Mining Bitcoin on a laptop is a great way to learn more about how decentralized cryptocurrencies work. But it won’t make you rich. Crypto hobbyists report Bitcoin earnings equivalent to just a few cents a day. And even if you scale this up by adding tens of GPUs to your home setup, you’ll still only push those takings into single dollar digits. The reality is that crypto mining has entered its industrial phase. And that begs the question – will market forces make BTC data centers more efficient?

Phil Harvey – CEO and founder of Sabre56, a hosting provider and digital asset project management consultant – remembers the early days of crypto when mining was done in the basement. And, as the sector has scaled up, he’s been working with clients to make their operations more efficient, applying lessons in project planning and implementation learned from a previous career in the military.

Harvey remains intrigued by the possibilities of distributed ledger technology and appreciates that more needs to happen to bring the concept into the mainstream. “We should definitely try to understand its use case better and not be afraid of the change,” he told TechHQ.

Enabling Bitcoin technology

Sabre56 sees itself as an enabler of Bitcoin technology, helping customers to build Bitcoin mining farms by bringing design, project, and cost management expertise to the table. And the company has delivered installations at sites across North America and in the Nordics.

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What’s more, the Dubai headquartered firm has taken things a step further and is establishing hosting facilities of its own. “The plan was always to evolve from being a consultant to practicing what we preach,” Harvey explained.

Speaking with TechHQ it was clear that he wants to change the perception of crypto mining as an activity that’s wasteful of energy and causes damage to the environment. Having people align to standards and run Bitcoin mining operations more professionally will help.

Sabre56 is looking at ways of implementing benchmarks that both itself and others can follow – examining how operations can become more efficient with what they have. As mentioned, there are market forces to consider too, which could end up putting all but the most energy-efficient and well-optimized operations out of business.

Popularity of BTC data centers

The popularity of BTC data centers comes down to the odds of successfully mining Bitcoin. When miners solve the puzzle of finding a low-numbered hash of the next-in-line block of digital cryptocurrency transactions, they are rewarded with a few Bitcoin for their efforts. But the chances of success are incredibly low, so much so that winning the lottery feels like a done deal by comparison.

Bitcoin miners can boost their odds of receiving a reward by running multiple machines and taking trillions of guesses. However, while the chance of success goes up, so does the electricity bill. And when Bitcoin miners shop for hosting facilities for their rigs, one of the major items on their wish list is cheap power.

Last month, Sabre 56 announced that it had been awarded a five-year deal with Bootstrap Energy to provide miner operations at the 300MW Saxet Energy Park in southern Texas, US. The area is home to gigawatts of wind power, and energy management at the site will be designed to pass electricity cost savings onto clients.

Neat and tidy operations: Sabre56-hosted crypto mining facility in Wyoming, US. Image credit: Sabre56.

But it’s not just crypto miners that may benefit from state-of-the-art BTC data centers. Large-scale Bitcoin mining facilities give power companies a buyer of last resort when wind and solar energy generation surges. Rather than having to dump the electricity, energy firms can be confident that crypto miners will be glad of the windfall.

Also, because it’s possible to pause crypto mining operations, BTC data centers can help to buffer the grid. For example, if electricity demand spikes in the neighborhood, the computing processes could, in principle, spin down to reduce the facility’s energy footprint and free up power. And this points to a key operational difference between crypto mining sites and regular data centres, which need to be up 24/7.

In fact, there’s an argument to be made that mining farms motivate energy suppliers to upgrade infrastructure, with everyone benefiting from a more stable power grid. Texas Governor Greg Abbott has reportedly been thinking along these lines, but it’d be wide of the mark to say that everyone is happy to open their arms to crypto miners.

Longer term, excess power could be used to drive electrolyzers and create green hydrogen rather than support blockchain calculations that have less tangible benefits for society. Also, crypto mining is noisy and unpopular with residents looking for peace and quiet. And the objections don’t stop there.

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But when it comes to the energy mix consumed by BTC data centers and other crypto mining operations, there’s evidence that facilities are ahead of the curve compared with local averages. For example, the Bitcoin Mining Council – which claims to represent 43% of the cryptocurrency’s global mining network – writes that the electricity being used comprises a 63.1% sustainable power mix, according to its H1 2023 member survey.

Using Electricity Maps, which visualizes the carbon intensity of electricity being used worldwide, it’s possible to compare crypto mining to electricity consumption in general. For example, at the time of writing, 51% of electricity being consumed in the UK is from renewable sources. In the US, the Electric Reliability Council of Texas is providing 28% renewable power. And the only regions with a sustainable power mix above crypto mining’s 63.1% are Austria; the Nordic countries of Norway, Sweden, and Iceland; Germany; Canada; Brazil; Uruguay; plus pockets of the US, such as the City of Tacoma, and sources of Federal Hydropower.

Given the importance of cheap power to the economics of crypto mining and noting that the falling cost of wind and solar are fueling the rise of renewables as the world’s cheapest source of energy, Electricity Maps could just as easily function as a guide on where to site your next BTC data center.

And there are some pioneering examples. We’ve already highlighted Sabre56’s mission to make the sector more efficient. But it’s not the only industry player to recognize where the cryptocurrency sector needs to get to. TeraWulf – a vertically integrated Bitcoin miner – has multiple zero-carbon sites, which target places with an excess supply of energy, not much demand, and limited transmission opportunities.

Its Lake Mariner facility serves as a sink for abundant hydropower and its Nautilus Cryptomine is said to be North America’s first nuclear-powered Bitcoin mining facility.

The company points to the role that BTC data centers can play in giving power firms a guaranteed buyer at the time of energy production, as well as helping to meet other expenses. “That customer adds to the denominator and allows you to amortize the fixed costs of the system over a larger base,” said Nazar Khan, one of TeraWulf’s co-founders and its COO.

The post BTC data centers: market forces and the drive for greater efficiency appeared first on TechHQ.

Bitcoin (BTC) has its fans and critics. And to understand what makes this cryptocurrency so polarizing, it’s worth investing a small amount of time in unpacking the concept of money. By doing so, you can appreciate the opportunities and concerns on both sides of the digital coin, as well as gain a perspective on potential BTC trends over the longer term.

Going back centuries, civilizations have purchased goods and services using various means, including exchanging livestock and paying in shells. Fast forward to today, and we have trusted fiat currencies such as the US dollar, EURO, British Pound, and Chinese Yuan.

And while digital payments increasingly dominate, technically – for example, in the case of the British Pound issued by the Bank of England – it is the physical notes and coins that represent the promise of payment from the central bank to the bearer of the currency.

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This begs the question as to why people are so happy to give their money to retail banks and send funds electronically – if those numbers in the various accounts aren’t, strictly speaking, legal tender. And the answer is that those traditional financial services have government backing.

“Making a deposit into a bank or building society account is like giving your trust to that organisation,” writes the Prudential Regulation Authority (PRA), which monitors banks and building societies in the UK. “You trust that it will look after your money and, when you want to access that money again, it will be there.”

