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Click image to listen to “Banking Transformed,” The Financial Brand’s new podcast.

Jim Marous, editor and founder of The Financial Brand and personal friend, has launched a new podcast, Banking Transformed. If you’re looking for a way to make your commute time its most productive, I recommend giving it a listen.

It is a defining moment in the life of a jumble of letters when the jumble attains real-word status. While most people understand acronyms like laser, sonar, and snafu, few can identify their component words. (Light Amplification by Stimulated Emission of Radiation, SOund NAvigation Ranging, and it’s just as well that not too many people know that last one.) Likewise, no one bothers adding parenthetical definitions anymore for initialisms like UFO, BLT, and GMO.

The release of the 2001 Steven Spielberg film A.I. may have ensconced the initialism AI in the popular lexicon, albeit sans periods. Today even the news media talk about AI without bothering to add a definition. And not just the word but the incidence of AI has become commonplace. We rely on the likes of Alexa, Erica, and Siri without giving a second thought to the fact that we’re talking to a machine. (Why do we so often give AIs female voices? Even the original “Star Trek” computer, which in a feat of creatively the writers named Computer, had a woman’s voice.)

And, of course, within financial services circles, it’s common knowledge that AI assists in voice-activated transactions, fraud detection, loan application processing, live chat, investments, strategic trading, risk management, data mining, funds transfer, foreign exchange, and more. 

Climate change, forest fires, robotic arms—and human decency

In addition to using AI for fine-tuning business systems and service delivery, some financial service institutions are turning their AI capabilities outward for the greater good. Exhibits A and B, first brought to my attention by way of recent articles in Finextra, follow.

For Exhibit A, I submit Royal Bank of Canada, better known (speaking of initialisms) as RBC. According to Finextra, RBC is “…backing a new academic research project using artificial intelligence to address climate change.” An RBC press release states:

In a continued effort to take its research beyond banking, Borealis AI announced a new collaboration with Mila – Quebec Artificial Intelligence Institute to support an artificial intelligence (AI) research project on climate change … together with RBC Quebec, Borealis AI donated $50,000 to Mila’s climate AI research efforts. This donation will help Mila develop a tool that uses AI technology to produce street view images that show the potential effects of climate change … When developed, the tool would allow a user to input a location and see a visual projection of the potential effects of extreme weather events at this location at street level, making these effects more visceral than traditional aerial and satellite images.

“Mila,” the press release explains, “is the result of a partnership between the Université de Montréal and McGill University with Polytechnique Montréal and HEC Montréal.” Borealis AI, “… an RBC Institute for Research, is a curiosity-driven research centre dedicated to achieving state-of-the-art in machine learning.” RBC adds, “We are proud to support a broad range of community initiatives through donations, community investments and employee volunteer activities.”

For Exhibit B, I submit Russia’s Sberbank, which, Finestra reports, “… is teaming up with the Russian Ministry of Emergency Situations to host a hackathon where contestants will use machine learning and AI in the fight against wildfires.” Wikipedia defines hackathon as “… a design sprint-like event” involving just about every computer expertise you can name. Notwithstanding this story’s coming out of Russia, wildfires are quite topical for the United States, and they certainly tie to climate change. Participants in the Sberbank event will …

… develop a solution for automatic classification of fire types based on temperature anomalies data received from satellites. This information could be used to identify possible areas where forest fires occur and let stakeholders react quickly to prevent emergencies.

Sberbank is also in the AI news due to a joint effort with Microsoft. The firms are working together studying the use of an AI “… manipulator, video cameras, and an arm grabber to improve occupational safety for operators who remove coin bags from carts when working at cash handling and cash-in-transit centres.”

As a post-script, I submit Exhibit C, even though it pertains not to AI but to HID—my impromptu acronym for Human Intelligence and Decency. I cannot think of a more fitting way to wrap up National Cybersecurity Awareness Month. This story comes to us from London, also via Finextra. A man who lost his wallet hurried home and logged on to his accounts to see if anyone was abusing his cards. In fact, someone was using—but not abusing—them. Four one-penny payments appeared on his account along with the memo, Hi, I found your wallet in the road, along with a number for the wallet’s owner to call or text. The owner thanked the finder for his honesty with a bottle of red wine. But, Finextra facetiously added, he “… has not yet paid back the four pennies.”

