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Star Wars? No, PSD2 means banking wars

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The revised Payment Services Directive will be a hot topic next year as it could mean a change in traditional banking as we know it, allowing third-party service providers to offer customers alternative banking services, says THOMAS PAYS, co-founder and CEO of i-Pay.

If you have not heard about the revised Payment Services Directive (PSD2) yet, get ready, there will be a lot of talk of it in 2017. Since the Council of the European Parliament passed the PSD2 legislation, the banking sector is bracing itself for a period of immense change, with a lot of companies set to get into the action over the next few years.

In a nutshell, PSD2 allows for, amongst others, digital role players to tap into payments systems traditionally considered the domain of the financial services system. Banks must, according to the regulation, offer third-party service providers ways to access customers’ accounts through open APIs (application program interfaces). This paves the way for the banking sector to evolve quite dramatically, eventually allowing for different types of companies and fintech startups to offer banking services to customers.

“You are actually looking at the collapse of the traditional banking infrastructure and a rebirth of banking as we know it.” These bold words come from Thomas Pays, co-founder and CEO of i-Pay, an Electronic Funds Transfer (EFT) payment gateway based in Johannesburg, South Africa. Pays believes through PSD2, banks are set to lose full control over account information, a key resource which, understandably, they never wanted to share with fintech companies. As innovative and agile as new fintech start-ups are, a number of them were hamstrung by this, with banks arguably stifling innovation and the growth of the industry.

PSD2 was adopted by the European Union (EU) in order to promote innovation in the payments space, improve consumer protection, and to incorporate new and emerging payment services typically provided through digital innovation. While PSD2 is first and foremost focussed on the EU, Pays notes that this regulation will affect South African banks too. “Several local banks have branches in the UK and Europe, and since these fall under PSD2 regulation – and also being on the same back-end as the banks’ South African systems – their whole structure would need to change in order to comply,” notes Pays. He describes the impact of the regulation as a ripple effect that will eventually touch banking in as many as 67 countries.

Here is, for example, the way PSD2 will change the online buying process. Currently, the way shopping is done online allows for a number of role players in the process, including the merchant and customer, the ‘merchant acquirer’ that processes credit card payments on behalf of the merchant, card schemes such as Visa, and finally the customer’s bank. PSD2 creates what is called a Payment Initiation Service Provider (PISP), a go-between which if given permission by the customer, initiates a payment bridge directly between the merchant and the bank. This is possible since PSD2 offers API access to the customer’s bank accounts, and it is in the role of PISP that fintech companies, such as i-Pay, will operate.

Who will benefit the most from PSD2? Pays believes that through the new banking ecosystem, the main winner will be the consumer, since it will not only be more convenient to transact online, but also safer. “PSD2 is taking online banking infrastructure and gearing it towards an environment which is stronger and more robust – much more so than the current method of buying online with credit cards,” he elaborated. The merchants too are set to benefit, since they are looking at much smaller transaction fees and more convenient ways to accept payments.

Pays believes that even though PSD2 opens the market for innovative companies, the exact type of innovation it might herald is not yet known at this stage. “PSD2 is going to shock the market not just on a technological level, but also with time through the innovation it will drive. At this stage, we can only speculate how banking is going to work in future,” Pays says.

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CES: Most useless gadgets of all

Choosing the best of show is a popular pastime, but the worst gadgets of CES also deserve their moment of infamy, writes ARTHUR GOLDSTUCK.

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It’s fairly easy to choose the best new gadgets launched at the Consumer Electronics Show (CES) in Las Vegas last week. Most lists – and there are many – highlight the LG roll-up TV, the Samsung modular TV, the Royole foldable phone, the impossible burger, and the walking car.

But what about the voice assisted bed, the smart baby dining table, the self-driving suitcase and the robot that does nothing? In their current renditions, they sum up what is not only bad about technology, but how technology for its own sake quickly leads us down the rabbit hole of waste and futility.

The following pick of the worst of CES may well be a thinly veneered attempt at mockery, but it is also intended as a caution against getting caught up in hype and justification of pointless technology.

1. DUX voice-assisted bed

The single most useless product launched at CES this year must surely be a bed with Alexa voice control built in. No, not to control the bed itself, but to manage the smart home features with which Alexa and other smart speakers are associated. Or that any smartphone with Siri or Google Assistant could handle. Swedish luxury bedmaker DUX thinks it’s a good idea to manage smart lights, TV, security and air conditioning through the bed itself. Just don’t say Alexa’s “wake word” in your sleep.

2. Smart Baby Dining Table 

Ironically, the runner-up comes from a brand that also makes smart beds: China’s 37 Degree Smart Home. Self-described as “the world’s first smart furniture brand that is transforming technology into furniture”, it outdid itself with a Smart Baby Dining Table. This isa baby feeding table with a removable dining chair that contains a weight detector and adjustable camera, to make children’s weight and temperature visible to parents via the brand’s app. Score one for hands-off parenting.

Click here to read about smart diapers, self-driving suitcases, laundry folders, and bad robot companions.

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CES: Tech means no more “lost in translation”

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Talking to strangers in foreign countries just got a lot easier with recent advancements in translation technology. Last week, major companies and small startups alike showed the CES technology expo in Las Vegas how well their translation worked at live translation.

Most existing translation apps, like Bixby and Siri Translate, are still in their infancy with live speech translation, which brings about the need for dedicated solutions like these technologies:

Babel’s AIcorrect pocket translator

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The AIcorrect Translator, developed by Beijing-based Babel Technology, attracted attention as the linguistic king of the show. As an advanced application of AI technology in consumer technology, the pocket translator deals with problems in cross-linguistic communication. 

It supports real-time mutual translation in multiple situations between Chinese/English and 30 other languages, including Japanese, Korean, Thai, French, Russian and Spanish. A significant differentiator is that major languages like English being further divided into accents. The translation quality reaches as high as 96%.

It has a touch screen, where transcription and audio translation are shown at the same time. Lei Guan, CEO of Babel Technology, said: “As a Chinese pathfinder in the field of AI, we designed the device in hoping that hundreds of millions of people can have access to it and carry out cross-linguistic communication all barrier-free.” 

Click here to read about the Pilot, Travis, Pocketalk, Google and Zoi translators.

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