Customers of conventional financial institutions have protection up to a certain value. And while this oversight and government backing is mostly successful in keeping the wheels of traditional finance turning – the promise of payment is only directly tied to the cash in your pocket.

Plus – as wobbles throughout history have shown – if confidence in the ability of the government to control its finances dips, so does the value of that promise to pay the bearer. And when times are shaky, investors reach instead for gold, which has been seen to hold its value during turbulent times.

And this brings the discussion to the idea of cryptocurrency, specifically Bitcoin’s main fork, dubbed Bitcoin Core (BTC), which some advocate has the potential to become a kind of ‘digital gold’.

How does BTC work and what is crypto mining?

The best way to understand crypto mining is to simply look at a block in the BTC blockchain. And there are a couple of key details to focus on. The first is the hash, indicated in the screengrab below by a green arrow, and the second is the so-called ‘nonce’.

Screenshot of BTC details (block #802502) grabbed from Blockchain.com’s explorer page.

A hash digest is a fixed-length code that’s commonly used as an integrity check on digital files. The one-way function generates a unique fingerprint of a file’s contents. And, if the hash function is truly collision-proof, then no two inputs will produce the same output.

For example, if you apply a SHA256 hash (the function used to digest blocks when crypto mining BTC) to the phrase ‘Helloworld’ you get –

5ab92ff2e9e8e609398a36733c057e4903ac6643c646fbd9ab12d0f6234c8daf

But if we re-run the SHA256 hash on ‘Helloworld+1’, the one-way function generates a different code, or fingerprint –

4865d2b4b49f88cc5a721fdc7ff210878f657219d5a768e317134b66a18a4605

And this tells us quickly that the input (which, rather than our simple example, could instead be a GB-sized file and hence enable rapid integrity checks for software such as large operating system updates) has been modified. Also, while the fingerprint is impossible to predict, we can engineer patterns in the output by adding random values to the input.

In our case and sticking with the SHA256 algorithm, if we try ‘Helloworld+1580358748’, we get –

5a0506dd28159d6d8bb1e1e2a3edc4d10e1fa2519193726e9bff6960887a2aa2

And you’ll notice that adding ‘1580358748’ to the list of cryptocurrency transactions comprising BTC block #802502 (plus a hash of the previous block, to secure the blockchain) produces a string of zeros at the front of the hash digest –

00000000000000000001a3c8e6069d5a7d7c7236c91953bfd356794211151b04

Finding a suitable ‘nonce’, which can be added to a block so that its hash has a string of preceding zeros, gets to the heart of bitcoin mining. And although the exercise may sound a little abstract, it gives BTC coins – which are issued to the crypto miner that’s first to solve the challenge for each block – their scarcity.

With the blocks themselves representing sequences of transactions, stamped with an integrity check thanks to the hash functions, we now have the makings of a digital currency. What’s more, if a bad actor wanted to rewrite history and change any of the entries on the digital ledger, the hash would fail to match due to the modified contents.

Plus, coming up with new ‘nonces’ – which is a trial and error process – represents too big a challenge were adversaries to try and cover their tracks.

Digital gold, or not?

Likening BTC to gold serves as a useful comparison in picturing a possible role for future cryptocurrencies. Although, time has yet to pass the same degree of judgement on BTC, with gold having been accepted for thousands of years as a trusted store of value.

“Bitcoin and gold are similar from both a psychological perspective and, especially, as a resource,” write the economists Wolfgang Härdle, Campbell Harvey, and Raphael Reule in a useful discussion paper on ‘Understanding Cryptocurrencies’ [PDF]. “Neither can be created arbitrarily: each must be mined and each has a finite supply (at least on planet Earth)”.

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Similarly, just as it takes energy to extract gold from rock buried underground, it typically requires a vast number of guesses before crypto miners discover a suitable nonce. The probability of an input generating an output with zero as the first digit is 1 in 16 (the hash digest is hexadecimal). But to find 19 leading zeros, as in the hash digest of BTC block #802502, drops that likelihood to just (1/16)¹⁹ – an incredibly small number.

The probability of successfully hashing a new block is many times less than winning a national lottery. But, of course, crypto miners can (sticking with the example of a lottery) buy trillions of tickets per second to boost their chances of hitting upon a valid guess.

Looking at the hash rate for BTC – the number of guesses being made on finding a suitable nonce value – that figure is more than 382 million per second, and it’s measured in units of terahashes (1 trillion guesses).

In the physical world, mining equipment is big and bulky and requires industrial scale power. And the analogy holds for digital crypto mining rigs too. To be competitive, crypto miners need pools of computing hardware that’s been designed specifically for the task.

Units such as Bitmain’s popular S19 model, which is specified as delivering a hashrate of 151 terahashes per second (TH/s) and consumes more than 3kW of power at the wall, are whirring away all over the world (where allowed) to validate BTC transactions on a decentralized digital ledger.

Long-term BTC trends

Critics of such a consensus mechanism, dubbed proof-of-work, point to the power that’s consumed. But, without coming down on either side of the fence, it should be noted that managing traditional currencies consumes energy too. There’s a vast amount of backend services supporting modern banking operations, and it’s the price to pay for running systems that customers trust.

As mentioned, the use of gold goes back thousands of years, which is ages long compared with the not-yet two-decade-old practice of BTC crypto mining. We live in interesting times with ambitious projects to deliver zero-knowledge proof, privacy-preserving World IDs, and the boom in AI.

There’s an element of the unknown when new technologies emerge, and it’s fair to say that cryptocurrencies occupy that space. Parallels with the utility of gold may serve as a guide on how the story of BTC plays out, but time will tell whether Bitcoin has similar appeal, and that clock has only just started ticking.

The post Exploring BTC trends – is Bitcoin entering its industrial phase? appeared first on TechHQ.

WeChat payment is the blueprint of Elon Musk’s aspirations for X. Now, foreigners can use the cashless payment method.

Thanks to updates recently announced by leading mobile payment solutions WeChat Pay and Alipay, short-term visitors to China now have access to cashless payments.

Previously, access to the payment platforms required a local bank account, which effectively locked most foreign visitors out of using them. Mobile payment has been the dominant payment method in China since the late 2010s, owing largely to its ease of use.

Despite previous warnings from China’s central bank against rejecting cash payments due to fears the practice could make people “lose confidence in cash”, the ubiquity of apps like WeChat Pay and Alipay have seen many businesses stop accepting cash altogether, especially in major cities like Shanghai and Beijing. 

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This has long been an issue for short-term visitors, who struggle to spend paper money.

A Tweet welcoming tourists to explore cashless China.

Although domestically-issued credit cards under Visa and Mastercard were already supported by China’s mobile payment networks, foreign-issued credit cards were not. 

Mastercard announced on June 21 that cardholders are now able to link credit and debit cards to Alipay’s digital wallet, enabling international travelers to “pay like a local” in China, without a local bank account. 

