Fraud Forum comes to Lake Washington: August 23-24

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Inside this issue . . .

ISSUE 40 | Summer 2018

Contact MAP at:PO Box 8884Seattle, Washington 98188

Phone: 1.866.598.0698Fax: 206.439.0045Email: [email protected]

www.mapacific.com See “uConference18” on page 2

— How regulatory relief combats fraud

— Industry News

— EMV chips are more secure

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— U.S. mobile payments lag behind

— Visa News

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— The New Digital Demand in Banking

— Using chatbots for financial services

Payments fraud reached a new high in 2017 after a downswing earlier in the decade, according to a new study by the Association of Financial Professionals (AFP). A record 78% of all organizations were hit by payments fraud last year.

Controlling fraud is top-of-mind for business leaders, and organizations are implementing controls and mea-sures to restrict the occurrence of such activity. Yet, the perpetrators of these attacks continue to succeed in target-ing payment methods. Additionally, while advances in and widespread use of technology have increased payments efficiency, they have also provided

criminals with more tools to commit pay-ments fraud.

To combat fraud, MAP is working diligent-ly to identify and expose threats on behalf of client credit unions. Just last year, MAP helped one client achieve the lowest fraud rate for all Visa clients on the DPS platform. Still, fraud can be a difficult subject to talk about, so MAP formed a Fraud Forum for clients to promote vigi-lance and forge an open environment for combating fraud. We are working towards better flows of information and honest discussion, which we believe will lead to a greater and wider understanding of fraud issues and more cooperation. As part of

Fraud Forum comes to Lake Washington: August 23-24

Fraud Forum &

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P.11 — Letter from the CEO

— Consumers worry about privacy

— CUliance: Millenials Love ATMsP.10

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MAP is pleased to welcome back John Snodgrass, CAMS, to present on the breadth of financial crimes that CUs are facing. John is Senior Manager of Financial Crimes and BSA/AML Compliance Officer at Boeing Employees Credit Union and has been with BECU for 19 years. He is responsible for managing the daily operations of the Financial Crimes Department. He is a Certified Anti-Money Laundering Specialist and serves as a member of the disaster recovery and crisis management teams at BECU. John is past President of the Northwest Fraud Investigator’s Association and he holds a B.A. in Business Communications and Graphic Arts from Washington State University.

MAP’s 2018 Annual Conference will be held August 23 and 24 at Hyatt Regency Lake Washington at Seattle’s Southport. The AAA Four Diamond hotel offers an upscale retreat near the shores of Lake Washington. Guestrooms and suites offer plush beds, ample workspaces, and 65” smart TVs, as well as views of Lake Washington, the Seattle skyline, and the Olympic Mountains. On-site amenities include complimentary Wi-Fi, indoor saline pool, 24-hour fitness center, multiple dining options, and more.

MAP hosts this small conference each year for credit unions where we bring together industry experts to meet in a relaxed setting for learning and exploring what is happening in the payments industry and how it will impact our members. Our conference is a rare occasion for credit union professionals to learn about the rapidly evolving payments and financial services industry. MAP is pleased to welcome client and guest credit unions to our two-day conference, but as an intimate event for select participants space is limited. Registration is available online at www.uConference18.com. For more information, please contact your Client Services Manager or Karl Kaluza at 866-598-0698 x1618 or [email protected].

this ongoing effort to combat fraud, MAP is making the Fraud Forum a highlight of this year’s annual confer-ence. In addition to featured speakers, MAP team members will share their ongoing program to defend against a continually changing fraud environ-ment.

This year’s conference will kickoff on August 23 with a Practi-cal Innovation workshop where participants will be learning and practicing divergent and convergent thinking. In partnership with MAP, FutureThink combines a skill-building workshop with access to problem-solving tools to unleash an innovative mindset, helping participants disrupt the status quo about payments at their credit union and beyond.

On Friday, August 23, the second day of the conference will feature MAP’s Fraud Forum. MAP’s keynote speaker is Mary Reeder, Vice President of Risk Management at Visa. Mary has more than 20 years of experience leading engineering and operations teams for early-stage and larger technology compa-nies. Prior to joining Visa she served as Chief Technology Officer at Finsphere, the company that developed Visa Mobile Location Confirmation service that uses a person’s smart-phone to confirm where they are in the world and check to see if that matches where their credit card is being used. Mary held a similar position for more than twenty years at HouseValues, Onyx Software (now Consona) and Microsoft Corporation. She holds a patent for her work on the MSN platform.

