Mobile banking - SMS upgrades dominate recent development in the UK

The May 2010 update of Mapa’s UK Mobile Banking and SMS Competitor Intelligence dashboards recorded notable new services as well as removed services in the UK market.

Mapa’s UK mBanking Dashboard compares a list of 70 individual Mobile Banking services across 7 banks. All information is obtained replicating the customer experience through the live accounts that they hold with these banks.

Mapa’s SMS Banking Dashboard compares a list of 100 individual SMS Banking services across 21 competing providers. All information is obtained replicating the customer experience through the live accounts that Mapa hold.

Both Dashboards is updated quarterly, highlighting competitor changes that have occurred in the market during that time.

Barclays have been the most active player in the mobile field the last months. Following the removal of SMS Banking highlighted in the Mapa update from February, the bank has now introduced their new and upgraded SMS Banking service. Barclays LayerCustomers sign up within Internet Banking and can register for regular balance alerts as well as triggered transaction alerts for a flat fee of £2 a month.

The use of ‘Augmented Reality’ has now reached the UK financial market. Within the mobile phone application Layar, available on iPhone and Android, Barclays customers can search for branches, ATM’s and contactless retailers. By combining the use of camera and GPS, users are able to see hits on a map, in a list or on the screen as an extra layer in the reality seen live through the camera.

HSBC and First Direct continue to extend the free period for their mBanking service which now lasts until the end of 2010.

A&L have now shut down their mBanking and SMS Banking services following the takeover by Santander.

Halifax has extended their SMS Banking services to include all customers. Previously, only Reward account customers were able to sign up for alert when going into unarranged overdraft.

The main change in the UK credit card market was the introduction of free text alerts by MBNA. This service has been available before but with service charges. The new service also includes new ad hoc alerts.

Additionally, an interesting finding from Mapa research was the use text messages in correlation to the flight disruptions caused by volcanic ash. Several UK banks seized the opportunity to contact their customers via SMS with information on how they could get financial help from their bank.

Bank regulation reform on the cards in the UK

Financial regulation will be put back in the hands of the Bank of England under the proposed Financial Reform Bill announced in the Queen's Speech at the opening of Parliament yesterday .

It will abolish the tripartite regulation system that Labour introduced in 1997. Under that system responsibility is shared between the Bank of England, the Financial Services Authority (FSA) and the Treasury.

But there was no mention of a tax on banks' profits despite earlier reports. The Conservative-Lib Dem coalition government announced plans last week in its agreement document to introduce a levy on banks as well as measures to tackle "unacceptable" bank bonuses.

It also said an independent commission would be established to look at breaking up banks into their retail and investment banking arms to reduce risk.

However, there was no further mention of either of these in the Queen's Speech, although it is likely that there will be an update on the bank levy in the Budget on 22 June.

"Legislation will reform the framework for financial services regulation to learn from the financial crisis," the Queen said.

The proposed reform is one of 22 bills announced in the Queen's Speech, setting out what the new coalition government hopes to achieve over the next 18 months.

The Conservatives have long been in favour of getting rid of the FSA and giving the Bank of England responsibility for maintaining financial stability.

However, the Liberal Democrats have previously said they would keep the FSA and make it the single regulator, with the governor of the Bank of England having overall responsibility for systemic stability.

It is currently unclear what role, if any, the FSA will play under the proposed changes.

Banks reveal extent of 'dark pool' trading

Six big investment banks published trading volumes for their "dark pools" for the first time yesterday, showing them as a tiny fraction of the market and not the major hidden rivals to stock exchanges that some argue.

Citi, Credit Suisse, Deutsche Bank, JP Morgan Cazenove, Morgan Stanley and UBS together executed €596m of equity trades from 15 countries on their automated crossing systems on Friday, according to Markit data.

That accounted for about 0.4 per cent of all types of cash equity trades in Europe and 1.6 per cent of all over-the-counter (OTC) trades reported on the Markit BOAT service that day, according to Thomson Reuters data.

Dark pools are electronic platforms that allow would-be buyers and sellers of large orders of shares to avoid revealing pre-trade information and signaling their intentions to the rest of the market.

Bankers argue that for the bulk of OTC trades they act purely as dealers, using their own money or share inventories to take one or another side, or they act in a non-automated way to match buyers and sellers for big blocks of stock.

Japan may clamp down on N. Korea remittances

Japan is mulling tougher restrictions on sending money to North Korea in response to Pyongyang's sinking of a South Korean naval ship, domestic media said on Tuesday.

But Finance Minister Naoto Kan suggested stricter sanctions might be largely symbolic. Japan already has measures in place, including a trade ban and restrictions on remitting funds.

"There's a question about how effective these measures have been, but we should consider such options to show our stance under the current circumstances," he told reporters.