Shortly afterwards, Tencent – operator of popular chat app WeChat and its associated payment network – announced that it is “deepening its collaboration” with international card organizations including Visa and Mastercard in an effort to improve overseas users’ digital payment experience.

What is WeChat?

Founded initially as the payments arm of e-commerce giant Alibaba, Alipay is a payment app and digital wallet which boasted 1.3 billion users in 2022. Users save their debit and credit card details to the app, which then lets them make payments with their mobile phone. 

Alipay owned around 80 percent of China’s mobile payments solutions market for five fiscal quarters in a row, starting in the third quarter of 2013.

WeChat Pay is a virtual wallet found within WeChat, a hugely popular social media, instant messaging, and now digital payment app. The app has been making international headlines following Elon Musk’s recent rebranding of Twitter. 

Musk wants what WeChat has. Source: Getty Images.

Musk previously stated that he hopes to turn the new brand, X, into a WeChat-inspired “everything app”. In a leaked meeting transcript from June last year, he tells Twitter employees that “[y]ou basically live on WeChat in China because it’s so useful and so helpful to your daily life. And I think if we can achieve that, or even get close to that with Twitter, it would be an immense success.”

Released in 2013, two years after its parent app’s initial release in 2011, WeChat Pay quickly became a major competitor for Alipay. It saw huge success in its first year by leaning into the social elements of the WeChat app: early adoption was driven largely by its digitized version of the Chinese Hong Bao custom, the tradition of gifting cash-filled red envelopes on special occasions. 

WeChat Pay’s digital version let users send up to USD$29 to their in-app friends, and approximately 16 million red envelopes were exchanged during Chinese New Year’s Eve in 2014. This rose to an impressive 1 billion in 2015. 

Unfortunately, overseas users will not have access to this function without a local bank account; short-term WeChat Pay users will be unable to conduct any money transfers via the app.

Overseas tourists are estimated to have spent USD$131 billion in mainland China in 2019, the same year that Visa and Mastercard commenced their partnerships with Tencel and Ant Group, owner of Alipay and affiliate of Alibaba Group. 

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These initiatives did allow some overseas customers to use their credit cards in China, but at the time the ability to process international credit cards was limited to a select number of businesses. 

The revival of these partnerships coincides with the resumption of travel and tourism to China following the country’s pandemic lockdowns.

Spending limits for overseas visitors on WeChat Pay are currently set at 6,000 yuan (approx. USD$835) per day, 50,000 yuan per month, and 60,000 yuan per year. Fees are waived for payments under 200 yuan, but any amount above this carries a 3% fee.

The post Overseas visitors can now go cashless in China appeared first on TechHQ.

From technological advancements to changing consumer preferences, the banking and payment industry is evolving rapidly. While exciting, its dynamic nature can make it challenging for banks and non-banking financial institutions of all sizes to keep up.

It becomes crucial for institutions to compare their strategic priorities, product roadmaps, and plans for future innovation against their competitors. These valuable insights into market trends, customer demands, and emerging opportunities allow them to make informed strategic decisions.

For example, a 2022 report from Bottomline revealed that 66% of banks and financial institutions (FIs) think that compliance and RegTech will become more important over the next year, and 87% thought it would be somewhat or very challenging to remain compliant.

This knowledge allows executives to make the right decisions regarding resource allocation and investment in technology, helping them meet regulatory requirements effectively. If this isn’t prioritised, companies face significant challenges with compliance, potentially exposing themselves to regulatory penalties, reputational damage, and loss of customer trust.

Benchmarking against peers enables banks to identify areas of improvement and best practice. Analysing successful institutions can help them identify gaps in their operations and implement necessary changes to enhance efficiency, customer experience, and overall performance. The process fosters innovation in the industry and boosts the institution’s growth.

Source: Shutterstock

The report from Bottomline, which surveyed  more than  500 banking and FI players across Treasury, Fraud, Operations, and Product at C-suite level in 34 countries, revealed that 64% view digital transformation as their biggest focus, with 27% of banks and FIs specifically identifying the need to address legacy payments infrastructure as a priority. Those not prioritising technological updates – like integrating a SaaS communication platform to reduce data silos and improve customer experience – may fall behind in the future.

In most industries, surprise outcomes are a hindrance to a competitive business. Keeping abreast of the latest developments and having a healthy insight into what is around the corner is essential to remain a key player. Being unaware of the latest shift in customer expectations regarding fraud protection, for example, can mean competitors meet demand, and create a drop in your company’s revenue.

To alleviate this danger, leverage benchmarking activities, like taking the annual survey from Bottomline. After answering just 12 questions (it takes  around 5 minutes only), you will receive a personalised comparison of how your strategy and pain points compare to those of your peers in banking and payments.

Once the survey is completed by what’s expected to be more than double last year’s participant numbers, you will receive a comprehensive report highlighting insights from the full data picture.

The 2022 report showed that the top priority of most banks and FIs was real-time payments, an increase of 15% from 2021.

Source: Shutterstock

Zhenya Winter, the Head of Financial Messaging Marketing at Bottomline, said the increased interest in real-time payments can be linked to schemes and mandates such as SEPA Inst and SIC IP, which provide more accessible access models for banks and FIs. A good example would be the UK’s New Payments Architecture and Europe’s Target2, which champion  how real-time payments can provide new revenue streams by using digital overlays and, of course, meeting customer demand.

Winter said: “The business case for real-time is no longer in doubt, whereas previously, banks were concerned about having enough volume and value to justify the spend on implementation.”

Riccardo Colnaghi, the Head of Business Development at Solarisbank AG, agreed. “Not adopting real-time payments would mean ruling out the upfront opportunity to join a wider set of longer-term payment trends that are likely to be key for future competitiveness.” Indeed, 54% of survey respondents said they have either completed planning and want to start implementation or are already ‘live.’

The report also highlighted that many banks and FIs consider prioritisation in a busy roadmap the biggest barrier to adopting real-time payments. In 2022, financial institutions were caught up with maintaining regulatory and industry compliance, and educating customers on new digital platforms implemented since the pandemic. With access to this kind of insight, you can take advantage of the shortcomings of your competitors to stay ahead.

Can you afford to fall behind your peers’ strategic priorities, technological advancements and innovation? Ultimately, having access to industry insights provides an essential competitive advantage and the opportunity to stay at the forefront of the banking and financial landscape.

If you want to take advantage of a personalised comparison of your business against its competitors and get access to the full 2023 report, take the Bottomline survey today.

The post Don’t get left behind: unlock competitive advantage in banking and payments appeared first on TechHQ.

Companies researching the best way to receive international payments in 2023 soon discover that they have no shortage of options for accepting foreign currency from customers overseas. And that includes blockchain-based cross-border payment solutions such as Ripple. The US tech firm has long been on a mission to ‘build breakthrough crypto solutions for a world without economic borders’ – but how do blockchain-based cross-border payments work and should your organization use them?