Charles A. Harwood, Director of the Federal Trade Commission’s Northwest Regional Office in Seattle, will present on data breaches, data security, and data privacy. Charles has served as a Deputy Director in the Bureau and Act-ing Director of the Bureau of Consumer Protection. Throughout his career he has led law enforcement and consumer educa-tion efforts, often in cooperation with state authorities, involving a wide range of antitrust and consumer protection issues. In 2001, Harwood received the FTC Chairman’s Award for his service to the agency and the public. He is a graduate of Willamette University College of Law and Whitman College.

Mary Reeder

Charles Harwood

John Snodgrass

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Cost of a Data Breach hits New High. According to research from Kaspersky Lab, the average cost of experiencing a data breach is on the rise. The company’s annual Corporate IT Security Risks survey is a worldwide survey of IT business decision makers, which this year found that breaches now amount to $1.23 million on average for enterprises (up 24 percent from $992K in 2017), and $120,000 on average for small and medium-sized businesses (up 36 percent from $88K in 2017).

“No single button” say Major US Retailers. Merchants, including Home Depot, Target, Walgreens, and Walmart, are seeking help from federal regulators to oppose a recent plan by the four major card networks to introduce a unified singular but-ton for online checkout that would replace proprietary services like Visa Checkout, according to The Wall Street Journal. The merchants fear that the single button offering is anticompetitive and will restrict the options they have for routing debit transactions, forcing them into more expensive card network offerings.

60 percent of banks increase digitalization. According to the Global Trade Securing Future Growth report published by the International Chamber of Commerce, over 60 percent of surveyed banks reported to have implemented or to be in the process of implementing technology solutions to digitalize their operations. However, only 9% of banks reported that the implemented solutions have so far led to a reduction of time and costs.

Amazon’s Alexa now makes donations. Amazon has added a new skill to its voice-activated, artificially intelligent digital as-sistant, according to news from TechCrunch. Users of an Alexa-en-abled device can now tell Alexa to donate a certain amount of money, and the voice-activated personal assistant will take the funds from the user’s Amazon account and pay it out to a specific organization. The voice assistant relies on a four-digit voice confirmation code to make sure the donation isn’t a mistake or that someone else in the house doesn’t direct Alexa


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How regulatory relief is helping combat fraud

The Economic Growth, Regulatory Relief and Con-sumer Protection Act that was signed into law on May 24 contains a largely overlooked provision that could go a long way to-ward helping credit unions better spot a fast-growing form of borrower fraud.

The legislation includes a little-noticed measure that would make it harder for criminals who use real Social Security numbers to create fake personas, which they subsequently

employ to apply for credit.

In some cases, fraudsters have used these synthetic identities to open hundreds of credit card accounts and steal hundreds of thou-sands of dollars. The schemes can also cause substantial problems for the individuals whose Social Security numbers get stolen.

Analysts say that the incidence of synthetic identity fraud has been increasing by at least 30% per year with several factors that are driving the trend. For one, the vast amount of stolen consumer data that can be found online enables criminals to piece together infor-mation about real Americans in order to create fictitious personas. In addition, efforts to crack down on more traditional forms of fraud have led bad actors to look down more promising alleyways.

Moreover, the Social Security Administration started issuing ran-domized numbers in 2011 — previously, the first few digits were linked to geography — which has made it harder for lenders to detect this type of fraud. The 2011 policy change has led fraudsters to rely on Social Security numbers issued within the last seven years.

The law’s upgrade to Social Security Administration procedure is a commonsense and effective way to cut down on synthetic ID fraud and help prevent millions of people from having their identity stolen. The Social Security Administration will make upgrades once it has collected a reserve of funds from the financial industry, which sug-gests that the proposal’s implementation may be a couple of years away.

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Due to rising incidents of fraud and data theft, credit card issuers and merchants switched to using EMV technology to authenticate transactions. Taking its name from Europay, Mastercard, and Visa, EMV was developed as far back as the mid-1990s, but the technology was only widely adopted in the US with the advent of the liability shift in October 2015. This shift meant that the least EMV-compliant party in a payment process would be the one held liable for fraudulent transactions.