Street magician Kris Bentz dazzles—and accepts digital donations.

On my recent trip to Las Vegas, a street magician snagged my attention. (I mentioned this last week.) His show hadn’t yet started and a crowd had not yet begun to gather, so I might have moved on had he not called me over to examine one of his props. But by the time I’d finished, I found myself at the front and center of a semicircle of newly gathered spectators. So I stayed.

I wasn’t entirely thrilled to be there. Don’t get me wrong. I enjoy magic shows, and this one was first-rate. And I enjoy street performers. It’s just that I don’t carry cash—I’m in the digital payments business, after all—and I wasn’t looking forward to having a crowd watch me heartlessly pass along The Hat after depositing zilch.

So you can imagine my relief when, as The Hat set out on its journey, the street magician said, “For those who don’t carry cash, I accept electronic tips.” With a flourish, he whipped out a sign showing a variety of digital payment logos. 

Relieved, I gave him a generous tip, partly to thank him for a great show and partly to thank him for sparing me the embarrassment of looking like a tightwad. The performer’s name is Kris Bentz—that’s him pictured above—and his show was, as I said, first-rate. And it required no small degree of skill, because performing on the street precludes fancy equipment, trap doors, smoke, and mirrors. (You can check out his act—maybe for your next corporate event?—by clicking here. I am using his name and image with his permission.)

I am by no means the only person who travels cashless. CNBC reported earlier this year on a study by U.S. Bank that found … 

… 50 percent of respondents said they carry cash with them less than half of the time they are out. When they do carry the green, 76 percent said they keep less than $50 on hand and nearly half have less than $20. 

I began wondering, what hath the digital payments industry wrought upon the humble street performer? And realized that what it hath wrought, as so often happens in our digital age, is …

Creative solutions

I donated to Bentz’s virtual hat by means of Apple Pay. It proved a bit clunky, for I had to set up Bentz as a contact before I could dispatch the funds. 

A better solution might be Busk.co, a brand name that makes sense if you happen to know that busking refers to street performing. Buskers sign on to the app, which lets spectators donate in seconds via Apple Pay and Google pay and in a minute or so using PayPal or a plastic. It, too, is a little klunky, because spectators must also sign up for the app, which may be a bit much to ask of people with no plans of becoming serial busker supporters.

Products the likes of Square may be less than ideal. Part of the busker’s success depends on continued interaction with spectators, to which pausing to connect a reader to a portable device and run a card is hardly conducive.

A good possibility for buskers may be found in iZettle, a Swedish company that PayPal purchased last year for a mere $2.2 billion. iZettle furnishes a tap-to-pay device, so spectators can pony up without downloading an app or adding the performer to a contacts list. According to TechCrunch.com:

One busker, Charlotte Campbell, who took part in the test phase said the addition of contactless payments “had a significant impact on contributions” she received. “More people than ever tap-to-donate whilst I sing, and often, when one person does, another follows,” Campbell added. The deal is perhaps the most visible piece of business from iZettle, which has quietly made a mark in helping UK payments go digital.

Venmo, another PayPal holding, is also gaining popularity among street performers. MarketWatch reported:

On a recent crisp afternoon in New York, saxophonist Chris Johansen wraps up a set in Madison Square Park. If this were a few years ago, he’d scoop up the cash tips in his collection bag and move on. But now, he also adds up the tips he has collected through an app on his smartphone. As Johansen plays, he displays a sign with his Venmo account … the rate at which the digital tips have come in, he says, has been a surprise. His largest single tip: a $25 whopper. “Almost every day,” he says, “I’ll look at my phone and see that people have donated money.” 

And Bentz? “I’m saving up for a DipJar,” he said. According to its website, DipJar “… started as a way for baristas to accept cashless tips” and “eventually transformed into a way for nonprofits to revolutionize how they accept in-person donations.” It’s unclear whether Bentz will qualify, since buskers aren’t typically nonprofit organizations. At least, not on purpose.