Making overseas payments using traditional banking systems means lining up multiple intermediaries between the payer and the beneficiary. And with each link in the chain taking a fee for enabling the transaction, the cost of international payments adds up. Plus, those transfers can be delayed if cross-border payment requests happen to coincide with a weekend or bank holiday. Also, the pre-funding of overseas accounts locks up working capital.

Ripple’s blockchain-based cross-border payments, on the other hand, promise settlement in seconds, not days. And transaction fees are kept low by removing no-longer-needed intermediaries from the equation to give customers competitive last-mile payment rates.

How does Ripple work?

Ripple’s solutions are built using the XRP Ledger, which is a blockchain for IOUs and enables transactions between different payment types. The digital ledger has a number of features that make it attractive to fintech providers looking to modernize financial services, including on-chain escrow that can gate XRP and release it once payment settlement conditions have been met.

Using XRP as a digital intermediatory, Ripple cross-border payment settlement is active in more than 50 countries, allowing users to send a variety of currencies using the blockchain-enabled system. Senders receive a fiat-to-fiat quote on pricing and FX, and beneficiaries can be paid out immediately in the chosen currency.

Ripple is an interesting case study on how fintech providers are using blockchain to modernize the provision of financial services. Rather than compete against traditional banks, Ripple is reaching out to them – offering its digital currency payment rails as a high-speed, more efficient alternative to legacy systems such as SWIFT.

Ripple vs SWIFT

SWIFT, a global member-owned cooperative that specializes in secure financial messaging services, connects more than 11,000 banking and securities organizations. And the Belgium-headquartered organization has customers in more than 200 countries, putting it ahead of Ripple.

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But announcements by SWIFT, such as a successful experiment to move tokenized assets using its infrastructure, show that even dominant players are having to adapt to a financial future that could be increasingly blockchain-based.

A common criticism of cryptocurrencies has been their energy demands, with Bitcoin miners propping up the profits of energy companies and chip makers. A switch from proof-of-work to proof-of-stake shrinks this carbon footprint by reducing the computing demands of running a digital ledger. Rather than mining for cryptocurrency, users can earn rewards by staking their cryptocurrency to participate in the consensus mechanism of the blockchain.

The safety net comes from the idea that stakeholders won’t want to jeopardize their locked-up cryptocurrency by attempting to add invalid blocks to the chain. But there are fears that proof-of-stake networks could become centralized if a large amount of cryptocurrency is controlled by just a few actors.

The XRP ledger, which underpins Ripple, gets around this by adopting a different method of coming to consensus on adding blockchain entries. XRP makes use of a so-called federated byzantine agreement, which relies on validators overlapping in their endorsement of yet-to-be-added transactions. For example, if 80% of validators agree on adding a block to the chain then those details are assumed to be trusted.

And nodes carry their own unique node lists (UNLs) of validators, which they believe provide reliable information – removing them if they keep failing to reach consensus. Overlap between UNLs provides continuity across the community, with the XRP Ledger gravitating towards proven validators and shying away from untrusted nodes. But there could be a catch.

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A study by researchers at KAIST in South Korea on Stellar – a cryptocurrency that also operates using the federated byzantine agreement method of reaching consensus – showed that, rather than encouraging decentralization, the approach can bake in dependences on certain key nodes.

“We show that all of the nodes in Stellar cannot run SCP [Stellar Consensus Protocol] if only two nodes fail,” writes the KAIST team in its paper. “To make matters worse, these two nodes are run and controlled by a single organization, the Stellar Foundation.”

And like Stellar, Ripple operates its own validators, which could be problematic if those nodes form the dominant link between the various UNLs. Also, blockchains aren’t bulletproof and exhibit residual failure modes – something that David Schwartz, Chief Technical Officer at Ripple, admits.

“It’s important that we continue to innovate to reduce the odds of them happening and reduce their severity even if it is a bit embarrassing for the industry to point the finger at these failure modes,” he commented at Apex – the XRPL developer summit, in a talk on the continuous evolution of the XRP Ledger.

Ripple's latest report let this sink in.. 250 trillion by 2027 in cross-border payments alone. #XRP pic.twitter.com/2SCe8h8ZnV

— RIZ.XRP (@RizXRP) July 19, 2023

In Ripple’s case, the ledger could halt its forward progress if too many validators fail before humans can respond to the issue. And, as Schwartz points out, the goal is to have ledgers that offer maximum reliability. Hence, it’s why developers are working on solutions such as Negative UNL – a feature of the XRP Ledger consensus protocol designed to improve ‘liveness’.

“Using the Negative UNL, servers adjust their effective UNLs based on which validators are currently online and operational, so that a new ledger version can be declared validated even if several trusted validators are offline,” explains the latest XRP Ledger documentation.

Given the rollercoaster ride that cryptocurrencies have been on lately, it’s promising to see fintech firms being transparent about potential weaknesses. And if these are signs of blockchain developers building firm and well-tested foundations, digital ledger projects may live up to the hype after all.

The post Blockchain-based cross-border payments – the Ripple effect appeared first on TechHQ.

• Women in tech need to differentiate self-esteem and self-worth.
• The technology we’re developing is enormously powerful.
• But it’s actually the difference humans can bring that’s crucial to the future of fintech.

In our series of interviews with women in tech, we sat down recently with Monica Eaton, co-founder of Chargebacks911, a fintech firm that saves companies getting unduly hit with chargebacks.

In Part 1 of this article, Monica told us of the different nature of the fintech enironment, which historically has been more welcoming to “non-traditional” views than the majority of the tech world, because its whole function is to think differently and create new world realities, rather than simply update or streamline existing ones.

Towards the end of Part 1, Monica mentioned that, of all the difficulties that still exited for women joining the fintech world, probably the largest centered on self-esteem, self-worth, and having the ability to get up, try a thing, fail, and carry on.

We asked her to expand on that.

Women in tech: overcoming challenges.

THQ:

You mentioned that the biggest barrier was that idea of knowing you can do the job, and expanding the definition of what “doing the job” means out beyond simple task-based goals – “solve this problem” – to something broader and more ultimately productive. How do you overcome that barrier?

ME:

In terms of “overcoming,” I think there’s a difference between self-esteem and self-worth. Those are two different things.

Self-esteem comes from getting approval from others, and as women, we may get approval from you by sticking to an expected societal norm. Let’s go totally “traditional.” You clean the house well, you’re a good mother, all of those things check the “approval from others” box, so that’s what we work towards.

Then you come into the workplace. And sometimes that tradition is quite ingrained, where we’re still looking for approval. This isn’t just women, by the way, many of us struggle with this. But if you’re looking for approval from others, and that’s how you build your self-esteem, that’s not very stable, because as soon as they change their mind, as soon as something else comes along, it’s gone.

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Then you don’t have anything to make you confident. And then you’re on a rollercoaster of emotions, and those emotions end up affecting your productivity. So instead, I like to say “Forget self-esteem.” Don’t go for approval from anyone else, actually go for approval from yourself.