The use of cards with magnetic strips slowly gave way to the use of the newer more secure EMV cards.

EMV uses small chips or microprocessors to store information, perform processing, and generate dynamic data for every transac-tion. This makes it nearly impossible to replicate transaction code and create counterfeit cards. Meanwhile, mag stripe cards store unchanging data on sensitive cardholder information that are easy to duplicate.

Because of its security features, EMV-enabled cards significantly reduced fraud-related incidents. According to Visa, merchants ac-cepting ‘chip cards’ reported a drop in counterfeit fraud losses by 58 percent in December 2017 when compared to December of the previous year. Similarly, Mastercard fraud data also saw a 54 percent decline in counterfeit fraud from April 2015 to April 2016.

The migration to chip technology may be slow but looks encourag-ing. During the recent Secure Technology Alliance Payments Summit, keynote speaker Stephanie Ericksen of Visa revealed that 96 percent of the company’s payment volume at point-of-sale (POS) use EMV cards. In addition, 59 percent of POS terminals in the US accept chip cards—an impressive growth since the liability shift.

Fraud reduction is the biggest benefit for merchants upon shifting to EMV technology. Compliance with the standard also limits the financial liability of business owners if they process a fraudulent transaction. Customers also seem to prefer using EMV-enabled ter-minals that offer more security. In fact, a 2016 survey by NerdWallet revealed that 43 percent of respondents prefer using chip cards for in-store purchases.

Chip technology helped combat fraud in face-to-face settings, like grocery store checkout lanes, that use counterfeit cards. But it did not completely eliminate data theft and other types of fraud.

Fraudsters have shifted their focus to card-not-present (CNP) fraud on transactions done via phone or online. The threat becomes even more significant as eCommerce in the US grows at an exponential pace.

According to Brett McDowell of the FIDO Alliance, 50 percent of reported fraudulent transactions are attributed to CNP fraud. The majority of data breaches in 2017 were due to weak or stolen passwords. This indicates the need for stronger authentication and identity verification processes to better secure the overall payments system, including the EMV ecosystem.

Despite the achievements and progress in EMV migration of the payments industry, business leaders acknowledge that there is more work to be done. They are also upbeat on the next step in the chip card transition—contactless payments.

Dual-interface EMV cards can also have contactless card reading or near field communication (NFC) features. Consumers only have to tap their card on the terminal scanner for faster checkout. However, there are several hurdles to this technology, such as lack of accep-tance, confusion among users, and few companies issuing NFC-capable cards.

There is more to the future of payments, including embedding biometric readers on cards to verify a cardholder’s identity. Industry leaders are also looking at cryptocurrencies, artificial intelligence, and blockchain as other forms of payment technologies.

EMV chips are making card processing more secure

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Visa News

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Cash can cause travel anxiety. Visa’s Global Travel Intentions (GTI) Study highlights various parts of the travelers’ journey and found a key motiva-tor for travel is stress relief. The study also uncovered certain aspects of travel can lead to anxiety and stress, including get-ting, carrying and exchanging cash. In addition to examining the motivations and planning tactics, the study found that Americas lead the world in number of trips in the past two years, taking an average of 3.2 trips in 2017. Technology is helping some travelers better navigate their destinations with 88 percent of travelers using online access while abroad and almost half (44 percent) use ride-sharing apps to get around once they are on the ground.

Visa fosters next generation of credit union leaders. Visa, together with the Filene Research Institute, will conduct two unique studies exploring talent gaps in the credit union industry throughout 2018. Through Filene Research Institute’s War for Talent Center of Excellence, Visa and Filene will convene leading academics and credit union experts to study the in-dustry’s talent gap with two unique studies in 2018: Factors of Tal-ent Attraction at Two Credit Unions: A Field Study and Credit Union Board Composition: Desires and Practices. This research aims to help credit union leadership identify key traits they seek in candidates and define values and soft skills that impact these traits in order to build a diverse board equipped to attract talent with well-rounded backgrounds, ideas and expertise.

Visa’s Cashless Challenge 2.0. Visa is searching for one travel enthusiast to send on an international adventure with the help of top social media travel pros to highlight the value of going cash-free. The international trip is a sequel to Visa’s Cashless Challenge, which awarded $500,000 earlier this year to small businesses in the United States who reduced their reliance on cash and embraced the benefits of electronic payments. For more information about the Visa Cashless Challenge: International Travel Edition Search, includ-ing terms and conditions, trip details and how to submit, visit www.visa.com/cashlesstravel.

