DIGITAL BANKINGTRACKER™ IN THE FIGHT AGAINST HUMAN TRAFFICKING, FIS TURN TO AI SEPTEMBER 2018 Using AI and machine learning to Starling, RBS partner The top movers and shakers fight modern slavery for new digital bank in the digital banking space – Page 6 (Feature Story) – Page 10 (News and Trends) – Page 18 (Scorecard) © 2018 PYMNTS.com All Rights Reserved 1 DIGITAL BANKINGTRACKER™ TABLE OF CONTENTS What’s Inside An overview of the latest digital banking news, trends and headlines, including stories surrounding the 03 latest partnerships and alliances forged in the space Feature Story Turning To AI To Reduce Digital Banking Risks Dr. James Cockayne, head of the Financial Sector Commission on Modern Slavery and Human 06 Trafficking and director of the Centre for Policy Research at United Nations University, discusses the financial industry's recent efforts to use tools like artificial intelligence and machine learning to curb human rights violations News and Trends 10 The most recent digital banking landscape headlines, including the latest on security breaches, the debut of new defenses against fraud and new open banking efforts Methodology: 14 The highest-ranking B2B and B2C digital banking providers Top Ten Rankings 16 The highest-ranking B2B and B2C digital banking providers Watch List 17 Three additions to the Digital Banking Tracker™ provider directory Scorecard 18 The results are in. See this month’s top scorers and a directory featuring more than 230 digital banking players About 147 Information about PYMNTS.com and Feedzai ACKNOWLEDGEMENT The Digital Banking Tracker™ is powered by Feedzai, and PYMNTS is grateful for the company’s support and insight. PYMNTS.com retains full editorial control over the report’s methodology and content. © 2018 PYMNTS.com All Rights Reserved 2 What’s Inside NEARLY THE ENTIRE DIGITAL BANKING INDUSTRY EXECUTIVE INSIGHT IS TRAINED ON INNOVATIONS IN CONSUMER DATA COLLECTION AND ANALYTICS. IN JANUARY, FINANCIAL INSTITUTIONS (FIs) AROUND THE GLOBE GAINED ACCESS TO A WIDE RANGE How are open banking regulations impacting the OF CONSUMER DATA THANKS TO NEW OPEN way banks interact with their customers? BANKING REGULATIONS. COMPANIES ARE EAGER TO PARTICIPATE IN OPEN BANKING INITIATIVES, HOPING TO LEARN MORE ABOUT THEIR CUSTOMERS AND PUT THAT INFORMATION TO USE IN TARGETED "Open Banking regulations can either be a MARKETING EFFORTS, SECURITY, FRAUD headache, or a competitive advantage. We PREVENTION AND RISK REDUCTION. proved that with PSD2 in Europe, where we helped the first of the major banks to become compliant ahead of the rest, and Among those companies is Facebook, which, according are doing that again with NPP in Australia. to reports from The Wall Street Journal, recently asked Banks that are out in front of the Open banks to share customer information — checking Banking shift, utilizing the right tools and account balances and card transactions — in a move technology to make their customers' lives that would add more commerce and payment features to easier, are the banks that are going to gain its platform, allowing users to check account balances or an edge. Ultimately, it’s not about being receive fraud notifications. Facebook is just one of many compliant with new regulations, or basic companies looking to offer new services with the help of risk mitigation, it’s about investing in the open banking partners. customer experience because in an ever more connected real time mobile and Around the digital banking world digital environment -- that’s where the real Micro-investing app Moneybox recently unveiled a battleground for the consumer in financial partnership with Santander. Under the terms of the services is moving." agreement, Santander customers will now be able to use the Moneybox app with their transactions. The app rounds up each transaction amount and prompts Richard Harris, consumers to invest or save that extra change. The head of international operations at Feedzai alliance is Santander’s first open banking partnership. © 2018 PYMNTS.com All Rights Reserved 3 What’s Inside outside parties. Britain’s Financial Conduct Authority is investigating how these firms market their services to consumers and is taking a particularly close look at the currency exchange space, which has been highlighted as an area where companies “were potentially misleading consumers.” To read more on these stories and find more headlines from around the digital banking world, check out the Tracker’s News and Trends section (p. 10). How banks can help reduce human trafficking Financial data can do more than help banks create new products or services. A growing group of banks are using these tools, along with technologies like artificial Starling Bank, meanwhile, plans to use open banking intelligence (AI) and machine learning (ML) to curb to help financial players build out their offerings. The human rights violations. company recently told shareholders it would expand into the banking-as-a-platform space, enabling third- In the latest Digital