Regional tensions continued to rise on Tuesday, when South Korea's Yonhap news agency said North Korean leader Kim Jong-il had ordered his military to be on a combat footing. South Korea has banned all trade, investment and visits with North Korea.

The Japanese government already requires that remittances to North Korea of more than 10 million yen ($110,800) be reported to the finance ministry, but is considering lowering this limit, the Nikkei newspaper said.

Tokyo may also tighten restrictions on travel between the two countries and ban ships that have visited North Korea from entering Japanese ports, the paper said.

Japan already bans North Korean ships from visiting Japan, among a series of measures introduced over the past few years to protest the North's nuclear and missile tests and its abduction of Japanese citizens in the 1970s and 1980s.

Problems delay use of remittance system in the Philippines

Hardware and connectivity problems would delay the use of the central bank’s electronic payments system for interbank remittance transfers to the third quarter.

“Most of the banks expect to complete their migration to the new system only by end-May or end-June 2010 while two banks have indicated that they could comply by end-September,” the Bangko Sentral ng Pilipinas (BSP) said in a statement.

By “new system,” the BSP referred to the Philippine Payments and Settlements System (PhilPaSS) Remit System.

The central bank and the Association of Bank Remittance Officers, Inc. (ABROI), Bankers Association of the Philippines, the Chamber of Thrift Banks, and the Rural Bankers Association of the Philippines had signed a memorandum of agreement in December that would allow these banking groups’ members to use PhilPaSS for interbank remittance transfers.

The remittance system -- envisioned to reduce the cost of remittance transfers to P50 per transaction from P150 to P550 at present -- should have been operational in the first quarter.

But as the BSP explained, banks were hounded by “hardware and system connectivity” problems. It did not elaborate.

It said only one bank, which the BSP did not name, was able to migrate to the PhilPaSS Remit System.

“The BSP will call a meeting with the heads of the participating banks to facilitate the use of PhilPaSS and ensure that overseas Filipino remitters will benefit from further reduction in remittance charges,” it said.

PhilPASS was established in 2002 as the central bank’s electronic payments system. It allows banks, non-bank financial institutions and those with quasi-banking licenses to have real-time settlement of their transactions.

The PhilPaSS Remit System was essentially initiated by the BSP and ABROI to eliminate the use of couriers in bank-to-bank crediting of remittances -- a mode of transfer that has proven to be expensive and risky.

At present, a Filipino working abroad will make a deposit in a bank, which then hires a courier to deliver the funds to another bank, where the Filipino worker’s relatives claim the remittance.

“PhilPaSS ensures safer, faster and cheaper means of remittance transactions,” the central bank stressed.

ABROI members number 11, including the country’s biggest banks.

Remittances grew by 7% to $4.3 billion in the first quarter. The BSP sees remittances growing by 8% this year from $17.35 billion last year.

Operations Risk - Bank settles wire transfer security suit against customer

PlainsCapital Bank in the US has settled a lawsuit it bought against one of its own business customers after crooks stole over $800,000 from the company's account. Cybercrooks stole the money from the PlainsCapital account of Texas-based Hillary Machinery last year via ACH and wire transfer.

Around $600,000 was recovered but when Hillary Machinery called on its bank to refund the remaining $200,000 it was hit with a lawsuit asking the court to affirm that security was reasonable and that the transfers were processed in good faith.

The company fought back with its own suit, arguing that the transfers, which went to Europe, should have set off red flags in the bank's fraud detection systems.

The pair have now come to a settlement in what was widely seen as an important test case following a sharp rise in account hijackings of business credentials.

Terms of the settlement have not been disclosed, but it comes just days after the courts threw out a motion by the bank to hold the hearings in private.

Recent research from Guardian Analytics and Ponemon Institute found that the US banking industry is failing to protect its small business customers from a destructive epidemic of cyberfraud that is sweeping the nation.

The research found that 55% of businesses reported experiencing fraud in the last 12 months, with 58% of fraud enabled by online banking activities. Yet, despite the soaring crime rate, 80% of banks failed to catch fraud before funds were transferred out of their institution. In 87% of fraud attacks, the bank was unable to fully recover assets.

Operations Risk – IBM left red faced!

IBM has been left red-faced after distributing USB keys infected with malware to delegates at Australia's biggest computer security conference. IBM was forced to send out an e-mail to all delegates at the AusCert conference warning them not to use the keys, which were dished out from its stand as a freebie item.

"At the AusCERT conference this week, you may have collected a complimentary USB key from the IBM booth," IBM Australia chief technologist Glen Wightwick wrote. "Unfortunately we have discovered that some of these USB keys contained malware and we suspect that all USB keys may be affected."

The malware, which dated to 2008, was detected by most anti-virus products, he said.

Wightwick described how to remove the malware, which spreads through Windows PCs, and instructed recipients who were having trouble to contact the IBM Security Operations team.