Issue 20
December 2024
Dear readers,
2025 is set to hit a decisive note for banks, as January 1, 2025 marks the coming into force of Basel 4.
Embedded finance, a $124 billion market soon? Yes, forecasts Mastercard.
Capitalising on the receding economic & political crises, and higher loan growth coupled with lower credit costs respectively, Sri Lanka and Vietnam anticipate 2025 to be a banking boom.
Happy New Year 2025!
Best wishes,
The MBA team
Pa donn ou kod, personn!
The MBA’s latest financial awareness video aiming to sensitise the public on the risks of phishing, and scams, while encouraging the use of digital channels, was launched last week, along with our Instagram page. Do follow us for more updates!
Digital wallets: far more than just money
16 December 2024
‘Digital wallets are evolving from simple methods of payment into a central component of a digital ecosystem. A study compiled by the Lucerne University of Applied Sciences and Arts with support from the SBA categorises the existing wallet solutions according to a range of attributes…. Consumers will increasingly use the capabilities of digital wallets in their everyday lives. Wallets will take on more and more functions, from e-IDs to driving licences and even insurance policies. User-friendliness and multiple features will continue to drive takeup. It is time for banks to think about what these developments mean for their business.’
Men sentenced for using SIM farm to steal over £220,000 from banking customers
19 December 2024
‘The sentencing follows an investigation and arrest by specialist banking industry sponsored police unit, the Dedicated Card and Payment Crime Unit (DCPCU). Emanuel Oxford-Faparusi, 23; Syrus Johnson-Faparusi, 25; and Uchechukwu Orjih, 21; worked together to send volumes of fraudulent texts and calls to victims, posing as legitimate organisations to manipulate banking customers into handing over money and banking details, with frauds being committed between August 2022 and March 2024. Once the customers provided their card details through the channels, the fraudsters would use the details to make fraudulent online purchases, as well as sending money to mule accounts which they controlled, and withdrawing the funds from there. The texts and calls would pose as being from a bank, deceiving customers into believing that their account was compromised and encouraging them to transfer money into a ‘safe account’ which was controlled by the fraudsters.’
AI is helping to transform financial services and it’s only the beginning
19 December 2024
‘A big challenge is that AI is developing much faster than both regulation and legislation can keep up with. While only fleeting, Labour’s first King’s Speech did refer to AI legislation, with many predicting a move away from the current ‘light touch approach’ to something closer to the EU’s new AI Act. This new regulation sets out comprehensive requirements and a legal framework for the development and use of AI. There are also internal challenges for firms mitigate, particularly to avoid poor customer outcomes. Key to this is establishing risk protocols and robust processes that limit any incorrect outputs, biased outcomes or cybersecurity and fraud threats. While open to the use of AI, the FCA has been quick to remind firms of these threats and the requirements of Consumer Duty.’
Watch out for scams this Christmas as criminals prey on loneliness
17 December 2024
‘ “Loneliness is a deeply personal and often invisible struggle that can leave people feeling longing for connection, especially during the festive season. Scammers can exploit this vulnerability, pretending to offer friendship or romance while working to steal from their victims. It’s a cruel betrayal of trust that can have devastating effects. We urge everyone to be cautious when interacting with strangers online or over the phone and to look out for others who may be feeling lonely.”…. To protect yourself from scams, we encourage you to follow the advice of the ‘Take Five to Stop Fraud’ campaign: Stop: Take a moment to stop and think before parting with your money or information. It could keep you safe. Challenge: Ask yourself, could it be fake? It’s ok to reject, refuse or ignore any requests. Only criminals will try to rush or panic you….’
CFPB issues legal warning about credit card rewards, releases comparison-shopping tool
18 December 2024
‘According to a CFPB summary of the circular, the document alleges credit card issuers may violate the law when they devalue earned rewards, hide the conditions for earning and keeping rewards, and fail to deliver promised benefits. It also states that covered persons that offer, provide or operate credit card rewards programs “may be liable for an unfair or deceptive act or practice where some of the conduct in question may be attributable to a third party or service provider, such as a merchant partner.” ’
FCC establishes portal for banks to report illegal calls
17 December 2024
‘The FCC’s rules prohibit transmitting inaccurate or misleading caller ID information with the intent to defraud or cause harm. Banks that learn their customers are the target of an illegal spoofing campaign, whereby criminals impersonate the bank in calls placed to customers, can submit information about the suspected spoofing violations to the FCC’s portal. In conversations with the American Bankers Association, FCC staff encouraged banks to use the portal to report illegal calls. ABA has also urged the FCC to create a database of reported “SPAM” text messages, requested that the current or next administration establish a National Scam and Fraud Prevention Strategy and outlined a policy agenda for fighting fraud.’
Survey: More customers need to know about bank assistance services
19 December 2024
‘Banks may have more outreach work to better define and promote their customer offerings when it comes to financial support and payment assistance services, according to a new J.D. Power report examining how confident consumers are in their banks to help them in emergencies. The report found that 33% of bank customers surveyed completely agree that their banks offer emergency support services, such as micro-loans, lines of credit and fee waivers. Twenty percent of respondents said their banks do not offer any help at all.’
What's in store for payments in 2025?
20 December 2024
‘The adoption of passkeys, or passwordless authentication using biometrics, is poised to gain momentum in 2025, Mastercard noted. Digital identity systems will also reshape experiences in healthcare, education, and public services, enabling people to share specific aspects of their identity securely and selectively. Corporate payments, traditionally slower to digitise, are now embracing virtual cards and embedded payment solutions within enterprise resource planning software. These tools streamline reconciliation processes, enhance fraud prevention, and provide real-time data insights, leading to better cost management.’
Sri Lanka and Vietnam banks to boost 2025 financials
20 December 2024
‘For Sri Lanka, the political crisis in 2022 and ongoing economic crisis in 2023 are receding, analysts said. The country is reportedly close to completing its foreign-currency debt restructuring, which could lift its default status and improve its credit profile, according to Fitch Ratings analysts. “Successful restructuring would ease the burden on banks’ financial profiles, boosting business generation and revenue prospects in 2025,” they said. In Vietnam, higher loan growth and lower credit costs will sustain the improvement of banks’ financial performances.’
EU trade finance banks puzzle over Basel rules as deadline looms
20 December 2024
‘Banks in the EU are gearing up for the implementation of new capital requirement rules when Basel 4 takes effect on January 1 next year, but doubts remain over the treatment of key trade finance products. Even though the deadline is just days away, there are still differing interpretations of capital rules for medium- and long-term trade finance guarantees and concerns about the impact of the reforms on banks’ use of credit insurance. Regulators require banks to put aside capital as a buffer against financial shocks, and Basel 4 is the latest set of regulations crafted by the Basel Committee on Banking Supervision, a group of global financial regulators, in the wake of the 2008 financial crisis. But the rules have an impact on the broader economy because banks prioritise lending toward products with lighter capital requirements.’
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