Newsletter 03


The LendTech Collective

Insights to stay ahead!

Monthly Newsletter | March 2020 | Issue 103


  • Beware, Online Frauds, a big challenge to the Lending Industry

  • How RPA can strengthen Cyber Security?

  • In the News

  • Major Events

  • Key Stats

Focus On

Beware! Online frauds, a big challenge to the lending industry

“It takes 20 years to build a reputation and few minutes of cyber-incident to ruin it.” – Stephane Nappo, Global Head, Information Security, Société Générale International Banking pole

Fraud is an ever-increasing threat to lending firms. It is a critical problem to address as it directly affects the firm’s profitability, its customer experience and its bad debts.

Types of frauds in online lending:

  • Loan Stacking: taking multiple loans from different lenders at the same time without intent of paying them back. Fraudsters can take most advantage in online lending as they are serving a significant portion of the population with little or no credit history.
  • Account take over (whale phishing): directly target high profile individuals at an organization, with the aim of stealing money or sensitive information or gaining access to their computer systems for criminal purposes
  • Identity Theft: criminals use someone else’s identification to secure a loan. In any case, once the identification of the victim has been verified, the fraudster gains access to loan funds and disappears.
  • Web Scraping: extract large volumes of data from web pages and applications and create legitimate-seeming fake accounts
  • Accessing data leaked on the dark web

Many customers choose to go online lending because of its rapidity. At the same time, online lenders are also serving a significant portion of the population with little or no credit history. Fraudsters can take advantage of this loophole, without much consequences. Regulations, compliance and overall risk management also place a significant operational burden on online lenders.

How does online frauds impact digital lenders and Fintech?

  • Loss of client trust: Clients expect their delicate financial data to be secure. Online fraud is perceived as a breach in the security of personal and financial information, which causes loss of clients.
  • Loss of reputation: Unable to secure clients data directly affects firm’s reputation which in turn affects securing new clients as well as relationship with partners and investors
  • Financial loss: Fraud reduces organisational assets and increases its liabilities, which impede the going-concern status of the firm

Fraud prevention is the not just the responsibility of individuals who may fall victims, but of the lenders whose reputation and assets may be on the line as well. While traditional fraud management techniques have been effective in detecting fraud, there are some inherent challenge

Typical Challenges in conventional Fraud Management Techniques

  • Inflexible Systems: Lack of flexibility to integrate with different functions of the enterprise and adaptability to read data from traditional and non-traditional medium. As a result, the alerts thrown by these systems are more siloed in nature as opposed to offering a more integrated view.
  • Multiple Systems: Firms have multiple fraud management systems across the value chain and there are instances where a transaction gets flagged resulting in a harrowing experience for the customers.
  • External Data Access: Lacks in ability to access external data that can act as an additional source for user satisfaction
  • Real-time Profiling: Need for real-time profiling to keep up with the pace and rate of online transactions without disrupting the customer experience

While firms are beefing up conventional techniques and investing in their existing security processes to ensure multiple layers of protection are created, it could be worth exploring additional or alternative approaches. The need for computational power to process large amounts of data and make decisions real time is imperative for businesses to reach quickly to fraud attacks. The only true way to keep the online digital world safe and secure is by analysing the digital identity of every online user.

In this aspect, automating your cybersecurity will improve the productivity and value of the security team. So, let’s find out how automation solutions can improve your firm’s Security.

Keep Reading 

How lenders can fight fraud risk with RPA

Lenders face higher costs of fraud than other industries.

According to LexisNexis Risk Solutions, for every dollar of fraud, lending companies incur $2.82 in costs, which includes fees, interest, etc. Large digital lenders, with over $50 million in annual revenue, are hit hardest by fraud in this space

When lending went digital, it gave fraudsters new venues to take advantage of the system. With more transactions moving online daily, the threat of reputational damage or financial loss is higher than before.

Robotic Process Automation (RPA) in this aspect is a promising science that can help protect against malicious cyber intruders.  Manually handling the security threats daily is impossible and it may end up in irregularities. Automation will remove these challenges, as the software is designed to handle the massive amounts of manual work, can respond quickly to alerts and can function without direct user involvement. Online lending frauds may be on the rise, but so are RPA-led technologies that combat them. 

How RPA can strengthen Cyber security?

Often the day-to-day processes are repetitive in nature and can take too long to complete manually. Paired together with an increase in the number of alerts and small security teams, organizations cannot perform efficiently and become at risk of successful attacks. Firms can leverage RPA’s Machine Learning capabilities to create business rules that are unique to your business. Combining machine learning (ML) and artificial intelligence (AI), RPA can enable automation – taking the human effort out of the equation.

