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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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Huawei Mate 20 unveils ‘higher intelligence’

The new Mate 20 series, launching in South Africa today, includes a 7.2″ handset, and promises improved AI.

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Huawei Consumer Business Group today launches the Huawei Mate 20 Series in South Africa.

The phones are powered by Huawei’s densest and highest performing system on chip (SoC) to date, the Kirin 980. Manufactured with the 7nm process, incorporating the Cortex-A76-based CPU and Mali-G76 GPU, the SoC offers improved performance and, according to Huawei, “an unprecedented smooth user experience”.

The new 40W Huawei SuperCharge, 15W Huawei Wireless Quick Charge, and large batteries work in tandem to provide users with improved battery life. A Matrix Camera System includes a  Leica Ultra Wide Angle Lens that lets users see both wider and closer, with a new macro distance capability. The camera system adopts a Four-Point Design that gives the device a distinct visual identity.

The Mate 20 Series is available in 6.53-inch, 6.39-inch and 7.2-inch sizes, across four devices: Huawei Mate 20, Mate 20 Pro, Mate 20 X and Porsche Design Huawei Mate 20 RS. They ship with the customisable Android P-based EMUI 9 operating system.

“Smartphones are an important entrance to the digital world,” said Richard Yu, CEO of Huawei Consumer BG, at the global launch in London last week. “The Huawei Mate 20 Series is designed to be the best ‘mate’ of consumers, accompanying and empowering them to enjoy a richer, more fulfilled life with their higher intelligence, unparalleled battery lives and powerful camera performance.”

The SoC fits 6.9 billion transistors within a die the size of a fingernail. Compared to Kirin 970, the latest chipset is equipped with a CPU that is claimed to be 75 percent more powerful, a GPU that is 46 percent more powerful and an NPU (neural processing unit) that is 226 percent more powerful. The efficiency of the components has also been elevated: the CPU is claimed to be 58 percent more efficient, the GPU 178 percent more efficient, and the NPU 182 percent more efficient. The Kirin 980 is the world’s first commercial SoC to use the Cortex-A76-based cores.

Huawei has designed a three-tier architecture that consists of two ultra-large cores, two large cores and four small cores. This allows the CPU to allocate the optimal amount of resources to heavy, medium and light tasks for greater efficiency, improving the performance of the SoC while enhancing battery life. The Kirin 980 is also the industry’s first SoC to be equipped with Dual-NPU, giving it higher On-Device AI processing capability to support AI applications.

Read more about the Mate 20 Pro’s connectivity, battery and camera on the next page. 

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How Quantum computing will change … everything?

Research labs, government agencies (NASA) and tech giants like Microsoft, IBM and Google are all focused on developing quantum theories first put forward in the 1970s. What’s more, a growing start-up quantum computing ecosystem is attracting hundreds of millions of investor dollars. Given this scenario, Forrester believes it is time for IT leaders to pay attention.

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“We expect CIOs in life sciences, energy, defence, and manufacturing to see a deluge of hype from vendors and the media in the coming months,” says Forrester’s Brian Hopkins, VP, principal analyst serving CIOs and lead author of a report: A First Look at Quantum Computing. “Financial services, supply-chain, and healthcare firms will feel some of this as well. We see a market emerging, media interest on the rise, and client interest trickling in. It’s time for CIOs to take notice.”

The Forrester report gives some practical applications for quantum computing which helps contextualise its potential: 

  • Security could massively benefit from quantum computing. Factoring very large integers could break RSA-encrypted data, but could also be used to protect systems against malicious attempts. 
  • Supply chain managers could use quantum computing to gather and act on price information using minute-by-minute fluctuations in supply and demand 
  • Robotics engineers could determine the best parameters to use in deep-learning models that recognise and react to objects in computer vision
  • Quantum computing could be used to discover revolutionary new molecules making use of the petabytes of data that studies are now producing. This would significantly benefit many organisations in the material and life sciences verticals – particularly those trying to create more cost-effective electric car batteries which still depend on expensive and rare materials. 

Continue reading to find out how Quantum computing differs.

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