purchase. There is also the facility to take advantage of forward prices, which are currently very attractive beyond 2018.
Above all, it is imperative for energy buyers to manage their energy purchasing within a robust risk management strategy, which will set price limits and guard against buying at the top of the market - helping to counter market uncertainty.
Deloitte appears to be the latest in a series of large multi-national companies becoming the victim of serious cyber breaches.
A report by the Guardian newspaper has revealed that the accountancy giant computers were discovered to have been hacked in March this year, although there are suggestions that the hack could have occurred as long ago as October 2016.
The news comes as several US companies are reporting large scales cyber security issues. Equifax and the SEC have both recently suffered embarrassing and potentially devastating hacks which have resulted in huge amounts of company data being compromised.
While the scale of the Deloitte hack is not yet known, the accountancy firm works for a vast amount of companies and governments around the world, providing tax consultancy and audits, all who have vital and confidential data held by the company. It appears that the main attack has been focused on the US arm of Deloitte, although there have been indications that it may affect companies in other countries.
The leak is said to have stemmed from the use of the company’s cloud storage system, where they store nearly 250,000 client emails. The hackers entered through an administrator password and reports suggest that this could have allowed them full access to all the information stored in the cloud.
Deloitte have sought to play down the hack in a statement which cited that there have been “very few impacted clients”. A spokesman is quoted as saying: “In response to a cyber incident, Deloitte implemented its comprehensive security protocol and began an intensive and thorough review including mobilising a team of cybersecurity and confidentiality experts inside and outside of Deloitte.”
Deloitte have taken steps to not only plug the leak, but to locate the source of the hack and earlier this year employed top US law firm Hogan Lovells to launch a special investigation on their behalf.
The hack will also serve as an embarrassment to a company who were voted Best Cybersecurity Consultants in the World in 2012.
While the full scale of the attack is not yet known, Deloitte will hope that they will not suffer the same fate as Equifax, whose share price fell 32% during the fallout of their cyber breach.
Following an internal review, SEC Chairman Jay Clayton revealed that the organisation had been the victim of “Malicious attacks”. The revelation came in a 4,000-word statement released on Wednesday and caused concerns among those on the trading floor.
The Securities and Exchange Commission is responsible for handling almost 1.7 million financial market disclosure documents a year through its EDGAR system, which was revealed as the source of the leak. The admission will be a source of embarrassment for the SEC, whose mission statement is to ‘protect investors’. Clayton’s statement confirmed that the leak was discovered and subsequently fixed in 2016. However, last month they discovered that the breach may have resulted in people being able to use the data acquired in the hack to illegally make profits on the stock market.
In addition to the cyber hack, Clayton’s statement also confirmed the use of private e-mails being used to transmit confidential data and that a number of SEC laptops that may contain confidential data are missing.
Wall Street has been suitably dismayed by the leak, given the potential risks that have been thrust upon it by the very organisation that is tasked with policing trades. However, the cyber breach will not come as a surprise to many within the government who have previously raised concerns about the SEC’s security systems in the past, including the Department of Homeland security who reportedly discovered five “critical” weaknesses in their system as recently as the start of 2017.
The US markets are already on edge, following the recent Equifax data breach which resulted in the leak of 143 million consumer records and is the subject of increased scrutiny and at least one Federal investigation.
In a bid to restore faith in the institution, Clayton has given his assurances that the SEC is taking cyber security seriously; he stated that: "The Commission will continue to prioritize its efforts to promote effective cybersecurity practices within the Commission itself and with respect to the markets and market participants it oversees," and that all steps are being taken to ensure there is not a repeat of a leak.
The move is a further indication that large financial companies and institutions are under increasing threat from cyber hacks. The SEC statement did not specify who was behind the breach, but recently countries such as Russia and North Korea have been linked to several high-profile hacks on large organisations.
Clayton and the SEC will need to ensure that it does not fall victim again if it is to rebuild its significantly damaged reputation on Wall Street.
In a move seen by many as one friend loaning another some money to help them through troubled times and garner favours, Google has paid $1.1 billion to smartphone manufacturer HTC to expand their Smartphone business. HTC, once a major player in the market have visibly struggled in the face of huge growth by competitors such as Apple, Samsung and more recently, Huawei.
The injection of cash is believed to be focused on the development of Google’s Pixel range of smartphones currently developed by HTC with the Californian company acquiring the team who develop the hardware and securing a non-exclusive licence on HTC’s intellectual property.
Google Focus on Hardware
The deal is further proof that Google are investing heavily in the hardware market to ensure a strong future for Android and its own status within the smartphone hardware market. "We think this is a very important step for Google in our hardware efforts," Rick Osterloh, Google's senior vice president of hardware, said. "We've been focusing on building our core capabilities. But with this agreement, we're taking a very large leap forward."