RPA software bots can be programmed to track, oversee and provide a quick report on all financial data of the lenders. The RPA bots are also able to raise red flags in the event of any suspected fraudulent activity and department responsible for Cyber Security & Fraud Prevention can act and outsmart any agent responsible. If there are delays to attending to the red flags raised by the RPA software bots, they can even go ahead to block the fraudulent transactions and safeguard the lender’s data.

In order to better grasp the directions of robot assistance let us now zoom in on some examples of RPA security-related application areas.

  • Data Validation: RPA can boost the efficiency of checking the suitability of access data.
  • Inventory Tracking: Software robots can continuously monitor the inventory and update it whenever they discover risky areas
  • Data Classification: Robots can be deployed to detect sensitive data, and either validate it or remove it if stored in unauthorized locations
  • Reduce Cyber Threats – RPA can effectively deploy to detect threats. By running a fast-paced analysis of the encountered malware alerts, bots can select the most relevant information bits and, based on this, make responsible decisions as to when and how to address the threats
  • Compliance made easy: RPA minimises human access to sensitive data, which can reduce risk and compliance issues
  • 24/7 Security: RPA doesn’t tire or mentally “clock out” on the job, providing 24/7/365 security coverage.

Whether intentional or by human error, people pose the biggest risk to the cyber well being of organizations and businesses. By removing the human aspect, it makes your data more secure.

 Modern cyber attacks have become heavily automated. If organizations try to defend against these attacks manually, the fight becomes man versus machine, with highly unfavorable odds for the organization. To successfully protect against automated attacks, it is essential to fight machine with machine – by incorporating automation into cyber security efforts.

Are you ready to embark on your own RPA journey? Please feel to Contact Us if you would like to understand more on how RPA can be implemented for your business[/vc_column_text]

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In the News


Coronavirus to Hit Global Banks’ Capital Markets Revenue

Uncertainty over the intensity, geographic reach and duration of the coronavirus (COVID-19) outbreak is negatively impacting primary market activity and significantly increasing volatility, making it likely that capital markets revenue at the global trading and universal banks (GTUBs) will be adversely affected, Fitch Ratings says. We do not expect this hit on earnings to affect GTUB ratings if the outbreak is quickly contained, but prolonged revenue weakness and deterioration in asset quality if a weaker economic outlook becomes more deep rooted could pressure capital levels and ultimately ratings over the longer term.

Following strong market activity during the first two months of the year in Europe and the U.S., increased market volatility will likely reduce issuance activity, which will dent revenue in the normally seasonally strong first quarter. Policymakers have highlighted a determination to use fiscal and monetary tools to lessen the economic and financial market impact of COVID-19, financial market volatility will likely persist while uncertainty remains. The Federal Reserve lowered its target fed funds rate by 50 bps in response to slowing growth from the COVID-19 outbreak. While the Fed response may spur issuance activity, it will also negatively affect asset yields, resulting in lower margins and reducing bank profitability.

While increases in volatility can aid trading revenue, we believe the recent sharp rise in volatility and trading volumes reflects high levels of uncertainty. Transaction volumes in many trading businesses could taper off once investors and corporates have readjusted their portfolios. This environment resembles fourth-quarter 2018 and first-quarter 2016, which saw days with elevated VIX but notable year-over-year declines in markets businesses.

All GTUBs have material capital markets businesses, but their contribution to overall profit varies. In the U.S., FICC and equity trading revenue accounts for around a third of total revenue at Morgan Stanley and around 40% of total revenue at Goldman Sachs in any given quarter. For JPMorgan, Citigroup and Bank of America, the level is lower, with less of a negative impact on overall profitability. At the European GTUBs, trading businesses account for about 25% of total quarterly revenues on average for Barclays, Credit Suisse and Deutsche Bank, with a lower contribution at BNP Paribas, Societe Generale and UBS.

BitGo Launches Its First Institutional Crypto Lending Service

As the cryptocurrency lending industry continues to grow, another major crypto company is getting into the business.

BitGo, a crypto firm that claims to handle over 20% of all Bitcoin (BTC) transactions, is launching an institutional-level crypto lending service on March 5. The debut of BitGo’s lending feature comes after a several-month-long private beta test.

Nick Carmi, the head of financial services at BitGo, emphasized that the new crypto lending product was developed with the goal of creating a lending business that is similar to lending services in the traditional financial markets.

The executive noted that BitGo’s lending service is part of the company’s sustainable business model: Major features of BitGo’s lending offering include fully collateralized loans, customized and detailed reporting for each client as well as the ability to work with regulated custodian BitGo Trust, the firm announced.

