Fintech wrap: Big Tech competition concerns, Swift AI pilot, NYDFS guidance

Our pick of the week’s fintech stories.

In April, the FCA issued FS24/1 on the potential competition impacts from the data asymmetry between big tech firms and firms in financial services.

The regulator said it would continue monitoring big tech firms’ activities in financial services to assess whether policy changes are needed and working with regulatory partners. It will also work with Big Tech firms to examine whether their data from core digital activities would be valuable in certain retail financial markets.

UK Finance has now said big tech should do more to fight scams, particularly reimbursing victims of automatic push payment (APP) scams, which totalled over $500m last year.

Last year, 11 tech and social media firms signed up to a UK Online Fraud Charter to combat the rising level of scams from fake adverts and romance fraud.

“In addition, to expand resources for fighting fraud and economic crime online platforms, internet service providers and telecommunications companies could be brought into the scope of the Economic Crime Levy. Doing so would raise over £40 million a year to invest in better technology and recruit specialist officers and incentivise action to reduce fraud,” the finance industry body said.

Swift and global banks launch AI pilots to tackle cross-border payments fraud

Payments facilitator Swift has announced two AI-based experiments in collaboration with its member banks, to explore how the technology could assist in combatting cross-border payments fraud and save the industry billions in fraud-related costs.

The first involves detecting anomalies that could be indicative of historical fraud using patterns of activity on the Swift network.

In the second, Swift convened leading financial institutions including BNY Mellon, Deutsche Bank, DNB, HSBC, Intesa Sanpaolo and Standard Bank, to test how it can use advanced AI technology to analyze anonymously-shared data from different sources.

G20 countries are committed to speeding up cross-border payments. Notably, the EU adopted rules in February facilitating instant payments. But quicker payments mean an increased risk of fraud. AI could help tackle this.

“These pilots are rooted in responsible use of AI and are aligned with emerging global standards, such as ISO 42001, the NIST AI Risk Management Framework and the EU AI Act,” Tom Zschach, Chief Innovation Officer, Swift, said.

NYDFS issues guidance on virtual currency customer service

New York State Department of Financial Services (DFS) Superintendent Adrienne A Harris has issued guidelines for virtual currency entities so that they provide better customer service and complaints procedures.

The Department outlines commonly effective policies and procedures, including:

  • providing customers with both a phone and electronic text mechanism to submit requests and complaints, in addition to any other methods to submit requests and complaints a VCE may have;
  • providing regular updates and estimated resolution timelines to the customer, providing a means for the customer to stay apprised of the status of their request or complaint, and providing an explanation when the outcome of an issue is less than what the customer was seeking;
  • publishing an FAQ or similar communication without requiring an account to log in;
  • tracking requests and complaints, along with feedback on customer satisfaction;
  • reporting a quarterly tabulation of the number of requests and complaints received, broken down by method and request/complaint topic. The tabulation must include the average time from receipt to resolution of the requests and complaints;
  • providing a copy of their customer service and complaint policies and procedures, including provisions that align with the standards described throughout the guidance;
  • specifying the individual or individuals responsible for the customer service and complaint policies and procedures.

“Consumers have a right to a transparent and timely process for resolving complaints and answering questions, irrespective of the company or product in question,” said Superintendent Harris. “This guidance outlines clear expectations for a positive customer experience, which benefits both consumers and business.”