Payment News

VTB Turns to Advanced Modelling Techniques to Plan its ATM and Branch Network

Russia’s second largest bank, VTB, has been working on tools to identify the optimum location for bank branches and ATMs. It has used a wide range of parameters, over 5,000, to calculate how to reach the most customers and generate the most sales from a new location. Convenience and accessibility, population, proximity to shopping centres and bus, tram and rail stops are part of those calculations. It even factors in known changes in customer behaviour when a branch is being renovated.

Big data, artificial intelligence and machine learning are all part of this story. The bank aims to modernise a third of its retail network, with the goal of having branches within 15 minutes travel time for its retail customers.

VTB has already put in the data for all of Russia’s major cities where it works with retail customers and aims to finish its analysis for the entire network soon.

Cash is Still King for Turks

The Central Bank of the Republic of Turkey (CBRT) carried out a cash usage habits survey between September and October 2020. Some of the key findings included: 

• Median sum of money carried normally is 150 Turkish lira (TL).

• The Median sum withdrawn from a bank or ATM was TL 500, although the average was TL 963.

• 62% described themselves as ‘cash users’ and 9% as card users with the balance in between.

• 18.3% did not have a bank account.

• 32% were paid in cash, 30.3% directly into their bank account, with 23% a mixture of each.

Participants kept a payment diary over four days. Cash accounted for 89.5% of all transactions, 76% by value. The reasons given for paying cash were habit, privacy, budgeting, lower costs and security.

More people said they would use more cash in the next 12 months than those who said less. The CBRT’s comment was, ‘This suggests that the use of cash will not decline in the period ahead.’

It also commented that, ‘the importance of card payment systems within payment methods is increasing rapidly and with the proliferation of smartphones, there are significant developments in mobile payment systems.’

ECB to Address Target2 Outages

In 2020 the European Central Bank’s (ECB) real time gross settlement system (RTGS) experienced six major-IT related incidents. An 11-hour outage in October 2020, blamed on a third-party technology provider, led the ECB in November 2020 to hire Deloitte to review what happened and to make recommendations.

When the system went down in October, the back-up site did not boot-up. This meant central banks and Eurozone financial institutions could not process transactions, transfer liquidity or settle securities transactions.

Deloitte found business continuity management, back-up and recovery testing and communication protocols in an emergency situation to have weaknesses. The review made 18 recommendations.

The ECB has already started to make changes; for example, it is setting up more comprehensive back-up systems should Target2 go down and this will be complete by the end of 2021. In the first quarter of 2021 it held a number of industry workshops to improve how it communicates with market participants.

Beginning of the End of Magnetic Stripes on Cards

Mastercard will stop using magnetic stripes on its cards in Europe from 2024. In the US, which was late in the adoption of chip and PIN technology, the move will start in 2027 with issuers no longer having to issue cards with stripes. By 2029, they cannot do so, unless these are prepaid cards for use in the US and Canada.

Although some way off, this will require all terminals to be changed to accept chip technology. Chip technology experiences less fraud from stolen data and fallback transactions.

Crypto Currency Security Hacked

Criminals hacked into the Poly Network, a decentralised finance (DeFi) platform that facilitates peer-to-peer transactions with a focus on allowing users to transfer or swap tokens across different blockchains, and exploited a weakness in smart contracts to steal from multiple blockchains.

Their explanation said that ‘the hacker exploited a vulnerability, which is the _executeCrossChainTx function between contract calls. Therefore, the attacker uses this function to pass in carefully constructed data to modify the keeper of the EthCrossChainData contract.’

In the slightly bizarre world of crypto crime, Poly Network tweeted to the criminals asking to speak. Poly Network say $4.8 million was returned, suggesting this is because ‘laundering them and cashing out is extremely difficult, due to the transparency of the blockchain and the use of analytics.’

Poly Network say the hacker posted an Ethereum message describing the Poly Network as ‘a decent system’ and ‘one of the most challenging attacks’. $340 million is reported to have been returned and the hacker is being described by Poly Network as a ‘white hat’, sector jargon for an ethical hacker who generally aims to expose cyber vulnerabilities.