The move is an attempt to prevent Google from being left out of the loop in the smartphone industry as current Android devices can easily be adapted to bypass Google's services altogether. It appears that Google are attempting to take a leaf out of Apple’s book by ensuring smooth rollouts of their mobile operating system, such as the recent IOS 11 update, combined with a boost to their own Pixel handsets. Pixel arrived with great fanfare, but has not yet made significant in-roads to displacing either Apple or Samsung. In purchasing the HTC team who have developed it, Google are clearly hoping that will change.
Google will retain some caution however, given that they have attempted to enter the market before with their 2011 purchase of Motorola Mobility for $12.5 billion. That move was both disastrous and relatively short-lived with Google off-loading the business for just $3 billion in 2014.
The deal is yet to be ratified by the regulatory bodies, but caught many industry experts by surprise with the majority believing the deal would constitute a full takeover. Rumours were so abundant that Google purchasing HTC outright was imminent that the Taiwanese stock market suspended trading on HTC on Tuesday.
The move comes with several risks for the Californian tech giant, with the major one being the possibility of alienating Samsung who currently run Android on their popular range of smartphones. But what is clear is that the big winner from this deal is HTC, the struggling Taiwanese company who have now not only strengthened ties with an important ally, but crucially have acquired a much-needed cash injection which will allow them to concentrate on the further development of smartphones and also on their Virtual Reality headset, Vive, which is not only favoured by Google, but is also outselling the Facebook owned Oculus Rift by almost double.
What is certain is that this deal will be watched closely by several hardware developers wary of Google’s manoeuvres in a very lucrative market and the potential for added competition.
Latest figures release show that a fall in income receipts from foreigners have pushed the US deficit up to 2.6%, bringing it back towards the levels of 2008, but well short of the 2005 high of 6.3%.
According to the Department of Commerce, the increase in the account deficit during the second quarter rose from $113.5 billion to $123.1 billion and pushed the figure up to a level equivalent to 2.6% of the US’s total economy when measured against the GDP. This reflects an increase from the first quarter of this year, where the deficit measured 2.4%. The news came as a surprise to many who had pencilled in a deficit figure of $110 billion for the months ending in June.
The increase is largely being attributed to a $5.2 billion decrease in receipts of secondary income from foreigners alongside a decline in government fines and penalties.
Import of goods and services increased by $11.8 billion by the end of June, however these figures accelerated more quickly than sales to overseas markets which were up $2.2 billion, benefitting from a weaker dollar and an upturn in global growth.
The current account is widely viewed as the most accurate measure of US trade because it includes goods and services in addition to payments and investments from the rest of the world to America.
The government will be keen to try and reduce this deficit, given it was a significant campaign pledge from the current administration who have repeatedly claimed that it is reducing the number of jobs for Americans, particularly in factories across the country.
The trend of bricks and mortar stores falling foul of the move towards online shopping struck once more yesterday as retail giant Toys 'R' Us filed for Chapter 11 bankruptcy in the US and Canada to protect itself from creditors while they attempt to re-organise the business.
Founded in the 1950s and once the dominant market leader for toy sales in the US and in other countries, Toys 'R' Us has struggled recently to combat the shift to online shopping and against larger retailers such as Amazon and Wal-Mart and to leverage their high debt.
The firm, which is owned by 3 private equity firms (KKR, Bain Capital and Vornado Realty Trust - who bought the business in 2005 for $6.6 billion), have stated that they have received offers of more than $3 billion from investors, which could help prop up the company in the run up to the busy Thanksgiving and Christmas trading periods.
The future of the business is still in doubt, and could lead to the closure of 1,600 stores and the loss of 64,000 jobs across both countries.
End of an era?
For many Toys 'R' Us closing would signal the end of an era. Since it opened in 1957, the toy store has become a favourite with children worldwide with their recognisable backwards ‘R’ and company mascot, Geoffrey the Giraffe. However, in truth, the stores have been struggling for years, as shoppers stayed at home and shopped online while Toys 'R' Us continued to invest in bricks and mortar stores, leaving themselves with an online shopping experience lagging behind their competitors.
The company has struggled to remain relevant in an era of Ipads and Android, where the click of a mouse can bring your favourite toy directly to your house. Unfortunately for the faltering retailer, that trend shows no signs of slowing down, in fact GlobalData Retail estimate that nearly 14% of all toy sales were made online, up from 6.5% just five years ago.
The new strategy to “bring our toy stores to life”, encouraging children to drag their parents in store to play with all the toys instigated by the new CEO has seemingly backfired leaving Toys 'R' Us with sales down a further 1.6% in 2016, despite the Toy industry reporting growth of 5%.
Online Shopping not the only problem
Although some of the struggles Toys 'R' Us are battling can be attributed to the shift to online shopping. The company’s immediate problems stem from their large debt. Toys 'R' Us currently hold $5 billion of long-term debt on their balance sheet, which they aim to restructure, using the $3 billion offered by investors to preserve the future of the business, if they get the court approval they require.
As the news spread about the Toy giant's struggles last night, Chief Executive Dave Brandon sought to allay any fears and reassure everyone that the store's future was far from over:"Our objective is to work with our debt holders and other creditors to restructure the $5 billion of long-term debt on our balance sheet, which will provide us with greater financial flexibility to invest in our business."