U.S. mobile payments usage lags behind ChinaAmericans who travel to China will find one thing somewhat unusual: In restaurants, stores and markets, people will take out their phones instead of credit cards when they’re ready to pay. Despite all the buzz and excitement, mo-bile payment in stores still hasn’t gained much steam in the U.S. Mobile transac-tions barely accounted for $1 out of every $100 spent in-stores last year, according to a new report by 451 Research, a New York-based advisory company. And analysts don’t expect mobile payment usage to rise anytime soon — the percentage is expected to reach just 3.4% by 2022. An eMarketer report highlights the gap between the U.S. and China: This year, 25.3% of smartphone users in the U.S. are expected to pay for physical purchases by phone, compared with an estimated 77.5% in China.

According to Mercator Advisory Group’s recent report on the Asian Mobile Payment Apps: Mobile payment adoption grew in China and India, for example because the digital payment methods were a better way to pay in cultures where payments were handled almost entirely in cash. Consumers in China and India rely on their mobile payment apps to manage much of their lives and often depend upon them for payments with fierce loyalty to their chosen apps. The In-dian government’s surprising and sweeping demonetization in 2016 created a surge of demand from consumers to use smartphones to transact business and pay for goods and services. China’s politically influenced economy and tolerance for powerful companies—whether state-run or corporate—set the stage for Alipay and WeChat Pay to dominate in that country.

In the U.S., Mercator Advisory Group’s Customer Monitor Survey Series has found that half of U.S. consumers use their mobile phone to make payments either online or in stores, but its use is lackluster, except for a small segment of avid users, whose use is increasing. Merchant-based mobile apps appear to have broader appeal today than universal mobile payment apps, perhaps because of their sup-port and integration of loyalty and rewards programs that stimulate use, such as Starbucks and features that improve customer experi-ence. Mobile order and pay is a real benefit to many consumers as 47% of consumers and 65% of young adults say they have used mobile order and pay. Mobile payment will gain adoption when the benefits are clearly defined promoting its use.

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There are 4.1 billion users on messaging apps that use intelligent conversational “chatbots” to interfaces with these apps. Chatbots are changing the way businesses and customers interact. Powered by artificial intelligence, chatbots hold the promise of enabling close to natural conversations with people.

While the amount of intelligence and abilities to communicate at a human-like level have been largely overestimated across industries, intelligent bots do represent a shift towards conversational inter-faces, through which businesses can serve their customers 24/7 in the most efficient manner and at a high rate of customer success. Oracle claims that chatbots could save $174 billion across insur-ance, financial services, sales, and customer service.

Chatbots may not be the only definitive answer for improving cus-tomer service, but they can go far to improve the responsiveness and efficiency of a company’s customer service function. Chatbots are increasingly being implemented in B2B, B2C, and internal communi-cations in the financial services industry. Customer service bots are enabling customers to check balances, transfer money, pay bills, and more. All of this, however, is still the starting (or at most, the transi-tional) point of the evolution of chatbots in the US, where the vast majority of examples are cases of a rushed jump into the chatbot bandwagon out of fear they’ll become irrelevant to their customers.

The evolution of chatbots in the US can be illustrated with a contin-uum on which every existing example can be placed: from informa-tional bots at the beginning, to advisors at the most sophisticated stage of development. With every step from an informational stage to advisor, chatbots are enriched with functionality. The pivotal point in this evolution is the ability not only to understand the request and provide information but to act on that information.

Let’s walk through three major stages in the evolution of chatbots in the US with particular examples:

Informational ChatbotsFor a chatbot to create a meaning-ful and successful interaction with the customer, the experience has to be at least 10 times better than the one with the human assistant or without the assistant at all. Informational chatbots, however, in their most incarnations today, can’t deliver even an experience that is three times better.

One example is American Express: on April 2017, at F8, Facebook’s annual global developer confer-ence, American Express announced

an updated Amex bot for Facebook Messenger enhanced by AI and servicing technology. The updated Amex bot for Messenger enables eligible US consumer and OPEN card members to get on-demand answers from the Amex bot for Messenger to answer certain queries related to their account and card information.

