We are starting the new week by looking at the latest tech weekly, featuring all the big stories you may have missed in the world of fintech, biotech, and telecom. The Q4 review of PayPal shows millions of illegitimate accounts. Boston Fed makes progress on the Digital Dollar. Human capabilities still score ahead of AI in financial markets. The UK pushes for the legislation changes due to record high financial fraud. ComplyAdvantage releases the long-awaited State of Financial Crime report for 2022. European crypto apps with a 560% increase in downloads in 2021. Poor financial health in the European telecom sector. Vodafone’s CEO hints at the M&A possibility. UBC attempts to boost decentralized clinical studies.
4.5 Million Of Paypal’s Accounts Were Illegitimate
As PayPal’s CFO, John Rainey, was revealing their Q4 earnings of the company, he admitted that 4.5 million accounts have been shut down as “bad actors” were unfairly taking advantage of the company’s incentives. As one of PayPal’s goals was to pass 750 million active users by 2025, the company started to offer a $10 reward for opening up an account. However, it quickly became apparent that bot farms were the “users” opening up new accounts.
“We regularly assess our active account base to ensure the accounts are legitimate,” Rainey said. “This is particularly important during incentive campaigns that can be targeted for bad actors attempting to reap the benefit from these offers without ever having an intent to be a legitimate customer on our platform.”
Boston Fed is Making Progress On The Digital Dollar
Federal Reserve Bank of Boston has been working together with MIT researchers to explore the technical possibilities behind CBDC. Considering that the system would have to manage 1.7 million transactions each second without using a distributed ledger technology, this is quite a challenging task. However, now new research has been published showcasing a theoretical high-performance processor that could fulfill that tasks.
The MIT researchers worked on investigating two separate code bases and both of them have exceeded the speed and throughput expectations and requirements. The first DTL-based was able to complete 99% of ordered transactions in less than two seconds and relied on a single ordering server. However, due to a bottleneck, the peak throughput was at roughly 170 thousand transactions each second. The second architecture was not using one server and completed the transactions on multiple computers simultaneously, leading to a significantly higher throughput of 1.7 million per second, completing 99% of the transactions in less than one second.
“Despite using ideas from blockchain technology, we found that a distributed ledger operating under the jurisdiction of different actors was not needed to achieve our goals,” the researchers say in the paper. “Specifically, a distributed ledger does not match the trust assumptions in Project Hamilton’s approach, which assumes that the platform would be administered by a central actor. We found that even when run under the control of a single actor, a distributed ledger architecture has downsides.
“For example, it creates performance bottlenecks, and requires the central transaction processor to maintain transaction history, which one of our designs does not, resulting in significantly improved transaction throughput scalability properties,” they added.
Currently, MIT and Boston Fed are ready to move to phase 2 of exploring CBDC and possible alternatives for its technical designs.
Humans Still Valued More Than AI In Financial Markets
The new study on AI in the financial market shows that humans still have an edge over AI in regards of making money in the sector. Although AI in finance is growing and is here to stay in every aspect of the sector, from cybersecurity to customer services, humans are still more valued when it comes to investment decision-making.
Barbara Jacquelyn Sahakian, Fabio Cuzzolin, and Wojtek Buczynski analyzed 27 peer-reviewed studies that were released between 2000 and 2018 and focused on various stock market forecasting methods that utilized ML algorithms. Analyzing the studies, the researchers identified several issues in them. One of the main ones was that the majority of the experiments tried several versions of the investment model simultaneously and the best performing model was then present as the primary result.
“This approach would not work in real-world investment management, where any given strategy can be executed only once, and its result is unambiguous profit or loss – there is no undoing of results.”
“As such, we concluded that there is currently a very strong case in favor of human analysts and managers. Despite all their imperfections, empirical evidence strongly suggests humans are currently ahead of AI.”
UK MPs Push For Changes In Legislations Due To Record High Fraud Numbers
The MPs in the United Kingdom are urging the government to pass legislation on obligatory reimbursement to victims of authorized payment fraud. In the new report of
Treasury Select Committee, the UK government is called to “push harder and act faster on the growing fraud epidemic”. Apart from compensation for “authorized push payment fraud” the Committee is also highlighting that people who fell victims to online fraudulent adverts
“For too long, pernicious scammers have acted with impunity, ripping off innocent consumers with fraudulent online adverts, impersonation scams and dodgy crypto investments,” Mel Stride, chair of the Treasury Committee, says. “Unfortunately, fraud has soared during the pandemic, and as MPs, we’ve heard heart-breaking stories of individuals who have fallen victim to these criminals and lost large sums of money.
“Some of our recommendations, such as legislating against online scam adverts, can be implemented quickly. Others, including crypto regulation and Companies House reform, will require a longer-term approach. Taken together, our proposals give the UK a fighting chance to get back on the front foot and stop these scammers in their tracks,” he adds.
ComplyAdvantage Releases The State Of Financial Crime Report For 2022
ComplyAdvantage, the company specializing in financial crime detection, has just released its most popular annual report on The State Of Financial Crime in 2022. The report is structured as a set of guidelines for compliance teams all over the world and describes the emerging threats to the governments and financial institutions in the coming year. In the report, we get insights from 800 C-suite and senior compliance experts from North America, Europe, and Asia Pacific, working in sectors such as investments, crypto, enterprise banking, fintech, or insurance.
