Category: Technology

Welcome to our Technology category, a dedicated hub crafted to explore and delve into the latest technological trends reverberating through the fintech industry. As an innovative fintech entity, we stand firmly in our belief in the transformative power of technology. We see it as the catalyst reshaping the financial landscape, making it more efficient, secure, and customer-oriented.

The articles housed in this category dive into a multitude of tech-centric topics. We discuss everything from the role of artificial intelligence and machine learning in reshaping finance to the profound impact of blockchain on financial transactions. Our objective is to provide an exhaustive perspective of the tech landscape, spotlighting how technological advancements are revolutionizing the financial industry and opening up new avenues of opportunity.

At Signzy, we harness the power of cutting-edge technologies to craft our innovative fintech solutions. We remain steadfast in our commitment to stay at the forefront of technological advancements, continuously evolving our product offerings to deliver the best, most efficient solutions to our clients.

Whether you’re a fintech professional immersed in the sector, a technology enthusiast passionate about the latest developments, or simply an individual curious about how technology is driving transformation in finance, our Technology category offers a wealth of valuable insights.

We cordially invite you to join us on this fascinating journey as we explore the world of fintech technology, discussing its pivotal role in shaping the future of finance. Step into this exciting realm with us, as we unravel how technology is not just influencing, but defining the next generation of financial services.

Cryptocurrency

Due Diligence Best Practices for Cryptocurrency Firms

Posted on | by Signzian

Although the cryptocurrency market is largely unregulated in India, cryptocurrency remains an investment option of interest for young Indians. Just recently, the Indian Income Tax Department issued tax notices to thousands of cryptocurrency investors. BR Balakrishnan, Director General of Investigation (Karnataka and Goa), Income Tax Department, said that they couldn’t turn a blind eye to the whole cryptocurrency investment space and that “It would have been disastrous to wait until the final verdict was out on its legality.”

So legal or regulated or not, cryptocurrencies are selling in India.

But the lack of government regulations on cryptocurrencies like bitcoins makes them prone to frauds. Recently, India has witnessed several cases of cryptocurrency frauds right from the 84-crore Goregaon cryptocurrency investment scam to the 2,200-crore Mumbai fraud incident.

Although RBI has never supported the usage or trading of cryptocurrencies in India, it hasn’t imposed any bans either. But the rising fraud instances show that there’s an urgent need to regulate the market.

Recently while presenting the Union Budget 2018, finance minister Arun Jaitley said “The government does not consider cryptocurrencies as legal tender or coin and will take all measures to eliminate use of these cryptoassets in financing illegitimate activities, or as part of the payment system.” The Finance Minister’s speech has triggered lots of responses from the Indian Cryptocurrency exchanges.

Shivam Thakral, co-founder and CEO Delhi-based BuyUcoin, said “Nothing new was quoted by our Finance Minister in the budget announcement today. It was a repetition of the same old cohort whilst the industry was expecting clarity over taxation and it’s regulation from the Government.”

Another bitcoin exchange Unocoin also maintains that no new Legislature has been introduced and the legal status of Cryptocurrency remains unchanged. That it’s the same unregulated virtual currency now as it was earlier. The Chief executive and co-founder of Unocoin Sathvik Vishwanath said “There is no change in the government stance with respect to trading cryptocurrencies. Cryptocurrency holders need not panic and the business is as usual.”

But even with the ‘impending’ official regulations, cryptocurrency companies can (and some are) proactively following norms such as KYC and AML, which they could certainly be subject to if the regulation happens. These measures will also address the key concerns the Finance Ministry has with cryptocurrencies.

Regulatory processes some Indian Cryptocurrency Companies are already implementing

While Indian cryptocurrency companies wait for the official regulation to happen, some of them are going ahead and borrowing the guidelines that apply to other financial institutions. This is the way to go as the international law firm, Norton Rose Fulbright, notes: “As a general rule, where no specific steps have been taken to regulate cryptocurrencies in the relevant jurisdiction, it would be necessary to refer to the existing legal and regulatory frameworks to understand how they might apply to the new circumstances that the technology enables.”

