Today in TechREG, the United Kingdom has announced that it is planning to introduce legislation to give more powers to financial regulators to oversee nonfinancial firms that provide critical services to the industry. While the government didn’t mention any particular company, cloud providers like Amazon or Microsoft may be affected by this proposal.
Plus, digital asset bank Custodia has sued the Kansas City Federal Reserve and the Federal Reserve Board to get a decision on its application to access the Federal Reserve’s Master Account.
UK Government Wants Financial Regulators to Oversee Amazon, Microsoft Cloud Businesses
The U.K. Treasury released a policy paper Wednesday (June 8) proposing a new regulatory framework that would provide the Bank of England (BoE), and the Financial Conduct Authority (FCA) with new powers to oversee tech firms that provide critical services to the financial industry. The government is concerned about the growing dependence of banks on cloud computing, as these services are mostly provided by a handful of players. If many firms rely on the same third party for material services and this company fails, it could have a systemic impact across the financial system, the paper argued.
Crypto Bank Custodia Sues Federal Reserve Over ‘Black-Box’ Master Account Decision
Custodia Bank, a Wyoming-based digital asset bank, has taken legal actions against the Kansas City Federal Reserve and the Federal Reserve Board to force the institutions to issue a decision on the bank’s application to access the Fed’s Master Account. The bank argued that the institutions have “unlawfully” delayed for 19 months the decision to grant it access. Custodia said the “defendants’ method for reviewing Master Account applications largely remains a black box.” The company cited numerous meetings and communications with the Kansas City Fed and the Fed Board and said “it remains a mystery” how they allocate decision-making authority for reviewing and granting Master Account applications.
DOJ Calls for International Cooperation to Fight Crypto Crime
The Department of Justice (DOJ) has released a report urging the U.S. to strengthen its coordination with other nations to investigate and combat crimes involving cryptocurrency. The report concluded that despite the steps already taken to combat the illicit use of digital assets, “efforts must evolve to meet the challenge.” The report recommended expanding the U.S. operational and capacity building efforts with international partners, increasing information sharing and closing regulatory gaps across jurisdictions.
BIS Doubts Public Blockchains Could Be Used for Payments
The Bank for International Settlements (BIS) has published a report highlighting the difficulties for public blockchains to become a suitable and successful means of payments. Building on permissionless blockchains, crypto and decentralized finance (DeFi) seeks to create a radically different monetary system, but the method suffers from inherent limitations, the BIS argued. A system sustained by rewarding a set of decentralized but self-interested validators through fees means that network effects cannot unfold. Instead, the system is prone to fragmentation and costly to use. Fragmentation means that crypto cannot fulfill the social role of money.
Australia’s Competition Watchdog Sues Airbnb for Misleading Customers
Australia’s antitrust regulator has filed a lawsuit against Airbnb, accusing the company of misleading users into paying more than advertised for their stays, Reuters reported. From 2018 to 2021, the San Francisco-based internet giant advertised and charged room rates in U.S. dollars without indicating the much higher figures in Australian dollars, the Australian Competition and Consumer Commission (ACCC) said in a court filing Wednesday.
Agentic artificial intelligence (AI) promises to improve operational efficiencies and the customer experience offered by enterprises.
The advanced technology is finding applications in loan underwriting and fraud detection, and now it’s moving across borders.
TerraPay Co-Founder and Chief Operating Officer Ram Sundaram told PYMNTS as part of the “What’s Next in Payments” series focused on exploring AI’s use in banking and by FinTechs that automated decision making and streamlined processes will continue to transform global money movement, especially as faster payments gain ground in cross-border transactions. That’s the inexorable trend, but as Sundaram put it, there’s still room, and a necessity, to have some human interaction in the mix.
In terms of global fund flows, TerraPay’s single connection ties more than 3.7 billion mobile wallets together across 200 sending and 144 receiving countries, touching 7.5 billion bank accounts. As one might imagine, coordinating and enabling the transactions is complex.
“Obviously, in the best-case scenario, everything goes smoothly, but when things are not going smoothly, that’s when the customer queries come in,” Sundaram said.
It’s no easy task to find out straight away where a transaction is, as analysts and representatives at the company have to look at logs and query partner systems.
“A lot of that work is done manually,” said Sundaram, who added that the agents “know the corridors and the markets that they are working in, but it still takes some time.”
TerraPay is using AI models with machine learning to bolster customer support and automate tasks as financial institutions (TerraPay’s client base) send payments in real time, and those payments are processed into local markets’ beneficiary banks.
“We still don’t trust [AI models] to let them respond to the customer straight away, but we can do the analysis, and then that gets reviewed by an agent who decides if [information] is accurate or not and then sends it off,” Sundaram said.
The same principles are guiding AI models and company practices to improve technical and security operations, analyzing and categorizing anomalous transactions and automating integrations with partner firms.
“Compliance is an issue where there is a lot of review needed of the alerts, and we are using [AI models] to speed up those processes,” Sundaram said.
Asked by PYMNTS about how agentic AI can be harnessed, he said: “In financial services, you can’t take chances on technology like this, which has the freedom to go wrong. You have to be careful about making sure that it’s 100% reliable before we can let things run entirely by automation.”
Agentic AI also remains pricey. For example, OpenAI is charging $20,000 a month for its specialized agents. However, Sundaram said the industry will become commoditized quickly, which will lower prices, and some open-source offerings are capable.
“There’s a fire hose of news about breakthroughs and new ideas and new ways of doing things that are coming out on a daily basis,” he said.
Data underpins it all, and Sundaram told PYMNTS that no matter what the application, the information fed into the models must be clean. Most organizations have a range of data sitting in different intra-company silos, and those silos need to come down.
In addition, the data must be structured so that it is accessible and can be synthesized by the models. Many firms may have more than 1,000 software-as-a-service (SaaS) resources to which they are subscribed but are not accurately tracked or monitored.
“Every database is separated, each one sitting somewhere else,” he said.
The days of stitching together those separate SaaS offerings to run an enterprise are ending, he said, and we’re headed to a future when data is collected in one place.
AI models and agentic AI “are extensions of what we’ve always valued at TerraPay, which means building the most efficient infrastructure possible in order to make sure that transactions are processed safely, quickly and affordably,” Sundaram told PYMNTS. “We see AI and [AI models] as powerful tools that help us scale all this very quickly while making sure we build more and more efficiency into the system.”