Chatbots are most effective in situations where a customer is trying to resolve routine issues, complete specific tasks like placing an order, or guiding a user through a multi-step process. The benefit is the ability to close the loop with the customer along a process, efficiently and in a delightful way. The ROI is in cost reduction, ef-ficiency, and improved customer satisfaction. The financial services industry, however, is not the one where this stage of development is sufficient, and, in most cases, modern banking chatbots are on the next stage of development, incorporating a transactional capability.

In 2016, Mastercard announced its plans to launch an AI bot plat-form that allows consumers to transact, manage finances, and shop via messaging platforms. The Mastercard bot for banks promised to seamlessly extend Mastercard services to customers on messaging platforms and make financial information and decisions part of con-sumers’ everyday lives. In the pilot phase, Mastercard partnered with Kasisto. The Mastercard bot was powered by KAI Banking and could fulfill customer requests and solve problems on messaging platforms such as Facebook Messenger and SMS.

Information + (Trans)actionThe natural development of informational chatbots is the one with the ability to act on the information – namely, to perform a transac-tion. These chatbots are likely to be developed and deployed in proprietary environments, performing actions related to the primary business. Fortunately, a number of chatbots from the largest institu-

Using chatbots for financial services

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to make a donation. Amazon said it shares a consumer’s username, email address and home address with the charity the money is going to but will not provide any credit card information. Users receive an email confirming the donation and can track it via Amazon Pay. The feature works with 40 charities. Users can simply say, “Alexa, make a donation,” and the virtual assistant will help the user choose from a list, or they can name the specific charity to which they want to donate.

Global mobile wallet users to total 2.1 billion in 2019. Nearly 2.1 billion consumers worldwide will use a mobile wallet to make a payment or send money in 2019, up nearly 30% from 1.6 billion recorded at the end of 2017, according to a new Juniper study. While contactless card payments were far more prevalent than NFC mobile payments in many markets, leading wallets were seeking to redress the balance by enabling both online and of-fline options. The report argues that while QR code-based in-store payments had seen quite astonishing levels of adoption in China, successful use cases in Europe and North America were likely to be limited to ‘closed loop’ wallets such as those deployed by Starbucks and WalMart. According to the research, the greater security offered by NFC-based wallets, which include tokenized credentials and, increasingly, biometric authentication, make them more attractive to both consumers and merchants. That said, technology deployment costs continued to limit adoption of such solutions at the point of sales counter.

Google Assistant to have voice payments feature. Google announced that Android or iPhone users will be able to initiate P2P transactions by giving voice commands to Google Assistant. The payments will be processed through Google Pay, the brand created recently from the merger of Google Wallet and Android Pay. The company said that users will be able to send money via a voice command like “Hey Google, send Mark USD 20 for dinner last night.” On voice payments, Google is just behind Apple, which has enabled a similar feature (via Siri) in 2017 but ahead of Amazon, which is also considering P2P voice-enabled payments.


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tions in the US have already reached this stage.

Bank of America’s chatbot Erica, launched in 2016, for example, was already at this stage of development. Erica uses artificial intelli-gence, predictive analytics and cognitive messaging to help custom-ers do things like make payments, check balances, save money, and pay down debt. It can also direct people to look up their FICO score and check out educational videos and other content.

BNY Mellon has a different, more inward-facing application. The 233-year-old custodian bank deployed an army of 220 bots – software created to carry out an often repetitive task that would normally be performed by humans, range from automated programs that respond to data requests from external auditors, to systems that correct formatting and data mistakes in requests for dollar fund transfers.

In 2017, the bank estimated that its fund transfer bots alone were saving it $300,000 annually by cutting down the time its employees needed to spend on identifying and dealing with data mistakes and accelerating payments processing.

Capital One Financial has also developed a chatbot – Eno – that can communicate with the bank’s customers via text message to give them information on their accounts and help them make credit-card payments from their smartphone.

AdvisoryThis is the stage where 10 times the experience is possible; it’s the most advanced embodiment of a chatbot. The difference is in the level of sophistication – both in the level of AI advancement and functionality. While there are no examples of chatbots being at this stage in retail banking (with most stuck on the second stage in their evolution), robo-advisors can arguably be considered the closest this end of the continuum and the most advanced form of an AI-pow-ered program – a bot. Encompassing automated investment/trading platforms (apps) and WealthTech, representatives are mostly either a tech startup or an investment bank with a reinvented/complemen-tary wealth management offering.