Which brings us to norms such as KYC, AML, and Data Privacy among others.

Atulya Bhatt, Founder of India’s leading cryptocurrency marketplace, BuyUcoin, stresses on how with self-regulation cryptocurrency companies can counter the anonymity of transactions and tackle money laundering in cryptocurrency trade. He says:

“Indian exchanges counter the anonymity of transactions and money laundering issues via self-regulation.”

Bhatt also recommends using advanced technological solutions for digital identity verification processes.

Hemanth Kumar, CIO at Unocoin (India’s most popular bitcoin wallet company), also underlines the importance of following KYC and AML provisions for cryptocurrency companies to remain accountable. He says:

“Regulation of entry points through strict KYC norms and deploying AML policies for monitoring the flow of the funds is key for any crypto exchange to bring in accountability of its customers.”

As you can see, KYC and AML are recurring themes even as cryptocurrency companies are practicing proactive self-regulations.

South Korea, which has just recently legalised cryptocurrencies, has already released a regulatory framework focusing on AML measures and KYC. The official document states that these measure will “reduce room for cryptocurrency transactions to be exploited for illegal activities, such as crimes, money laundering, and tax evasion.”

Key points from South Korea’s KYC and AML measures in its cryptocurrency regulation policies:

  • Cryptocurrency companies need to share (with the banks) information about the purpose of the transactions, the sources of funds, details about services the exchanges provide, and whether the exchanges are using verified real-name accounts
  • Cryptocurrency companies need to monitor (and report any) suspicious transactions
  • Cryptocurrency companies can only get bank accounts for functioning IF the exchanges provide their users’ ID information

If India, too, issues a similar framework, AML measures and KYC will clearly be the central themes.

In addition to these, cryptocurrency companies will also have to look into user data protection. Because cryptocurrencies use blockchains, and because blockchains are decentralized, distributed, and public, protecting the information on a blockchain can be challenging.

Wrapping it up…

Given the current state of regulation on cryptocurrency trading in India, cryptocurrency companies already have a lot at stake. But if India does end up following the likes of Japan, US, and South Korea and make virtual currencies legal, then all these companies will be expected to face regulations similar to most financial institutions.

Starting to work on deploying stronger KYC, user data privacy, and AML policies look like a great way to prepare for a time for when the regulation does happen. These measures also reinforce the government’s key concerns such as financing illegitimate activities, money laundering, and terrorist financing.

Signzy disclosure: The above content is an opinion and is for informational purposes only. Please don’t consider this as legal advice. It’s best to seek a legal consultant’s opinion before framing your policies.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

 

Cryptography: The Vault for Today’s Banks

Posted on | by Signzian

Analyzing the importance of cryptography in ensuring online security.

When recently Edgartown bank in Massachusetts, USA needed more space they made a decision to do away with their steel enforced vault built in 1850. What seemed to be a simple re-furnishing task turned into a mammoth demolition exercise! Its only when they started digging deep, did they realise that it wasn’t that the vault was put in the Bank. But The bank was built, around the vault. Thus removing the vault meant destabilizing the complete infrastructure.

This small instance reveals a very important aspect of Banking. Safety is paramount. Banks have constantly been the biggest buyers of safe and vaults. Even today, banks pay tremendous attention to detail as regards safety and vaults, like the Federal Reserve Bank of New York, which claims to possess one of the world’s safest vaults. [1] The vault in New York is safeguarded by a comprehensive multi-layered security system, highlighted by a 90-ton steel cylinder protecting the only entry into the vault. The nine-foot-tall cylinder is set within a 140-ton steel-and-concrete frame that, when closed, creates an airtight and watertight seal. [2] In light of prevalent practices such as net banking, e-wallets and digital payment systems, the importance of security is further amplified.

