October saw calls for the industry to combat fraud. There were also updates on the use of AI in financial services and several insightful global payments industry reports were released.

Banking Circle kicked off the month by attending Sibos 2022, where we hosted a ‘Meet the Experts’ panel featuring key industry speakers: Colin Digby of Crown Agents Bank, Leo Lee from U.S. Bank and Jakob Bækkel from Banking Circle.

Banking Circle’s Chief Commercial Officer, Jussi Lindberg, was also featured in an exclusive Sibos special edition interview for The Fintech Magazine, where he explained how banks can ‘be more FinTech’ without putting the ‘trust contract’ they all treasure at risk.

Our Head of Virtual Assets, Mishal Ruparel, spoke to The Stack, The Banker, and UKTN about how stablecoins may disrupt the correspondent banking model, and why banks should be embracing Web3 technologies.

Sarah Barslund Lauridsen, Head of Product & Solutions at Banking Circle spoke with TechRound about how Request to Pay (RtP) is shaping up to be one of the most exciting technologies in payments.

A new white paper ‘Beyond digital: how to rebuild corporate client trust in banks’ was published that highlighted the need for Europe’s banks to innovate – particularly smaller banks that lack the spending power of larger, international banks to develop and implement new digital solutions.

Towards the end of the month, while attending Money20/20 USA, Banking Circle announced that it now settles more than 10% of Europe’s B2C e-commerce flow.

Here are some other important stories from the industry you may have missed in October:

Global payments reports published by Capgemini and Boston Consulting Group

Capgemini’s World Payments Report 2022 revealed that banks need to earn SMB trust through innovation and engagement, or risk being left behind. The report highlighted that legacy infrastructure is still holding banks back, and looked at the rise of the B2B payments ecosystem, including the introduction of crypto as a new way to process transactions. Read our summary here, or download the full report.

Boston Consulting Group published its 20th annual examination of the global payments industry. Beginning with a comprehensive market outlook, the report explored the ever-evolving payments ecosystem, placing emphasis on the challenges that players face, and how they can overcome them. Download the full report here.

McKinsey also released a series of insightful articles from its 2022 Global Payments Report.

Crypto regulation roadmap announced for Europe

The European Securities and Markets Authority (ESMA) announced its Markets in Crypto Asset regulation (MiCA) plan for implementation, setting a precedent for the broader crypto landscape in Europe.

MiCA will apply to issuers of unbacked crypto assets, stablecoins, trading venues and wallets, alongside rules to reveal the identity of persons transacting cryptocurrencies. The legislation is not expected to be fully rolled out until 2024.

The paper also highlights the potential financial risk associated with crypto, and how fast-moving and volatile the market can be.

Read a summary of what’s included and how it may impact crypto firms here.

UK supervisory authorities jointly publish discussion paper on AI and machine learning

The Bank of England (BoE), the Prudential Regulation Authority (PRA), and the Financial Conduct Authority (FCA) jointly published a discussion paper (DP5/22) on artificial intelligence (AI) and machine learning (ML).

The paper examines:

• Objectives and remits: exploring the best approach to defining and/or scoping the characteristics of AI for the purposes of legal requirements and guidance by supervisory authorities.
• Benefits and risks: identifying the areas of benefits, risks, and harms relating to AI.
• Regulation: assessing whether the current set of legal requirements and guidance is sufficient to address the risks and harms associated with AI and how additional intervention may support further adoption of AI in UK financial services in a safe and responsible way.

Earlier in the month, it was reported that almost half of UK financial firms surveyed by the BoE stated that current regulations constrain machine learning deployment. This is despite there being many benefits of AI/ML, including enhanced data and analytics capabilities, increased operational efficiency, and improved detection of fraud and money laundering.

UK Finance publishes latest fraud report

UK Finance has called for greater cross-sector action to combat fraud.

Criminals stole £609.8million in H1 2022, a decrease of 13% vs H1 2021, however, the decrease was not an indication of a downward trend, but rather that the previous period was an exceptionally high period for fraud.

The report revealed that most fraud was occurring outside of the banking system through online and technology platforms, with criminals focusing on social engineering to target their victims.

Kate Frankish, Chief Business Development Officer and Anti Fraud Lead at Pay.UK stated:

“It’s critical that all institutions involved come together to outpace scammers and help protect people when they’re most vulnerable.

“A coordinated, cross-industry effort between banks, government, law enforcement, regulators and technology, telecoms and social media companies, is key to effectively tackle fraud in real-time.”

T2 wholesale payment system launch delayed

After assessment by the European Central Bank (ECB) Market Infrastructure Board, it was confirmed that the go-live date for T2, a new real-time gross settlement system, would be delayed until March 2023.

In a statement from the ECB, the reasons given for pushing back the go-live date were a need to allow users more time to complete their testing in a stable environment, while also “taking into account the importance and systemic nature of T2, especially in view of the current geopolitical conditions and volatile financial markets”.

Read more here.

Retail CBDC prototype completed by BIS Innovation Hub and the Hong Kong Monetary Authority

Project Aurum, a retail central bank digital currency (CBDC) system was carried out by BIS Innovation Hub and the Hong Kong Monetary Authority.

Comprising wholesale interbank and retail e-wallet systems, the prototype is designed to prevent over-issuance, while following the core principles of safety, flexibility and privacy. The project has demonstrated that CBDCs could work with stablecoins successfully.

Read more about the project here or watch how it works here.

New Finance and FinTech special interest group launched by The Institute of Directors

In a move to bring together the world of FinTech and finance, The Institute of Directors (IoD) launched a special interest group.

The launch event was held in London, with some of the most influential individuals from the FinTech and banking world in attendance. The group will host networking events for leaders in these sectors, bringing together people who share an interest in transforming the world of financial services.

Find out more here.