With automated investment apps, advice itself is hidden in the algorithmic trading/investments – AI gathers information and takes action, leveraging changes in stock prices with the goal to make a dollar return.

There is also another type of advice with an emphasis on wealth management and personal goals achievement. Schwab Intelligent Portfolios, for example, asks customers about personal goals and funds intended for investment, then determines the most appropri-ate structure of the investment portfolio. Advice, in this case, is hid-den in optimizing the portfolio structure, guided by personal goals.

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The New Digital Demand in Retail BankingFrom Customer Experience to Engagement Across Life MomentsFor credit unions that have mastered the delivery of basic digital services, the next step is driving digital deeper – and making every experience as simple and intuitive as possible across the member lifecycle. Data will play a critical role in that transformation, helping institutions use the information gath-ered through basic digital services to better understand their member, proactively anticipate future needs and build relevance at every stage of the financial lifecycle.

The end result is better member experiences, higher retention and the creation of improved relationships that lead to lifelong loyalty and pervasive service delivery across the financial lifecycle. In 2016, Oracle published “The Millennial Migration”, an original report helping banks understand their place in the digitally-driven millennial mind. This next report explores how financial institutions can stay relevant to digital consumers, as well as uncover the expectations and preferences of today’s consumers in a new global study that delves into consumer’s sentiment, behavior and expectations around banking.

Findings from The New Digital Demand in Retail Banking report shows that banking today needs to be better integrated into customers’ digital lifestyle, providing service that is instant, integrated with social plat-forms, and most importantly, driven by data.

Oracle surveyed 5,200 respondents from 13 countries around the globe. The survey delved into four key customer banking stages with respect to digital: opening a bank account, payments and transfers, personal loans and mortgages, and personal finance management and investment services.

The vast majority of consumers have moved from the traditional ways of banking, such as visiting physical branches, to primar-ily banking online, and are increasingly open to trying new digital platforms.• 81% of consumers are using digital channels to engage with

their bank;• 69% of respondents want their entire financial lifecycle on

digital channels;• Across all four banking stages, customers listed best rates or

returns and experience as the most important considerations in today’s financial decisions;

• Consumers from India, China, Indonesia and Brazil ranked as the most open to trying new digital platforms, while the US fell in middle of the pack at seventh. This look at “digital openness” sug-gests that banks operating in mature developed economies must capitalize on the digital banking lifestyle to win over customers.

Trust, best rates or returns and experience are the top three most important factors for choosing a service provider. However, when consumers go into the banking lifecycle, the quality of rates and experience triumphs trust. The digital prowess of new non-bank options makes them an attractive alternative to traditional financial institutions. As a result, financial institutions are seeing an erosion in their core business.• One-third of customers are looking for alternatives for personal

loans and mortgages because of the unsatisfactory experience;• More than 40% of customers think non-banks assist them best

in their personal finance management and investment needs, indicating dissatisfaction with traditional financial institutions in this area;

• 66% of customers say that experience is a major factor when choosing payment and transfer services, meaning consumer financial institutions cannot afford to rest in this area;

• While customers between 20 and 52 prefer opening a bank account through digital channels, young consumers between 16-19 years old still prefer non-digital channels like physical branches, likely due to lack of experience, reminding financial institutions of the importance of face-to-face assistance.

With customers perceiving fintechs and non-bank options favor-ably, attachment to traditional financial institutions is decreasing. To retain their current customer base, financial institutions need to deliver value, consistency in services and a higher standard of expe-rience that meets the expectations of today’s customers.

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Visa Named to the 100 Best Corporate Citizens List. In recognition of its commitment to corporate responsibility and sus-tainability, Visa was named to Corporate Responsibility Magazine’s 100 Best Corporate Citizens list. Ranked #39 this year, the magazine’s annual issue acknowledged Visa and other com-panies for advancing corporate responsibil-ity performance and transparency across environmental, social and governance areas. The 100 Best Corporate Citizens list is published annually by Corporate Responsibility Magazine. To compile the list, every company on the Russell 1000 Index is ranked based on publicly available information using a methodology governed by the Corporate Responsibility Association (CRA) Connect.