“2022 will prove to be yet another challenging year, given the digital acceleration caused by the pandemic, the continued pace of innovation and market adoption of crypto services and the ever-changing sanctions landscape ignited by ongoing geopolitics,” said Tom Keatinge, Director, Centre for Financial Crime & Security Studies at RUSI. “Counterrisk intelligence will be a key element in ensuring the fintech community remains current on the multifaceted threat trends that will confront their businesses.”
Some key insights in the report include the growth of SAR filing, the record high cybercrime numbers, geopolitical hotspots, and cryptocurrency is the “new normal”
“Reports are great but avoiding regulatory fines or business shutdowns is even better! As a company focused on counter risk intelligence, we will continue to share our vital insights, so that our customers, partners, and the greater fintech ecosystem can protect their businesses from unwanted financial crimes,“ said Charles Delingpole, founder and CEO of ComplyAdvantage. ”As the tide of new financial services is on the rise, so is money laundering and related crimes. Informed teams that are able to assess the known risks in the year ahead will be best placed to protect the integrity of their businesses.”
European Crypto Apps With 560% Increase In Downloads In 2021
The report by the analytics platform AppRadar highlighted that 2021 was a record-breaking year for crypto apps. Last year, there were more than 82.9 million downloads of crypto apps on Google Play Store, as compared to the 13.5 million in 2020. While Binance had the best performance with more than 35 million downloads last year, 4 European-based apps were included in the list of 12 most popular crypto apps. The clear leader in Europe was the Austrian startup BitPanda which got close to 800 thousand downloads, reaching a 500% increase from last year. BitPanda was closely followed by the London-based Blockchain.com which got 570% downloads.
Thomas Kriebernegg, MD and Co-Founder of App Radar, said: “We’re getting closer and closer to crunch time for crypto apps. More people are taking investing and owning cryptos and NFTs more seriously, so the battle is on to be their preferred wallet or trading platform. And given the digital nature of crypto, the center stage for that battle is people’s phones.
“Retaining customers is the difference between success and failure, customers can swap to your competitors in just a few taps. Features, usability, and visibility in the marketplaces are critical to taking market share in Europe,” he added.
Telecom Investment In Europe Must Change Drastically According To ETNO
The European telco lobby group ETNO is sharing their concerns regarding the state of the European telecom sector. Although the telecoms are spending heavily on fiber and 5G, the financial health is doing poorly. In 2020, the telco sector in Europe spent a record-high €52.5 billion on capital expenditure, but it is still not close to the US, South Korea, or Japan when it comes to network coverage, revenue, take-up, and usage.
“The increase of telecom investment and the resilience of the sector are desirable from a societal viewpoint and they are key to Europe’s ‘Open Strategic Autonomy’ plans. Therefore, the sustainability of the sector should encourage strong policy action to dramatically improve the investment climate,” said ETNO and Analysys Mason, in the report.
The 5G coverage in Europe currently stands at 62% which may be an increase from the year before but cannot compare against the 93.1% and 93.9% of coverage in the US and South Korea respectively. Regarding uptake, 5G account for barely 2.8% in Europe, as compared to the 13.4% in the US, and nearly 30% in South Korea.
“European telecoms, by way of regulation and lack of a single market, remains highly fragmented, with Europe counting 38 operating telecom groups with over 500,000 subscribers, compared to seven in the US, four in Japan, and three in South Korea,” said ETNO, in a statement.“Operators, similarly to players in other sectors, have to operate in contestable markets, and those players that have enjoyed great success over the past two decades in the online space (the current hyper scalers) should also bear the same kinds of responsibilities that historical incumbent operators (that is, ETNO members) have had to shoulder,” the report said.
CEO of Vodafone Indicates There May Be A M&A In The Near Future
The CEO of Vodafone, Nick Read, has spoken about what he believes was a “solid” quarter for the company, highlighting the growth sustainability of the company.
“We remain focused on our operational priorities to strengthen commercial momentum in Germany, accelerate our transformation in Spain, and position Vodafone Business to maximize EU recovery funding opportunities. We are also committed to creating value for our shareholders through proactive portfolio actions and continuing to improve returns at pace,” Nick Read.
Many analysts quickly started analyzing the “proactive portfolio actions” statement, pointing out it is a vague way of indicating the readiness to acquire stuff. Although Vodafone has a mixed track record when it comes to M&A, it will be interesting to see how those plans progress.
UBC Try To Boost Decentralized Study Offering
United BioSource (UBC) is partnering with a healthcare tech firm Seqster PDM as it tries to bolster its remote study business. The partnership will allow UBC to utilize Seqster’s software and access to the U.S healthcare data sources to improve the decentralized designs, Aaron Berger, the executive director of real-world evidence (RWE) explains.
“The Seqster solution allows us to design studies that capture rich longitudinal healthcare data from the patient directly instead of the traditional data acquisition model,” he told us. “Seqster’s approach allows us to forego the cost and time associated with site-based data entry.”
“Most study designs now include one or more decentralized element. These ‘hybrid studies’ utilize some traditional elements and incorporate decentralized elements as appropriate for that specific research,” he added. “Decentralized research had begun before the pandemic and was accelerated by the pandemic. Now that sponsors have seen some of its benefits, the door is open to continuing pushing to utilize decentralization for the benefit of sponsors and patients alike.”
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