And this is how you get it – by performing. You get it by setting a goal that’s hard, you get it by raising the bar for yourself, by making yourself do things that challenge you. And every time that you succeed in a goal that you set, write it down.

It doesn’t even have to be big, it could be as straightforward as accomplishing a workout schedule. But those things create confidence that doesn’t shatter. And that also starts building an aptitude where you have confidence in your ability to solve problems, to learn something, and then it really doesn’t matter.

Now you have something else that’s driving you. And people notice that when you’re an expert in a room, not because others gave you a compliment, recognizing that you were an expert, but because you know you’re an expert, and you did what it takes to be an expert, and you went through the trial and error. That’s really powerful.

It also builds a type of resilience, where eventually, for instance, if I go into a meeting, I’m not thinking “Do they like me? Are they gonna like me?” I’m thinking “I know how to solve this problem.” And actually, there’s not even a doubt that I know how to solve this problem. I know how to solve this problem better than anyone. And that is a very powerful thing.

We still need more women in tech. Lots more.

Of course, you’re constantly learning, and it’s humbling as well, especially in fintech, because whatever you thought you knew? Wait a year. You’ll discover all the stuff that you really didn’t know, which makes things even more exciting.

Women in tech and the speed of change.

THQ:

We were going to say, fintech in particular is a rapid cycle compared to almost everything else. So how does it look to you now compared to when you started? You said that in the last 5-10 years, it had changed dramatically?

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ME:

Yeah, it’s changed substantially. On the one hand, I am scared to death. It’s scary. It’s like I have to control myself not to subscribe to every conspiracy theory around the corner. On the other hand, it’s super-exciting.

I think in terms of how things have changed, it’s like we’ve gone through this space for the last ten years where humans have been reduced and needed less and less. It’s all about technology. It’s all about your product, and that’s it.

We’re in an unprecedented time. And the speed at which technology can be developed, can launch, can iterate, can self-iterate, is amazing. It’s going to create such a tremendous amount of disruption in the fintech space that we’re going to have that moment of course correction, where the fintechs that will be successful are those that have deep rooted relationships, and connections. Where people are valued again.

Five, ten years ago, it was all about the technology, the platform, everything was on autopilot, because this was something very unique, that was difficult to create, and a tremendous unique advantage.

With the collaboration and the speed at which technology can fuse and take shape now though, you need something else. So the companies that will survive and thrive and create disruption are going to be those that have a wider scope.

That’s going to force us to look at how we can solve problems better for society in ways that are socially responsible. I think that will elevate our game. So exciting, and definitely a new phase.

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Women in Tech: the importance of allyship

Women in tech: people power.

THQ:

That’s an identifiable shift, isn’t it? Because now, everyone can have the same box of magic tricks – so it’s the skills and the value of your human beings that will make the difference in this tech-enabled world.

ME:

Exactly. When you focus too hard on the tech, you miss out on the ingenuity and the humanity that really makes things successful. And lots of people have made that mistake, myself included. For years, all I wanted was the technology to solve a problem. You always learn lessons, especially in business, and my focus was 100% on the technology.

“We’re going to have the best product in the world, we’re going to be five years ahead of everybody else.”

“Ssshh! Building the Best. Thing. Ever here!”

What I’ve learned is that as our business continues to grow, technology doesn’t hold a candle to the people, and ingenuity, and the owner mentality, and the relationships and the strategics. That is really the magic that makes things work.

So often, especially in the fintech industry, we forget that you’re not going to be anywhere if you don’t have great clients, great partners, great connections. It’s those deep relationships that really matter. It’s not what you know, but who you know, and how you interact with them.

I always disagreed with that mantra. “No it isn’t, I can build this, it doesn’t matter who I know, because we’re actually going to have the best.”

But the world has come full circle and yeah, turns out the lesson is that the value of human beings is key to building the best, having the best, and enjoying the journey along the way.

The future of finech.

THQ:

That invites a little prophecy. Where do you see the fintech sector generally, two years, five years from now?

ME:

There can be speculation on so many levels. I think we’ll go through a lot of consolidation, especially in the banking industry. And we’ll probably eliminate several cottage industries as well. Because what will happen is that with more transparency and access to technology, things will get exposed.

Many organizations, even industries today are in business to solve a problem that exists due to ignorance, due to lack of transparency, due to lack of data.

Look at data. It’s the most powerful ingredient in our entire planet. There’s only ever a problem because there’s not enough data, or there’s missing data, or there is data but it’s not interpreted correctly. There’s literally not a single problem that can’t be solved if you have the right equation.

Never underestimate the transformative power of data.

As we look at this revolution that is going on with data sharing with technology, governments are getting involved, the whole world is focused on one thing. I think we’ll see more data become democratized and it will shake things up. And, you know, I think we’ll have a better world as a result.

Disrupting the “ordinary” is what fintech is all about. In a general patriarchy, that means the more women are in the system, the better.

The post Women in tech: women and the future of fintech appeared first on TechHQ.

• Women in tech may have a less patriarchal experience in fintech.
• Innovation in fintech means creating new worlds, not recreating old ones.
• That means there’s an “outsider” energy on which fintech depends.

In our ongoing series of interviews with women in tech, exploring their journeys and their careers in technology, we sat down recently with Monica Eaton, co-founder of Chargebacks911.

Monica’s story is unlike that of many of the women in tech to whom we’ve spoken so far. Her company, which helps merchants avoid high levels of business-slowing chargebacks, was created on the back of her own experience of those chargebacks while trying to run a healthy ecommerce business.

Monica is a passionate advocate for women in tech, to the point of creating her own micro-mentorship program, called Lift: Elevating Women in Fintech.

We wanted to know how her story in fintech began.

THQ:

We’ve heard from other women in tech that there was always a lot of initial societal pressure not to go into tech if you were a girl or young woman. Was fintech, distinctly, always a pathway that was easy to consider getting into?

ME:

Well, I’ll tell you, I got into it by accident, and speaking to a lot of other founders and leaders in the industry, I don’t think I’m alone, in that many of us fell into this. And financial technology has just evolved due to the needs of the industry and the client-base. So, has it been difficult? It’s challenging for sure, but I think there’s also a terrific amount of opportunity, which keeps things exciting. And so yeah, maybe yes… and no.

Women in tech: fintech challenges.

THQ:

Historically, the best answer to any question. If there are challenges in being a female founder in fintech – what are they?

READ NEXT

Women in Tech: barriers to inclusion

ME:

You know, getting into fintech, it’s different to being in the mainstream tech industry, and different to being in most other standard industries too. Our motto is “challenging the status quo.” And that sounds simple when you think about it – just constantly innovate. But it’s also about constantly understanding that your best is yet to come.

You want an example of innovation? The rest of the world outside of fintech will look at innovation as making the process faster, more efficient, developing a slicker user interface so it’s more intuitive. And if you have ten steps, the rest of the world thinks innovating is creating something that’s modernized and faster – “Look, we found a way to do the ten steps, but it’s automated and cool!”