Street performances aren’t the only frontier that digital payments are looking to conquer. ePaymentsblog recently reported on Oxford University’s Greater Change program, in which homeless people …

… wear QR codes around their necks, which are linked to an online profile of the person it belongs to. These QR codes enable money to be transferred to the person by scanning the code with a phone and making a digital payment. The initiative aims to support the poorest people by helping them off the street and into employment and accommodation with the money they individually raise.

The more we hear “digital payments are well and good, but what about …,” the more you can bet solutions will be coming soon.

Overheard: “I never go to the bank. Except when some jerk writes me a check that I have to cash or deposit.” 

As you probably guessed, I overheard that remark some time ago, before consumers could deposit a check by taking a picture of it with a smartphone. According to Wikipedia, the first U.S. financial institution to offer that service was West Virginia’s Element Federal Credit Union in 2009.

But now that smartphones serve as personal tellers to millions of people—and we have the likes of mobile deposit, bank and merchant bill pay, Zelle, Apple Pay, Google Pay, Square, Venmo, PayPal, etc., and plastics galore—a crucial question arises. Namely…

Why on earth does anyone still write checks? 

Dire predictions run rampant about the future demise of currency. While there seems to be less chatter about the potential demise of checks, it’s out there. In an article entitled “Why do people still write checks as payments in stores?,” StackExchange’s Personal Finance and Money page lists nine disadvantages to continued check use. Under “advantages,” just one word appears: “Nothing.” The author continues: 

I assume the only reason stores still accept them is that people still use them, but for the life of me I can’t figure that part out. Why does anyone still write checks in stores for amounts that are clearly small enough that you could use a debit card? What is the benefit?

There are, however, many who allege the superiority of and predict a long, prosperous future for checks. Most offer the same basic copy points: Checks don’t incur “convenience fees” (an audacious euphemism if ever there was one), checks are more secure (that one is arguable), not everyone is online (fair point), not all merchants accept plastics or digital payments (such are a vanishing breed, and deservedly so, if you ask me), better recordkeeping (nonsense!), and float (which, depending on which side of the equation you’re on, can be an advantage or a disadvantage).

Not surprisingly, check printing company Harland Clarke is a strong advocate for the pen-and-ink form of payment. One year ago this month, VP of Marketing Karen Salamone blogged, “As it turns out, the theory millennials prefer tech to traditional payments like checks and cash couldn’t be more inaccurate, and there is data to prove it.” Citing a Qualtrics study, she pointed out:

80 percent of millennials use cash … 64 percent carry cash most of the time … 4x more millennials use cash than the top mobile payment platforms … 3x more millennials use checks than mobile payment platforms … 42 percent still use checks … More millennials use cash more than debit cards … 

I’m unconvinced that those data support the “couldn’t be more inaccurate” claim. Carrying and using currency and checks may reflect circumstances more than preferences. After all, making a digital payment requires a payee who has the means of accepting it, and not all have the means—yet. 

Salamone also noted: 

… only 34% of millennials report owning a video game console, which means more millennials use “old fashioned” checks than play games. A similar research study found that overall millennial checks usage is high: 87 percent of millennials have written a check in the last three months. 

Until now I was unaware of video game console ownership as a leading indicator of payment technology preference. As for 87 percent of millennials having written a check—a check—within the past three months, there is a question of spin. Consider how NPR News reported similar data:

A 2013 survey by payment solutions company WePay showed that … 64 percent of consumers write fewer than three checks per month—up from 35 percent three years earlier.

Meanwhile, numerous Fiserv studies show that millennials lead the pack when it comes to acceptance and adoption of digital payment systems. (Full disclosure: Fiserv is my employer.)

Many check defenders point to a Federal Reserve Payments Study from 2016. Yet the study reveals only that checks are obsolescing at a slower-than-predicted pace, a far cry from “checks are here to stay.” Moreover, much has changed since 2016. Digital payment options have proliferated, improved in user friendliness and accessibility, and grown in acceptance and ubiquity. And now that Peer-to-Peer payments are a thing, I am hard-pressed to come up with anything checks can do that digital payments can’t do better. Except, of course, take up space in your pocket or purse and cost you every time you reorder.