Banks have always thrived (and done maximum business) on the notion of trust that customers place in them. Direct evidence of this principle can be found in the fact that banks act as trustees and guardians of the currency of their customers. Customers deposit large sums of money and are led to believe that a similar value of currency (as regards their bank balance) is present at the bank, despite the fact that it is common knowledge that banks often deal with monetary values and transaction amounts which are far greater than the actual amount of currency present at the bank at a particular point of time.

Need for Security

When the infamous thief Willie Sutton was asked why he robbed banks, he answered, “Because that’s where the money is.” While the witty comeback still “holds up” today, the weapon of choice now is more likely to be a pen/computer than a gun. The business of a bank/financial institution is constantly under threat from menaces of robbery, or even fraud. What is pertinent to note, is that banks have always placed tremendous value on security and will leave no stone unturned to ensure that safety standards remain high. [3]

The advent of technology has made fraud-inducing practices more prevalent and sophisticated, with them being at an all-time rise.[4] A survey on financial trends made by Assocham and PwC said that financial frauds led to approximately $20 billion (Rs 1.26 lakh crore) in direct losses annually. D S Rawat, Secretary-General, Assocham stated that “Financial fraud is big business, contributing to an estimated $20 billion in direct losses annually. Industry experts suspect that this figure is actually much higher, as firms cannot accurately identify and measure losses due to fraud. The worst effect of financial frauds is on FDI (foreign direct investment) inflows into India.” [5]

The report states that as 75% of the population of India has a mobile phone, ‘banking on the go’ has become the norm, so as to increase the convenience to the consumer. Which reflects in the Reserve Bank of India’s data which states that from a meagre INR 1819 crore in 2012, the volume of mobile banking transactions has risen to INR 1,01,851 crore in 2015.

Technology continues in the race with bank robbers, coming up with new devices such as heat sensors, motion detectors, and alarms. Bank robbers have in turn developed even more technological tools to find ways around these systems. Although the number of bank robberies has been cut dramatically, they are still attempted. [6]

Cryptography

As the world moves digital there is a corresponding need of similar safety and security in the digital world. Cryptography plays a crucial role in ensuring complete safety in areas like e-mail to cellular communications, secure Web access and digital cash. Cryptography helps provide accountability, fairness, accuracy, and confidentiality. It can prevent fraud in electronic commerce and assure the validity of financial transactions. [7]

Cryptography secures the global information infrastructure by encrypting data flows and protecting data from third-party interception. Nowadays, cryptography secures data in transit and at rest, protects personal information and communications, and ensures the integrity of every online purchase. Cryptography has four key attributes:

1. Confidentiality: The protection of information and prevention of unauthorized access;

2. Privacy: Protecting the personal information of individuals;

3. Non-repudiation: The inability to deny an action took place; and

4. Integrity: Assurance that information cannot be manipulated. [8]

Cryptography also powers one of the most rapidly rising finance technology — Blockchain.

It has driven businesses to reimagine how their networks operate and has become synonymous with alternative business models. At its core, however, blockchain leverages a vast amount of public key cryptography to enable confidentiality, privacy and security of data and user identities. [11] Apart from its security benefits, blockchain also increases the speeds of different transactions. Instead of waiting days for a check to clear, a payment can be verified in seconds. There’s also less risk that payments will have to be denied because funds are unavailable. There’s no more “playing the float” since account debits and credits are instantaneous. [12]

Conclusion

Banks in India have started realizing that consumer experience and ease of banking are very important. This has led to several collaborations between the fin-tech start-ups and Banks. What would probably be the next wave in this collaboration is startups that focus on digital security helping banks bring the “offline” trust to the online world. Banks which focus on security and safety of digital consumers are more likely to build trust in the long run, and would most probably be the winners in the digital world.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Ankit Ratan, [ CEO, Signzy ]

 

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