When you look at getting an edge in fintech, you have to think outside the box, you need to really think differently about the problem. And specifically, it’s a new world, it’s not a new version of the old world.

So rather than looking at how can we automate those ten steps, in fintech it’s actually a case of thinking “Do we need those ten steps? How can we actually get rid of those ten steps and make it two. Or better yet, can we just get rid of this entire process?”

A lot of the growth that has come in the industry has been from external views, non-traditional views. You need a very diverse team if you want to regularly deliver different ways to think about how to solve a problem, when the rest of the world is pretty set on doing a thing a tried and trusted way. It’s that outside-the-box thinking that really creates innovation. It’s exciting, but I think that’s also a constant challenge that all of us really have to be disciplined in.

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WOMEN IN TECH

Women in Tech: the importance of allyship

Women in tech: the diversity question.

THQ:

In tech, generally, there’s a longstanding patriarchy in terms of who gets to make those decisions and who gets to be part of those teams. Is that significantly different in fintech, particularly because of that idea of finding different ways of solving problems?

ME:

You mean is fintech more diverse?

THQ:

That’s absolutely what we were asking. With about eight steps cut out.

ME:

That’s a great question.

I think being underestimated can actually be an asset, an advantage. And really this is what you find with any unicorn company – it’s always the dark horses, right? The Trojan horse or a company that just comes out of nowhere, you don’t know what they’re doing. So in many ways, I think that fintech is more inviting to different opinions and different structure. However, there’s a flip side to that, where as an individual, it takes a lot more tenacity and grit to get ahead, because you don’t have an open door, you have to create your open doors.

In fintech, sometimes you have to make your own open doors.

But the good news is that you can create disruption, and it’s an environment where that is a breath of fresh air in many aspects. So again, there are pros and cons. I will say, the industry from even a decade ago, even five years ago, has changed substantially. Especially internationally, I think there’s a lot more inclusion.

But to your point, 28% of the tech workforce is women, and that has probably increased substantially as well – it used to be much, much worse. So starting out as a woman in business in technology, I will definitely say there were a lot more barriers when I started than there are today. But I think probably the number one barrier is actually our own self-confidence.

It’s not as much the traditional things – yes, there are barriers politically, there’s some prejudice, there’s still that glass ceiling, so to speak. But it’s also in creating that self-awareness and self-worth, that tradition has created a totally different ethos. So again, there’s two sides of the coin to look at. And there are things that we can learn from on both sides.

The normality insult.

THQ:

We’ve been talking to a lot of women in tech, and that’s something that they all mentioned – that notion of imposter syndrome being funneled into women, particularly in terms of looking at an industry that doesn’t foreground people like you, it makes you think “Well, clearly, that’s not for me.”

ME:

Right? I mean, I always say technology is an industry where if you’re called “normal,” it’s an insult. So it’s probably the only industry where if you’re crazy, you’re exactly on target, you’re going in the right direction. So I think creating that self-awareness and self-worth is crucial, and with women and other diversities it comes down to honing in and focusing on becoming an expert, and then performing – and then it’s no different to any other industry.

However, I will say, in fintech, you have a lot more opportunity to make a difference. Because everybody is challenging the status quo. That’s what it’s about. It’s about looking at different ways of doing things, not getting discouraged through failure and understanding. You don’t figure out what’s going to work unless you’re willing to try and try again.

We still need more women to shake up the fintech industry.

THQ:

So fintech is an unusual environment in the business world, because disruption doesn’t necessarily mean destruction.

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ME:

Yes, exactly. It’s welcome. Yeah, it’s bizarre. People want to figure out what is this thing, what’s going to work, and that means it fosters the whole concept of “Fail fast.” You’ve lost the battle if fear prevents you from trying something that might not work. You need to really be assertive and aggressive and have confidence in your ability to recover and be resilient and solve a problem.

The mantra of everyone in fintech?

Instead of having passion for “I want to achieve this goal,” have passion for the journey, and what you’re going to learn in the process. Because inevitably, you may not actually end up solving the initial problem you set out to solve, but you’ll expose ten other problems along the way. And when I talk to founders in the industry, we’re all cut from the same cloth. We started out thinking, “This is what I want to do.” And then on that journey, it became “Oh my gosh, look at this other issue!” And now I’ve discovered this whole niche and how to solve things even better.

In Part 2 of this article, we’ll talk about overcoming obstacles in fintech, especially as a woman in tech.

The post Women in tech: the fintech mindset appeared first on TechHQ.

ASVspoof5 is the fifth running of the automatic speaker verification (ASV) community’s spoofing countermeasures challenge, which begins this month. The event, first held in 2015, puts voice authentication to the test and the findings are used to make ASV more robust. And it’s telling that in 2021 – when the voice security exercise last took place – organizers added a deepfake task to the list of challenges for participants.

Such large-scale activities are essential to allow security experts to identify vulnerabilities and weaknesses in voice authentication systems so that developers can improve designs and strengthen defenses. In cryptography, competitions have been integral in selecting the most robust set of protocols – most recently in NIST’s post-quantum cryptography standardization process.

Voice cloning countermeasures

But in the case of ASV there are some key differences to highlight. “There are no theoretical guarantees, compared with cryptography,” Andre Kassis – a member of the Cryptography, Security, and Privacy (CrySP) Lab at the University of Waterloo, Canada – told TechHQ.

Recently, Kassis presented a study (co-authored with Urs Hengartner) at the 2023 IEEE Symposium on Security and Privacy, highlighting the rising threats to ASV, including the vulnerability of countermeasures to being attacked.

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And before digging into those results, it’s useful to review why biometrics often generate a mixed response from security experts. On the plus side, biometrics are unique identifiers, and ones that we have to hand. There’s no need to remember your fingerprint, for example. But that also points to one of the big weaknesses. Unlike passwords, biometrics aren’t secrets.

Twenty years ago, determined security researchers in Japan succeeded in fooling fingerprint scanners using a digital camera, photoshop, and food-grade gelatine. In the case of fingerprints, we leave impressions of our biometrics all over the place. And with the growth in social media and uploaded multimedia content, the same has become true for spoken words, which is a problem for voice authentication.

11labs new AI voice cloning technology is alarmingly good. pic.twitter.com/omEiuHYRf3

— Barsee (@heyBarsee) February 13, 2023

Anyone who’s given a presentation online could have left plenty of training data for voice cloning algorithms. In fact, a voice-cloning algorithm built by Microsoft’s natural language processing and artificial general intelligence team is capable of mimicking a speaker’s voice when prompted with just three seconds of audio.

And a few years ago, the technical hurdles of mounting a speech synthesis attack, would have been sufficient to deter unskilled attackers. But today, it’s reasonable to consider voice cloning as a mainstream tool. There are hundreds of videos on YouTube of people who’ve cloned their own voices and been shocked by how realistic the results sound.