Whether this will prove enough to prevent Toys 'R' Us from becoming another high street casualty remains to be seen.
Card fraud has increased 19% year on year, according to The Nilson Report, accounting for losses of around $16.3 billion, in 2015. France has seen an 8.9% increase in card fraud and the US, which has the largest fraud/loss ratio, currently accounts for 47.3% of the world’s payment card fraud losses.
The threat to banking is at least in part due to the explosion of data, according to Sopra Banking. It is expected that by 2020 we will be creating more than 44 times the data we created in 2009 - and that fraud will have resulted in losses of $35,4 billion. The storage and transmission of so much offers opportunities for fraud and cybercrime as well as being part of the problem.
The Evolution of Fraud Management
Ensuring that customer protection is paramount, whilst also preventing normal transactions from being interrupted is a fine balancing act for banks. The evolution in handling fraud management can be conducted in a more intelligent manner using big data - or ‘dataprints’.
Alike fingerprints, dataprints give us unique information about a given person, action, place and point in time. Analysing these accurate identifications (transactions, devices, usual patterns) through Artificial Intelligence, provides a warning sign of fraud for banks and customers.
Analyst firm McKinsey in their look at disruptive technologies, predict that neural networks will utilize big data to enable “knowledge work automation”. Learning and applying new and more refined algorithms improves the process’s sophistication and capabilities, making it easier to make data-driven decisions to detect fraud.
It’s all very well to say that data and technology can help prevent fraud - but what does this look like in practice, and how can banks achieve this?
It is necessary to devise ways of collecting and storing big data in a manner that allows you to take full advantage of it when you need it - but also keep it secure.
Normally, data is created and held in silos, in a division/department/business area/type manner and because of this delocalization, it ends up being difficult to collate, distribute and utilize in any sort of global way. Centralizing the collection and management of data means that you can more easily access the data and cross-reference it.
A July 2014 survey of bank respondents by The Economist, found that half had applied centralized analytics to big data management through artificial intelligence software. In turn, these banks had the most holistic approach to risk mitigation and fraud prevention and enhanced their security as a result. It is something the industry needs in order to fight fraud in 2017 and onwards.
The centralization of data and in turn creation of intelligent big data will enable banks to not only mitigate fraud, but service their audience better. The implementation of big data centralization is as much a process as a system and requires synthesis of legal and regulatory compliance, a security and privacy focus, strong management and the best technology.
Big data means information from multiple and often highly disparate sources. One of the new challenges for data collection have arrived in the form of social media platforms like Facebook and LinkedIn. However, external data tracking, can be an extremely useful tool in the fight against fraud.
Analyst firm, McKinsey has shown that the use of external data, such as social media activities, can have up to 35% improvement in areas such as risk mitigation, as well as allowing the development of better insights into customer behaviour and ultimately in fraud behaviour analysis. One of the reasons for lack of uptake in this area is the difficulty of retrieval of such data. Although this is certainly achievable in terms of technology through the use of social graph APIs. However, the consent and release of this data is often a legal minefield and customer privacy worries and media scares themselves can be a hurdle to jump.
Going forward into an era of instant payments, external data tracking that is conducted in a privacy enhanced manner will become even more important. The ability to keep track of these payments, whilst ensuring personal data is obfuscated, all in real-time is a challenging but ultimately empowering new tool for the industry.
Big data is revolutionizing the process of ‘Know Your Customer’ or KYC. As KYC becomes KYCd, or Know Your Customer’s data, a more accurate and in-depth approach to consumer understanding can be rewarded by more impactful anti-money laundering (AML) and other types of fraud detection.
Being able to model patterns of behaviour by using predictions based on internal, external and social big data is transforming banking. It not only gives you insight into normal behaviour, but that baseline then allows comparison and identication of patterns, similarities and differences - and fraud. Technologies such as geolocation, can be added to the arsenal, so those incidents when a customer is interrupted from making a legitimate purchase are greatly reduced, whilst real crime is detected.
However, it can also offer challenges in terms of security and privacy. Customers are now more informed about privacy considerations and have become less happy about sharing their personal data with any company, not just a bank. Sopra Banking Software report found that 80% of customers would be willing to share their personal data, as long as they did so using a consented, ‘opt-in’, approach and in doing so they were incentivized by better rates and so on.
New EU privacy and data protection laws, which are an adaptation of the Data Protection EU Directive 95/46/EC, are due to be finalized this year. The new data privacy laws will be more restrictive and will have focus on, for example, data stored in the Cloud. This requires a Privacy by Design (PbD) approach when creating Cloud based systems, especially those that store, transmit and transact data. Handling these more extensive regulations needs a more rethink in the approach to security and privacy.
Conclusion
Although the collection of data, how to centralize and manage it, how to make it safe and how best to analyse and make predictions from it are all challenges, they also offer huge potential. The digital revolution that has brought us big data can also bring us big banking.
(Source: Sopra Banking)