Banking Tracker™ feature story, party partners to use its banking license and API Dr. James Cockayne, head of the Financial Sector infrastructure. The new offering allows retailers and Commission on Modern Slavery and Human Trafficking FinTechs to develop and scale their own financial and director of the Centre for Policy Research at United offerings, including savings accounts, current accounts Nations University, discusses recent efforts from the and debit cards. So far, Starling has partnered with financial industry to use tools like artificial intelligence Raisin, a money management app, and the Royal Bank of and machine learning to end modern slavery and human Scotland (RBS). trafficking. While there’s increasing interest in open banking September Digital Banking Tracker™ updates initiatives, there’s a growing concern that financial This edition of the Tracker features profiles of more than regulators are ringing the alarm on how some companies 230 players in our provider directory, including three new may use open banking to collect and sell data to additions: Emma, Honeyfi and Neon. © 2018 PYMNTS.com All Rights Reserved 4 What’s Inside 5Five Fast Facts 59% 66% 63.5% Share of consumers Number of Portion of banks that who regularly use consumers who say are using artificial online bill pay they are “extremely” intelligence for IT features or “very” concerned functions 60% about data privacy 86% Portion of millennials Amount of who prefer using consumers who apps to make say their FI’s digital payments banking offerings fully meet their needs © 2018 PYMNTS.com All Rights Reserved 5 IN THE FIGHT AGAINST HUMAN TRAFFICKING, FIS TURN TO AI © 2018 PYMNTS.com All Rights Reserved 6 What’s Inside Feature Story "Over the last couple of years, one of the key game changers that has emerged is the engagement of the financial sector, both public and private" DR. JAMES COCKAYNE, director of the Centre for Policy Research at United Nations University Most people today think of slavery as a barbaric system In a recent interview with PYMNTS, Dr. Cockayne noted from a bygone era, but for millions of victims around the that a growing group of financial players have taken an world, it continues to be a day-to-day reality. interest in finding and stopping illicit operations that support modern slavery. According to research from the United Nations (UN), more than 40 million people worldwide were enslaved as “Over the last couple of years, one of the key game of 2016, mostly through human trafficking rings, which changers that has emerged is the engagement of the earn criminals as much as $150 billion in profits. Many global FIs often unwittingly handle and transmit those funds and, in many cases, finance goods and services that profit from human trafficking. In recent years, the UN has worked to turn these banks from unwitting accomplices into allies in the fight against slavery. This fight is fronted by the UN’s recently formed Financial Sector Commission on Modern Slavery and Human Trafficking, a group led by Dr. James Cockayne, director of the Centre for Policy Research at United Nations University. “Leaders in the field” of financial services also participate on the Commission. © 2018 PYMNTS.com All Rights Reserved 7 Feature Story UNDER THE HOOD I think there are two very promising developments we already see in the financial Dr. James Cockayne, director of sector. the Centre for Policy Research at United Nations University on the importance of data in the fight to financial sector, both public and private,” he explained. end modern slavery and human “They made quite clear that what they thought was trafficking. needed is a roadmap for more systemic and sustained engagement by the financial sector with these issues.” The intersection of financial services and human “The Commission will look at the trafficking affordances and tolerances that allow us While banks have taken an increased interest in ending to live with more than 40 million slaves human trafficking, they face a long list of obstacles. One in the world. We’ll be looking at what of the biggest challenges for the Commission is the wide changes need to be made to ensure that variety of touch points and interactions between banks the system works for everybody and and human traffickers. doesn’t place all of the burden on those 40 million people. The UN has identified more than 20 different types of Data is one key to that outcome, but modern slavery and human trafficking in the U.S. alone, there may be other keys as well. It may ranging from sex trafficking to the use of slave labor in be that the regulatory environment is not everything from nail salons to the agriculture industry. incentivizing the right kind of behavior. Additionally, many of the businesses that are involved It may be a mindset issue, that we have in human trafficking may appear legitimate, but they the keys already there, we have the data are actually fronts used to launder money and support already there, but we’re not looking in the illegal activities.