The delivery of text-to-speech services to automate video narration and enable a host of other legitimate commercial opportunities for synthetic voices is booming. But as a market opens up for AI models capable of creating immaculate speech, voice authentication systems will come under increased threat.

In fact, given how believable AI voice models have become, security researchers such as Kassis are looking beyond deep-faked audio and focusing their attention on the countermeasures used by ASV systems to bolster security. For example, buried inside synthetic speech are artifacts that – while undetectable to human ears – can be identified through machine learning techniques.

Commercial voice cloning tools request that users provide authorization before creating any digital models.

In the time-domain, the acoustics of the human vocal track can be used to help discern words that have been spoken naturally from voice-cloned synthetic speech – an approach being pursued by computer scientists at the University of Florida. There are spectral characteristics too, which can be mined for information, but there may be a weakness here, as Kassis points out.

“The intensity of the human voice is more concentrated in the lower part of the audio spectrum,” he comments. “And at higher frequencies, systems may lose their ability to be accurate.”

For example, if an adversary were to spectrally-boost a sample of deep-faked speech, how would voice authentication countermeasures respond?

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In their tests, Kassis and Hengartner showed that open-source countermeasures, even ones that performed well in earlier ASVspoof challenges, could be evaded. And their method could fool most voice authentication systems within six attempts. “The key message from our work is that countermeasures mistakenly learn to distinguish between spoofed and bonafide audio based on cues that are easily identifiable and forgeable,” writes the security duo in their paper.

Back in the lab, the team is now working on a digital watermarking approach that it believes will be helpful in defending against deepfakes, including deepaudio. And considering current voice authentication systems, users may want to include two-step verification or additional multi-factor authentication (MFA) measures, rather than rely on ASV as the sole security challenge.

Commercial voice authentication systems – for example, as found in contact centers – typically provide agents with a risk score rather than a yes or no answer. And the technology can digest hundreds of signals, including features of the caller’s hardware and signal compression characteristics to produce so-called voice prints.

Voice authentication in the news

This ensemble approach could explain why some journalists have been able to fool their own banks into letting them check account balance details. For example, if we consider VICE Motherboard senior staff writer Joseph Cox’s experience – ‘How I Broke Into a Bank Account With an AI-Generated Voice’, it becomes clear that some voice authentication systems may be more robust than headlines suggest.

“On Wednesday, I phoned my bank’s automated service line,” writes Cox.

If he were using his own phone, then the handset microphone and its sound reproduction – captured as part of the enrolment process – would contribute to the positive match, lowering the risk score.

And when the system asks him to enter or say his date of birth, he chooses to type the answer, which adds legitimacy in a number of ways. Firstly, his DOB is correct. And secondly, the cadence at which he inputs the data – another security signal – will match the authentication records. Cox may have presented a synthetic voice, but his submission includes multiple truths that would harder for an attacker to impersonate.

Certainly, banks and other institutions need to pay attention to the risks of ASV systems, and events such as ASVspoof5, which has participants from industry as well as academia will help to keep the security sector well informed.

The post Crunch time for countermeasures as voice cloning goes mainstream appeared first on TechHQ.

• Money 20/20 has a huge number of fintech firms attending.
• It has curated streams, so every type of fintech professionals gets value.
• And it has must-see companies that are driving fintech world.

Fintech is sometimes a fickle industry. It can find itself swayed one way or the other, depending on how the world changes, how technology changes, and how the state of the world’s finances change from season to season, and quarter to quarter. That’s why, from time to time, fintech needs a stabilizing influence – and there are few more stabilizing, or exciting, than the Money 20/20 conferences.

The next event in the Money 20/20 series is taking place in Las Vegas – surely the home of all fintech. After all, what is a roulette wheel or a slot machine if not some of the world’s earliest technology for dealing with the redistribution of finance?

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But to make sure your fintech investment is less of a gamble, between October 22-25, 2023, Money 20/20 in Las Vegas will bring together over 11,500 fintech industry leaders, over 3000 leading companies, over 250 expert speakers and 7 constantly active content stages.

That’s more high-quality fintech talk and connection than any one mind can handle over three days. But, like a Man Vs. Fintech challenge – we encourage you to try. After all, the more you experience, the more likely it is that your business and your bottom line will thrive.

Money 20/20 – all the fintech you need.

Curated streams.

And while size may not be everything, it’s certainly true that an event as big and as packed with content as Money 20/20 can be intimidating if you’re not sure quite what you want to get out of it.

That’s why the conference has curated groupings and experiences, to help you squeeze the most value out of your three days in Vegas as you possibly can. If it’s your first Money 20/20 event, there are solo packages that can help point you in all the right directions, so you don’t lose time wandering around in awe – this is Vegas, after all.

If you have a fintech startup, you have a special thread of your own, to help you accelerate your business in the fintech sector faster.

The “Do Better Together” commitment at Money 20/20 has curated experiences for female and non-binary future fintech stars – look for the RiseUp thread, and you’ll find community, shared experiences, and the right people to help you build on what you have. Whereas black fintech entrepreneurs, and fintech operators from underrepresented groups are covered in the Amplify thread.

And if you’re keen to meet other fintech people like yourself in concentrated moments of connection, look out for MeetUps – 45-minute one-to-one sessions that let you exchange ideas, details, and ways to change the fintech world. There are MeetUp sessions for AML, LGBTQIA+, partnerships, sustainability, crypto, women in fintech, fraud, and more, meaning whatever aspect of fintech you’re in, the chances are there’s a MeetUp from which you can benefit.

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Keynote speeches have already been announced from FIS president and chief executive, Stephanie Ferris, and Michael J. Hsu, acting comptroller of the currency – with more to come between now and October.

But apart from the curated threads and the top-level keynotes, one of the biggest reasons to attend Money 20/20 is to introduce yourself to some of the wave-makers and the headline-makers of the fintech world.

Some of the players to watch at Money 20/20.

Cogo

One of fintech’s biggest concerns right now is also one of the world’s biggest concerns – forcing down carbon emissions before all the fintech in the world is meaningless as climate change engulfs us all.

Cogo is driving the pace in decarbonizing the banking and business worlds, particularly through its carbon management plans. If you’re in fintech – and especially if you’re in the banking sector, it would be a mistake to miss the opportunity to talk to Cogo about those plans, and how your business could benefit, both on the bottom line, and in terms of good planetary stewardship.

Veridas

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Another huge driver of business security these days is identity verification and management. Which means you’re losing out if you don’t reach out to Veridas at Money 20/20.

Using 100% proprietary solutions and spanning both the digital and the physical environment, Veridas makes the complex (and frequently tedious) business of verification and authentication straightforward and comprehensive at one and the same time.

With verification increasingly the subject of intense interest by regulators, you need to address the issue sooner rather than later. Why miss the chance to address it with Veridas in Vegas?

LHV Bank

Riding high off the back of its gaining of a banking license in the UK, LHV Bank is a leading supplier of finance and banking services to the SME sector.