Nick Carmi, BitGo’s head of finance and a Wall Street veteran who joined the company in May 2019, told Cointelegraph that the new lending service marks a first for the company. The executive added that BitGo is focused on the institutional market and does not have plans to make the product available to non-institutional traders.

According to the announcement, BitGo’s crypto lending service was built by a team of Wall Street investment specialists with a focus on institutional clients.

BitGo CEO Mike Belshe said that the company’s lending service is “melding the best” of Wall Street expertise with institutional investors and Silicon Valley’s technology and innovation.

BitGo’s move to institutional lending comes a couple of weeks after the company announced it was expanding to Europe with two cryptocurrency custody services. BitGo established two separate crypto custodies in Switzerland and Germany on Feb. 10, outlining that the two countries are among the most friendly jurisdictions for crypto business.

Phoenix Lending is launching new Stable Income Product

Phoenix Lending has announced new Stable Income Product with free debit card following the enthusiastic participation of lending products in February.

Launched on February 1, Phoenix Lending has successfully raised over US$4.5 million in one month. The annualized interest rate of Stable Income Products started from 24% and has dropped to 14% for BTC and 18% for USDT. The new products are available for subscription from March 2, and the interest payoff date is once every 30 days starting from May. Users who meet the following conditions are eligible for claiming the free Debit Card.


Subscribe BTC 14% Stable Income Product equivalent to US$1,500 or more. (deposit more than one month is required)

Subscribe USDT 18% Stable Income Product equivalent to US$1,000 or more. (deposit more than one month is required)

Card Details

Cost of the Card: US$400

Shipping and Handling Fee: US$50

Users can deposit digital asset to the Debit Card and make purchases in cooperative shops around the globe.

The qualifications and details of the event will be announced on the website. Except as otherwise provided, if the newly announced relevant terms and conditions are in conflict with or inconsistent with any present provisions, the newly announced details shall prevail without further notice.

Next Step of Phoenix

To make digital asset investment to be more accessible and secure, Phoenix is planning to launch custody services on its platform. “We are now approaching the biggest custodian for partnership so that we can provide the best investment experience for our users,” said Winston Hsieh, the CIO of Phoenix Lending.

Phoenix is also supported by BaaSid, an information security company based on blockchain technology, which recently announced partnerships with HITACHI Sunway and NEC by providing application consisting of high-class data split and blockchain technology. Phoenix will later implement such application as a secondary authentication service on the platform.

UK banks announce lending support for coronavirus-hit firms

Some of the UK’s biggest banks have announced measures to help businesses and customers to cope with the economic impact of the coronavirus outbreak.

Britain’s largest high-street lender Lloyds said it would offer £2bn of loans without fees to small firms hit by the virus, and said some of the worst-affected businesses would be offered payment holidays.

In a similar vein, Barclays has informed business customers affected by the virus that they can have a 12-month repayment holiday – a period when loan repayments are waived – on existing loans over £25,000.

State-backed RBS has said borrows who have been affected by the virus can defer mortgage and loan repayments by up to three months, and will also waive various other fees.

None of the banks laid out how badly its customers would have to be affected to qualify for the lending support, however.

An RBS spokesperson said: “We will look to understand each customer’s situation on a case-by-case basis and can offer a number of options to help them manage their finances.”

The measures from lenders come as coronavirus spreads quickly throughout Europe and the UK, having broken out in China in December. The virus has killed five people in Britain, from 319 confirmed cases.

Businesses across the country have told staff to work from home, while restaurants and other businesses have reported lower footfall as people stay at home.

Chancellor Rishi Sunak is expected to unveil spending measures to support the economy during the outbreak when he gives his Budget tomorrow.

Incoming Bank of England governor Andrew Bailey has said that some kind of “supply-chain finance” for businesses from the government and Threadneedle Street is likely.

David Oldfield, group director of commercial banking at Lloyds, said firm-owners are “worried what the outbreak might mean for their business and with no knowledge of how or when they might be affected”.

He said Lloyds was making extra lending available to help firms manage “temporary interruptions to their business and to their cashflow”.



Key Stats

Central Bank Interest Rates and Current Libor Rates

GBP Libor (overnight) Interest


Central Banks Interest Rates
Euro Libor -0.57614% American Interest rate (FED) 1.25%
USD Libor 1.08663 % Australian Interest rate (RBA) 0.50%
CHF Libor -0.82960 % British Interest Rate (BoE) 0.75%
JPY Libor -0.10450 % Canadian Interest Rate (BOC) 1.25%
GBP Libor -0.19088 % Japanese Interest Rate (BoJ) -0.10%

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