Visa, SBA host Small Business FinTech Hackathon. Visa and the U.S. Small Business Administration (SBA) hosted a small business (SMB) hackathon to link innovators with APIs from Visa, the Small Business Innovation Research program (SBIR) and oth-ers to develop solutions to solve finance-related challenges faced by entrepreneurs today. Hermyz, a company working to move small businesses away from checks and paper receipts by migrat-ing invoice management online took the grand prize of $10,000. Hackathons have become a popular way to promote FinTech innovation, particularly as financial institutions develop their own APIs and encourage developers to use their tools in new ways.

Visa Commits to 100% Renewable Electricity by End of 2019. As part of this commitment to use 100 percent renew-able electricity across its global operations by the end of 2019, Visa is joining the RE100 initiative, a collaborative, global platform de-veloped by The Climate Group in partnership with CDP to increase demand for and delivery of renew-able energy. To reach 100 percent renewable electricity by the end of 2019, Visa will pursue an ap-proach that emphasizes immediate action across its global facilities portfolio. Today, an estimated 35 percent of Visa’s global electricity consumption comes from a mix of renewable energy sources such as solar, wind and hydropower.

US consumer interest in connected home products is on the rise, but privacy concerns persist. Nearly half of US consumers (48%) intend to buy at least one smart home device in 2018, a 66% rise year-over-year (YoY), according to Parks Associates. However, a new survey of 2,000 US consumers conducted by enterprise technology provider Ooma shows that, despite this spike, consumers still have privacy and security concerns about smart home products.

The main key takeaway from the survey is that 87% of respondents aren’t comfortable with in-home delivery services like Amazon Key. In addition, 88% feel negatively about companies using their per-sonal data to figure out when they are likely to be home, potentially in order to time deliveries so they don’t miss their customers.

Primarily, users want systems that help secure their homes, but don’t steal their personal data. Slightly less than half (47%) of respon-dents said detecting burglars is a top benefit of smart home prod-ucts, and 43% similarly cited monitoring what’s happening outside and inside their homes when they’re away. At the same time, 72% of respondents who already own a smart security system told Ooma they’re worried home security companies will invade their privacy, and 23% of connected security system owners said they deactivate their system completely when they have guests over. This paradox shows US consumers want the benefits of smart home devices, yet don’t feel entirely comfortable with the intangible costs.

Smart home providers will need to prioritize security and privacy to catalyze mass adoption of their products, but this won’t come without challenges. The data shows consumers don’t want smart home companies spying on them, but do want them to help prevent harmful intruders by monitoring the whole home, which they could do through encrypting or deleting their users’ home data shortly after it’s captured. However, even if providers encrypt or delete this data, they’ll still need to convince their customers that they’re doing this effectively. That will likely be challenging, given users’ already prevalent privacy concerns.

Consumers worry about privacy when using Smart Home Tech

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Overdraft Fees cost consumers $34.3 billion in 2017. Overdraft fees have reached their highest level since 2009, which was at the end of the Great Recession. Consumers paid $34.3 billion in overdraft fees during 2017 compared to $33.3 billion in 2016, The New York Post reported. Despite the increase, consumers aren’t, in fact, overdrawing their accounts. Instead, Moebs Services says the uptick was caused by credit unions increasing their overdraft fees. Overall, average overdraft fees at banks have risen from $20 in 2000 to $30 in 2017. Over that same timeframe, the average overdraft fee at credit unions has increased from $15 in 2000 to $29 in 2017.

Apple prompts users to enroll in Apple Pay. Apple is ag-gressively prompting iPhone users to enroll in Apple Pay by putting a seemingly permanent red-circle badge on the settings icon, according to The Wall Street Journal. Users that opt out of enrolling in the mobile wallet upon setting up their iPhones will see the red circle appear, indicating that their setup is incomplete until they enroll. And some users will even sporadically receive a reminder notification that will only go away once they enroll in Apple Pay. Apple Pay adoption is struggling in the US in particular with just 16% of total iPhone users, and less than half of that group comes from the US. Even more, adoption has stagnated around 25% of eligible users — a problem that’s been plaguing mobile wallets across the board.

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Credit Unions can win over Millennials with cash and ATMsMillennials use cash and ATMs on a daily basis. In fact, a study by the Federal Reserve showed that Millennials use cash more than other demographics in the United States. According to that same study nearly 50% of transactions under $25 are in cash and 60% under $10 are paid in cash in the U.S.

