PayKun Payment Gateway: Fintech Weekly Issue 216: India's National Payment Platform Allows Citizens to Receive Cash at ATMs, FSC to Publish Guiding Principles for Virtual Asset Platform Operators by End of September

In India, people can now withdraw cash from their e-payment accounts. Recently, Hitachi Payments, a subsidiary of Hitachi, partnered with the National Payments Corporation of India (NPCI) to launch an ATM connected to UPI, India's e-payment platform. Users can link their bank accounts to the platform and withdraw cash from their accounts by scanning a QR code and withdrawing cash from the ATM without a card.

The Unified Payment Interface (UPI) is an electronic payment platform launched by NPCI in 2016. It allows users to transfer funds via mobile devices and supports the use of accounts from different banks through a single application. Users only need to enter their UPI account and password without having to provide detailed financial information. The platform can be used to pay utility bills, transfer money between friends, make payments at brick-and-mortar shops and support barcode payments. As of today, the system connects over 300 financial institutions in India and has attracted over 100 million users in the three years since its launch.

Hitachi Payments said that more than half of India's digital transactions are conducted through the UPI system. Moreover, in February this year, India's UPI system was connected to Singapore's e-payment platform, initiating cross-border payments between the two countries.

India has launched ATMs connected to the UPI system, allowing people to withdraw cash from bank accounts linked to the UPI platform by scanning a QR code and entering the UPI PIN.

The Financial Supervisory Commission (FSC) announced at a regular press conference that it will release the Guiding Principles for the Operation and Management of Virtual Asset Platforms and Trading Businesses at the end of September. The draft outlines ten key principles designed to govern internal controls, information systems, corporate ethics, and the regulation of domestic and foreign currency traders. These requirements include the need for platforms to manage assets separately from client assets, and to establish operational systems, information security, and mechanisms for managing hot and cold wallets. Meanwhile, operators of overseas virtual asset platforms must register under company regulations and submit anti-money laundering declarations to the FSC. (full text)

Cathay Securities' mobile application experienced two system failures within a week from 5 July this year.The FSC recently announced disciplinary actions against Cathay Securities and Cathay Futures, with fines of NT$1.5 million and NT$600,000 respectively. The penalty notice for Cathay Futures specifically cited that during a stress test of its certificate system, the firm only used a single account to conduct the test at different frequencies per minute, rather than using multiple accounts at the same time. This failed to accurately assess the system's capacity and the stress test was incomplete, resulting in system anomalies. The notice also mentions that the certificate system again experienced performance and response issues due to Cathay Futures' failure to implement adequate system resource allocations for improvement measures.

Other reasons Cathay Futures was sanctioned included inadequate system testing and recovery plans for the certificate system, such as failing to establish standard operating procedures for system failure recovery, failing to conduct parametric capacity testing of the connectivity mechanism between the certificate system and the database, and failing to incorporate trading security and stability into the quality of service standards for web orders.

Murray Roos, head of capital markets at the London Stock Exchange Group (LSEG), said that LSEG plans to use blockchain technology to improve the efficiency of traditional asset trading, from issuance to trading, reconciliation and settlement, according to the Financial Times. Currently, blockchain technology is mainly used in the trading process and if LSEG's plans are successful, it could become the world's largest stock exchange to offer an end-to-end blockchain ecosystem.

In addition, LSEG is considering a new company to drive the initiative, with the ultimate goal of creating a cross-border digital trading platform to facilitate transactions that are difficult to execute on traditional trading platforms, such as enabling a Swiss buyer to purchase an asset located in Japan from a seller in the U.S. LSEG is planning to launch its first marketplace next year, which will initially operate on a smaller scale, targeting the less transparent and more complex private markets.

Temenos, a banking systems provider, recently launched a solution for the secure use of generative AI tools, deploying generative AI and large-scale language models (LLMs) to automatically and accurately classify and tag customer transaction data in different languages and describe the data in natural language.Temenos said that firms will use anonymised data to train the models, which will be deployed on the bank's end, without the need to connecting the training data to a third party.

A Canadian financial institution used this tool during the testing period to provide customers with personalised advice on income and expenses. For example, customers could see different sources of income, including salary, interest, dividend or rental income, categorised by Canadian tax category in the bank's app, so that they could check their annual tax liability and adjust their tax reports. The year-end review feature provides statistics on spending and savings and allows users to compare themselves with others in the same income bracket.

HSBC and quantum technology company Terra Quantum recently announced a research collaboration to explore how quantum technology can generate optimised collateral portfolios.Terra Quantum noted that existing computational methods that rely on linear programming to find the optimal solution run into problems when complexity increases, which quantum technology can address.

HSBC have been exploring quantum technology since 2020 and believe it could revolutionise portfolio optimisation, fraud detection and information security. In March this year, they partnered with IBM to research the use of quantum technology in pricing and portfolio optimisation.

HSBC plans to explore a variety of application scenarios for quantum technology, including pricing optimisation, collateral optimisation, optimising Monte Carlo simulations in the construction of stochastic models, quantum machine learning and quantum key distribution.

Image source: HSBC

Editor: Li Yunxuan

Source: Compiled by iThome, August 2023