It’s also dedicated to continually evolving its fintech, so as to incrementally improve its services for clients and customers – at a time when neobanks are struggling, and standard traditional banks are often waiting to see what happens in the economy before committing themselves to investing in improvements.

Slow and steady is a policy that’s bringing dividends for LHV, so why not check them out and see what you can learn from it in Vegas.

Copper.Co

Talking about non-traditional fintech, if you’re going to Money 20/20, don’t miss the chance to check out Copper.Co – masters of digital assets, and blockchain wizards.

2022 was, to put it mildly, an unfortunate year for cryptocurrency exchanges – from mega-hacks to complete collapses. Copper.Co is leading the charge in allowing users to trade without moving their assets to, or through, an exchange, to secure any transactions against the identified risks that exchanges have been show to possess.

If you’re into Web3, DeFi, digital assets or cryptocurrency, check out Copper.Co at Money 20/20.

Ekata

Fraud is the triumph of nefarious players over all the rules of the fintech game. As such it’s the enemy of the whole sector.

Enter Ekata, a subsidiary of Mastercard, delivering cutting-edge identity verification to protect the foundations of the digital economy.

With systems dedicated to reducing financial risk and avoiding lost revenue, Ekata is a must-visit at Money 20/20.

And while preparation and planning for Money 20/20 at Vegas is already ramping up, with some curated streams taking applications from June onward, if you absolutely can’t make it to Vegas, it’s not the end of the world – because Money 20/20 has two further conferences in 2024, one in Bangkok, Asia in April, and one in Amsterdam, Europe, in June.

For right now though, focus on Vegas – the super early bird booking discount has just over a week to run, so save yourself $700 of worm and get yourself and your business booked in.

Money 20/20 – it’s the only way to see the whole of the fintech industry clearly.

The post Seeing Money 20/20 appeared first on TechHQ.

• Generative AI could have a role in process management.
• The technology could help smooth international regulatory issues.
• It could free businesses to focus on their core strengths.

Generative AI seems like it’s almost everywhere, just eight months into its widespread existence. And every day new companies find new ways to embed it into their systems – including financial firms working internationally.

We spoke to Dennis Winter, CTO at Solaris, an embedded finance firm, to ask him what role he saw for generative AI in the future of finance.

DW:

Here’s the thing. We’re a very young company ourselves, so innovation has always been integral to what we do. That includes adding the likes of automation to our systems, so we understand the need to add new technologies.

No-one really identified machine learning as a thing that you should actually invest in. But then generative AI exploded in the last quarter of last year, when ChatGPT became accessible to more and more people.

Generative AI process proxies?

And if we look into the last three months or so, it’s mind-boggling what’s happened out there. In March, we had a hackathon internally, looking at how we could potentially use generative AI ourselves, and our engineers said it was quite interesting, but somehow it was too heavy for us to really use.

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Just a couple of weeks later, this whole project was taken up by the open-source community, and we ended up with a solution where this whole thing has shrunk down to a technology where you can deploy a large language model on a laptop, you can train it on a laptop, and you can utilize it in a specific area of your organization, which of course, significantly simplifies the whole question.

Everyone was concerned about how we could use objectivity for our work. When it’s in the United States, we’re sending our data over there, and we have no idea how the training actually works. Which means you run the risk of having data protection officers looking into how you’re using it.

I was at a conference last week, and the first CTO I ran into told me that he’s just founding an AI company which acts as a proxy between GDPR and the United States for AI SaaS organizations. Which means they’re trying to extract PII data out of a data stream, and then enrich it again on the way back.

Generative AI startups – there are more every day.

So there’s a lot happening in this whole regulatory field where AI could be used – data protection will always be an issue, particularly in the European Union.

THQ:

Where do you see the space for generative AI there?

Generative AI: organizational process development.

DW:

You have to think about organizational development. How do you adapt to such things and not fall behind? Because if you’re not doing it, there will be companies out there that right now are just playing around with it, but will come up with strategies to utilize generative AI.

First, you need to come to a conclusion about what you tell your people, what you do with the people working in the organization, because compared to say blockchain, generative AI has a very low entry barrier.

For people to understand and work with blockchain, people had to understand the technology – what a private key is, and what blockchain itself means, and how a general ledger works and so on.

For generative AI, you have this simple entry field that you know from Google, and you enter your question in much the same way as many people also do on Google. And all of a sudden you get a lot of information back.

Generative AI can help smooth out international business processes.

So helping people understand how to use it in a secure manner is crucial – as is working out how to leverage it internally.

People are waiting for a kind of iPhone moment, where they look at things again and find out that there are many processes internally that you can optimize or make more efficient using technology like generative AI.

Many organizations at the moment are going through this exercise of understanding what the actual use cases are which are really improved by generative AI and need those new language models.

The thing is that you can, for a lot of those processes, just use regular machine learning to get similar results.

But then there are new internal use cases for generative AI, like customer support, when you’re just feeding all your data, like all your tickets, into one language model, and you allow your customer service people to ask questions about the customers you have, what’s happened over the last couple of conversations, to make the process more efficient.

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THQ:

All of this sounds like a fairly reasonable approach to the new technology, no?

Generative AI: regulatory process checker?

DW:

If we take a step back, I’m convinced that the whole topic of machine learning and generative AI will show up more and more in regulatory technology companies, like the one proposed by the guy that I told you about, so as to keep other organizations compliant in regards to data protection.

THQ:

So, generative AI operating at machine speed to maintain jurisdictional compliance? Sounds like a good use of the technology.

DW:

Well, yes, because when companies are branching out, they go international, they want to work in different jurisdictions, and you have different regulations in these jurisdictions. And that puts a huge burden on companies, managing all that.

From our side in finance, we have a German banking licence, and just branching out into other countries within central Europe puts a huge burden on us, because there is slightly different reporting regulations, different tax regulations, and so on and so forth. And this just blows up your organization.

You usually go through a discovery phase, where you have a certain assumption, you set things up in a certain manner, then you find out that things need to happen differently in Italy, Spain, or wherever. And this process of bumping into the walls costs you a lot of money.

THQ:

So that’s where you see generative AI coming into its own? Smoothing out costly business processes?

DW:

Yes, my interpretation is that there will be more and more organizations that specialize in setting up processes from a regulatory perspective in the finance sector, in the health sector, and so on, particularly whenever it comes to data protection.

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They’ll help organizations to stick to the things they know best, where they can create their value. And at the same time, make their money by making sure that certain things are in check using AI, using efficient processes or machine learning.

In our case, that will include things like fraud detection, which is a global issue. But the background processes, the back office and things like that will be outsourced to organizations that are utilizing AI and machine learning.

Dennis Winter of Solaris.

In Part 2 of this article, we’ll explore what using generative AI as process translators could look like – especially in the wake of the open-source development of smaller, more concise language models.

The post Generative AI – the automatic process cop? appeared first on TechHQ.