Survey results from Banking.com suggest that Millennials “view the ATM as central to how they manage their money and go about their daily lives.” In another study by BI Intelligence, it showed that Millennials prefer to do their banking online or via an ATM, with around 60% of those surveyed reporting they do not visit a financial institution branch on a regular basis.

Millennials are frugal and prefer surcharge-free ATM transactions. The single biggest reason Millennials move their checking accounts to other financial institutions is to get access to free ATMs, accord-ing to data from marketing research company Phoenix Synergistics. The survey found that 46% of Millennials who moved their checking accounts to other institutions in the last two years said they did so in order to be able to access surcharge-free ATMs. Here are some opportunities for credit unions looking to win over the hearts and minds of Millennials:• Branded ATMs in the Community: Partnering with a local ATM

operator to provide more surcharge-free ATM locations is a terrific way of serving cardholders of all ages. It also helps to increase brand exposure and is typically an affordable way of expanding an ATM fleet.

• Event ATMs: Sponsoring or placing a branded ATMs at local events is another method to take into consideration. A recent white paper from Star Financial details the benefits of using branded ATMs at local events to increase brand exposure and increase brand loyalty in younger cardholders.

• Surcharge-free ATMs: Banks and credit unions that want to cater to Millennials may want to consider joining a surcharge-free network. There are a number of surcharge-free regional or nationwide networks available including Allpoint and Money-Pass from CULIANCE.

Understanding your target market and remaining in-the-know on spending trends is key to marketing. For financial institutions to keep up with the cutting-edge of consumerism, watching the spending trends of Millennials is a key factor.

More Product Insights (Webinars)DATE TIME DESCRIPTION

July 18 11:00 AM ATM Driving

August 23-24 - See Jeff and the team at MAP’s Annual Conference

September 26 11:00 AM Premier On Behalf Of Services (VDM and Campaign Solutions)

October 10 - See Jeff at the NWCUA’s MAXX Convention in Tacoma

November 28 11:00 AM Biometrics

For information about Product Insights, please contact Jeff Aip-perspach, [email protected] or 206.787.1624.

2018 Product Insights (Webinars)

11

Change is good, even though it can be hard. Our brain is wired to do the same thing over and over, so it can be challenging to expe-rience change, especially the rapid change that has been transforming the payments industry in recent years. Innovation in our in-dustry is occurring at an unprecedented speed. The industry is contemplating new ways to mitigate the cost of operations, enhance member experience and amplify the time to market. Leveraging new payment capabilities will empower members with more control and options and thereby helping them to better manage their finances.

In recent years, we have had to examine our traditional models for doing business to confront the numerous challenges that have come from confronting fraud and security threats and the need to better understand our members through data analysis. We see collaboration and consultation as a means for our clients to embrace new experiences and perspectives. A good example is MAP’s Fraud Forum, credit unions working together and learning from each other to combat common criminals we face everyday.

At a time when change seems unmanageable, we are learning to embrace chaos in a way that is both acceptable and achievable. Our approach has armed our credit unions with more confi-dence as they face down persistent vexations with resilience and grit. As we embrace change and as we collaborate and consult with our credit unions, we see our clients thriving in this new environment because they have proven to themselves that they can not only manage change, but prosper and grow.

As we enter our twentieth year as a card processor, we acknowledge that change can be difficult. But change also holds many opportunities for those of us that embrace it and recognize it for what it is, a chance to transform into something better. For the MAP team, change includes a new office location. We’ll be moving a few miles south to the Cascade West Tower located in the CenterPoint Office Park, 20829 72nd Ave S, STE 600, Kent, WA 98032. The move will take place in early September and we expect no disruption to services.

As always, MAP will be here to work for the continued success of our clients by providing cost-effective, best-in-class solutions. We will continue to best service our credit unions by making smart investments in today’s technology with an eye keenly focused on the future of payments. For more information about how MAP can best serve you and your institution, feel free to call me, 1-866-598-0698, ext 1610 or email me at [email protected].

Letter from the CEO


Cyndie MartiniPresident/CEO

PO Box 8884Seattle, Washington 98188

Phone: 1.866.598.0698Fax: 206.439.0045

Email: [email protected]

PRSRT STDUS POSTAGE

PAIDSEATTLE, WA

PERMIT #1445

Fraud Forum comes to Lake Washington: August 23-24

Documents

Transcript of Fraud Forum comes to Lake Washington: August 23-24