Even street performers are hep to digital payments. I was recently in Las Vegas where a street magician, passing a hat at the end of his act, announced, “For those who don’t carry cash, I accept electronic tips.” With that, he displayed a sign showing about every major P2P platform you could name.

So what keeps checks around? I’d suggest a few factors. 

For reasons beyond me, there remain payees who hold out for checks. The local elementary school fundraiser, for instance. There was no way I was going to lecture the adorable, seven-year-old, dizygotic twins at my door for not being prepared to accept Zelle.

There’s the romance of a check in the mail from a relative. But the gift check is fast giving way to the gift card, and the gift card is fast giving way to online gift card.

Some digital payment systems have ceilings, making checks or money orders a needful alternative. This may explain why the Board of Governors of the Federal Reserve System has reported that, over the past 30 years, the volume of checks written has consistently fallen while the average amount has consistently risen.

Not to be overlooked is the thing about old habits, that is, that they die hard.

I have my doubts as to whether cold, hard currency will ever go completely away. I am reminded of this each time I leave a tip for the hotel maid on my pillow at check-out time. But checks? With apologies to the check printing industry, I’m not sure they will be around much longer.

“I’ll take Cyber Stats for 500.”

And the answer is: What is the estimated global cost of cybercrime by the end of 2019?

(Read on for the answer.)

Ah, October! It’s that wonderful time of year when grownups can return to their childhood for a little while by dressing up and wearing masks (except inside bank lobbies). And, if you live in the northern temperate zone, the air turns crisp, trees adorn themselves in gold and brown, and marketers introduce pumpkin-spice versions of every product from lattes and Twinkies to—and I promise I’m not making this up—dog treats and smartphone cases. 

And—lest we forget—October is National Cybersecurity Awareness Month (NCSAM). 

The more cynical may wonder what good it does to designate an official cybersecurity awareness month. The answer is that it does plenty of good—given sufficient participation to pull off the awareness part. 

Raising public awareness of good cybersecurity practices while preserving trust in financial institutions needn’t be as tricky a balancing act as it sounds. The objective is not to scare the daylights out of clients, but to give them healthy respect for the risk of being hacked, along with the tools for lessening the risk. Outlining a bank’s steps to keep clients’ funds and data safe can build confidence; and outlining steps clients can take to better protect themselves provides a valuable customer service.

No financial institution large or small need start from scratch. This year, the National Initiative for Cybersecurity Careers and Studies, under the Division of Homeland Security, has provided a wealth of free, downloadable tools in its NCSAM 2019 Toolkit:

The NCSAM 2019 Toolkit is a comprehensive guide to make it easy for you and your organization, regardless of size or industry, to engage and promote the core theme and critical messages leading up to and throughout October. Use the guide and the resources below to help you engage your stakeholders and promote positive, lasting cybersecurity habits.

The Toolkit features graphics, key messages, public messaging, a speakers bureau, and my personal favorite: a Jeopardy-style cybersecurity trivia game in PowerPoint format with internal cross-links. 

I consider myself pretty cyber savvy, but I admit I learned a thing or two going through the NCSAM quiz questions. In fact, the quiz provided the question that opens this post: What is the estimated global cost of cybercrime by the end of 2019? I won’t keep you in suspense any longer. The answer is a mere $2,000,000,000,000.00 U.S.

Here’s another: How many unfilled cybersecurity jobs are there in the United States alone? And another: Globally, how many unfilled cybersecurity positions are there estimated to be by 2022? The answers are, respectively 310,000and 1.8 Million.

Which may explain why here in my home state, I noticed, the University of Utah is advertising a course that promises to make students into cybersecurity professionals in 24 weeks. Doubtless they are not the only school doing as much. The demand for cybersecurity professionals certainly exists and, “thanks” to criminals, will not be going away anytime soon.

The game and other NCSAM tools can be useful for teaching the extent and methods of cyber attacks, as well as best practices for protecting oneself from them. 

Granted, the precautionary steps are not new: beware public wifi, keep passwords complex, change passwords often, use a password manager, and remember that easily recalled passwords are also easily guessed. Yet as often as the guidelines have been repeated, they will nonetheless be news to a large chunk of the public. As for those who have heard them before, many could do with a review. Not to mention a kick in the pants to implement them.