Hello readers, and I hope you are having a good start to the week!
I don’t often plug in book reviews, but I recently finished Brett Scott’s silver cloud and highly recommend it. The idea that access to cash is a right and a political act probably seems odd in an age of increasingly seamless payments – but Scott makes a compelling case for bills and coins.
In the UK, the government seeks to protect access to cash, but perhaps the biggest issue is protecting the ability to use this material. We all know the stores that only accept contactless payments, but this is now extending to other key areas like car parks.
In other news, I spoke to Adobe about their efforts in augmented reality procurement, Klarna faces more valuation issues and I interview Gadi Mazor, CEO of Israeli cybersecurity firm Biocatch.
Adobe bets on augmented reality shopping
Ask most people what Adobe does, and “metaverse shopping” probably won’t be high on their list.
But the company’s announcement last month of augmented reality retail tools reflects the tech industry’s broader bet on the future of shopping and the blurred line with financial services.
Discussions of metaverse shopping typically revolve around highfalutin visions for virtual reality worlds, in which consumers will spend virtual currency to buy clothes that might be purely digital or mirror real-world items.
Retailers from Forever 21 to Nike already have storefronts in virtual worlds. Dedicated companies are already selling or renting out “virtual real estate” for companies willing to take the first step – although, since many price their services in volatile crypto assets, their cost can fluctuate widely on a day-to-day basis.
Adobe product manager Scott Belsky takes a less sci-fi view of the metaverse, a term that’s been used to describe virtually anything vaguely digital that he admits is all too common.
“Obviously virtual is getting better and better, I just think there’s a limit to how long you can stay in it before you start feeling it,” he says. “You could wear augmented reality all day – it would feel natural.”
Adobe’s new AR and 3D shopping tool would allow customers to scan products with their mobile phone, surfacing information such as product details and price comparisons from a customer’s database. trader.
“There could also be customer purchase history if available, and the app can use the information for personalized recommendations,” added Stefano Corazza, vice president of creative products at Adobe.
For Belsky, the next step in augmented reality is headsets. After the dubious launch of Google Glass, Apple’s efforts in the “mixed reality” space – combining augmented and virtual reality – have sparked interest.
“When you walk into a restaurant, you can browse all the dishes in front of you,” he predicts. “When you go shopping, you’ll want to see every angle of a product and how a sofa and chair could fit into a room.”
Adobe isn’t alone in betting that augmented reality could be part of the in-person shopping experience of the future. In April, Snapchat announced new tools to make it easier for companies to create augmented reality products for users to try out.
Ajay Bhalla, president of cyber and intelligence at Mastercard, told the FT in May that the company was looking at how the technology could be used for retail. And PayPal filed a patent for AR shopping in 2016.
Corazza also sees benefits for e-commerce. He cites Deloitte Digital research that found consumers are 11 times more likely to buy products they see in augmented reality and 30% less likely to return them.
“It’s really up to the big companies that make the hardware to get us there,” Belsky said, “[but] any new media will fall completely flat unless it is richly filled with engaging interactive and animated content.
Adobe’s bet also reflects a broader push by technology companies to enter and dominate key roles in financial services. In early June, Apple announced it would enter the buy now, pay later space, offering loans directly to consumers rather than relying on banking partners.
“At this time, we are pursuing partnerships in this space rather than offering direct payment infrastructure,” Corazza said, citing a partnership with PayPal.
Still, for incumbent banks and fintechs, the tech industry’s attempts to build a payments future where they can connect consumers and retailers are more than an empty threat.
Klarna in talks for new financing at fraction of valuation The pastel-pink pioneer buy now, pay later isn’t having a great 2022, reports James Fontanella-Khan, Ortenca Aliaj and Arash Massoudi – it’s looking to raise cash at a declining $6.5 billion valuation close to $40 billion, according to people with direct knowledge of the matter.
Australia’s second neobank collapses Volt, one of four challenger banks created after a 2018 investigation into banking misconduct, has become the second bank in Australian history to return deposits and relinquish its license. The news follows the collapse of fellow neobank Xinja and the acquisition of another start-up, 86,400, by one of the existing Big Four players in banking, writes James Fernyhough.
US Bank Stress Tests Compare Well to Crypto A decade and a half after the start of the financial crisis, the Federal Reserve’s latest results from its stress tests on big banks compares well to “crypto winter,” writes Lex, as companies in digital assets and prices face a rout.
Quick Questions and Answers
I recently spoke to Gadi Mazor, CEO of Israeli cybersecurity firm Biocatch. Founded in 2010, Biocatch analyzes user behavior to help detect cases of fraud and cybercrime. It has raised $215 million from investors including Barclays, HSBC and Bain Capital Tech Opportunities.
What are some of the fraud trends you see in the UK?
Basically, the high profile trend is that fraud follows the technological level of banks – and fraud in the UK can be very advanced as the protections in the industry are the most advanced. What we are seeing in general is that it is moving more and more towards attacking the end user who is the most vulnerable link. Malware can have trouble penetrating banking defenses – remote access attempts are detected, for example – so you need to trick the customer. And we’ve seen that over the past two years, literally every month, there’s been a new scam, ranging from pets to packages. If it was in a branch and a victim walked in and was handled by someone, the cashier would know in no time; online, if they are attacked and everything else remains the same, the only way to understand is abnormal behavior.
What are some examples of “abnormal behavior”?
If you are asked to type in a ZIP code, and if it is not your own, you will normally type it in two pieces because it comes from short-term memory. If it’s yours, you’ll type it faster. Likewise, if you paste information when you go through an account onboarding process, you’re unlikely to know your name. We can also look at things like movement speed – for every year of age, two milliseconds of mouse clicks are wasted, so we can see in cases of fake map requests when a younger user applies . It can be someone’s son or daughter, but it can also be someone who takes over. And when people make mistakes, genuine users tend to erase everything; with scammers, they’ll just change a single digit.
How is the cost of living crisis affecting fraud?
We don’t see this as a problem just in the UK. The fact is that the pandemic, both psychologically and financially, has put people in a difficult position. After two years of going through this crazy time, people are craving to make up for it with expenses, and a lot of new fintech players they’ve turned to are offering services like buy now, pay later. But not all of these companies have the defenses against cyberattacks that traditional banks have developed over the past few years.