Banks will tell you that the reason your payment is taking so long or has all of these extra fees is because of security measures that will protect your money as it travels to its destination. They’ll sit you down, explain the process and cost and say “it’s for security,” a time-draining but necessary measure to ensure all of your money gets to its destination.
Financial institutions have always claimed a level of security that others just couldn’t match, but in an age of abundant financial technology (fintech) startups, is this still true?
In an article for The Independent, Russell Robinson, vice president of solution sales management at Fico Europe commented on this very phenomenon, noting that “millions of customers have already left brands that failed to provide hassle-free, frictionless digital services.”
Banks are falling further behind in the fintech arms race as innovators utilizing advanced technologies like blockchain and end-to-end tracking offer more secure, efficient, and transparent solutions to individuals and businesses.
In today’s high tech and digital world, concrete walls and barred windows have been replaced by 2-factor authentication, firewalls, and digital encryption.
What does “security” even mean these days?
Security no longer means two guards at the front entrance, a vault door or even a password strength that includes one character, a capital letter, three numbers and the hair of a hairless cat.
When it comes to payments, security now implies aspects or processes like encryption, tracking, and 2-factor authentication. And as these security measures strengthen, so do the hackers and fraudsters that love to break them.
In 2019, KPMG released their Global Banking and Fraud Survey, which analyzed banks and their methods of tackling internal and external fraud threats.
Over 50% of respondents experienced an increase in the value and volume of external fraud threats between 2015 and 2018.
Money in transit is relatively easy to tamper with, and it happens all the time.
The banks surveyed said the most significant challenge in fraud risk was cyber attacks, fraudsters obtaining customer data through hacking, data breaches and other social engineering attempts, all factors outside of the control of banks. Understandably so, customers still consider it their bank’s responsibility to prevent social engineering fraud on their account. That is, scams that deceive or manipulate people into giving out personal information.
If financial institutions make their transfer processes more accessible, the security almost creates itself. But, these changes can be expensive, and evolving a process that has worked for so long can seem like more work than it’s worth. Especially if you’re dealing with a multi-billion-dollar financial institution.
Transparency is key
Banks can’t be held accountable for their accounts, and lost or stolen money, but more importantly they don’t want to be.
Traditional wire transfers — an archaic process still used by most banks — are still untraceable, expensive and unforgiving. But why?
They’ll tell you it’s for security measures or a ‘necessary complication’, starting with flat rates and hidden fees (for your protection). But, add on inflated currency exchange spreads and fees from each intermediary bank that handles the payment on route and you’ll start to see why wire transfers no longer give customers the best bang for their buck. Wire transfers can also only be tracked retrospectively, meaning one wrong number and your money could be lost forever. Finally, in an effort to find it, you will have to pay more and wait infinitely longer.
There will be complex processing “fees” and incessant form-filling that gives customers an illusion of security. But, once your payment is in transit, there really is nothing a bank can do.
The labyrinth that banks have constructed around payments forces customers to face the matador of lost time and funds. At the end, the treasure reached is a sub-par experience, and an even worse final product.
Transparency with payments means that you know where your money is all the time and exactly how much it’s going to cost you, doesn’t that make you feel more secure?
This is the space where startups and smaller financial technology solutions can surpass older institutions that only recently put forth an effort to invest in better encryption like blockchain technology.
Why today’s fintech is different
Modern fintech is constantly adapting to consumer’s needs. It enables them to choose how and when they want to perform their payments, while also ensuring they save the most money. Blockchain technology is a key example that combines security and non-complexity to make payment experiences better for consumers.
The beauty of blockchain is in its encryption, making it virtually hacker and tamper-proof. The public nature of it allows a blockchain money transfer to be monitored by all participating parties, or nodes.
The data structure created by blockchain cannot be altered or deleted – if someone wanted to tamper with the information, the majority of copies of the ledger (or transiting information) would need to change the same piece of information to get past the security measures. This is called “consensus security.” Think about newspaper distribution. If the same story was misprinted in a paper and then sent across a city, someone would have to trace, track and change every paper to be able to stop the spread of misinformation. Well, before TV.
Blockchain provides an extra level of security for business payments by providing hyper transparency. This method is unlike banks or government institutions that take advantage of heightened security measures that increase cost and make payments slower. The inherent nature of blockchain removes the need for this.
At Veem, the security of our customers is our top priority. But, we won’t sacrifice other needs like efficiency, transparency and simplicity to get there. Businesses still need to get paid on time, in full, and be able to track their money from start to finish. We needed to combine the security our customers deserve, with the features they need to grow.
And that’s exactly what we did.
At first log-in, Veem requires information and documents to protect both ourselves and our customers from potential fraud, scams or money laundering schemes. This keeps our network secure and makes sure your payments are going to Veem Verified members only.
On top of that, Veem integrates with your favorite accounting software to make sure you only have to enter your information once. After that, you’ll have access to accounting and bookkeeping services without the added stress and time of collecting and inputting all the information for a second, third or fourth time.
To take the concerns and time consuming aspects of security off your hands, we employ several tools and processes right into our verification system.
KYC – “Knowing Your Customer” is an important part of our verification process. By confirming the identity of both the sender and receiver, we ensure security throughout our platform. Choosing to work and support secure parties.
2-factor authentication – At Veem, we secure your accounts by requiring 2-factor authentication for each login. After you enter your password, a code will be sent to your mobile device that you will need to enter to get access to your account.
Browser encryption – All communication between your browser and Veem are encrypted to ensure any sensitive information is transmitted securely.
Real-time tracker – It’s important to know where your money is at all times. Our real-time status updates allow businesses to keep track of their payments from end to end.
Security is a priority but not at the cost of simplicity. Veem utilizes blockchain technologies as part of our multi-rail payments technology to ensure your money travels safely and swiftly. When you can have both, why would you ever go to the bank?
See how Veem can make your business payments simple.