BITS CTO Corner

CTO Corner is BITS’s monthly publication covering emerging trends and technologies in the financial services industry.


CTO Corner: Identity Proofing and Authentication

May 1, 2015

This CTO Corner discusses current identity proofing and user authentication processes, reviews current weaknesses, identifies current efforts to strengthen them, and explores what else the financial services community could be doing. User identification and authentication are key components of any system that needs to restrict access to its data and resources, which includes many financial service applications, such as payments and on-line banking.

CTO Corner: Artificial Intelligence Use in Financial Services

April 2, 2015

Artificial Intelligence (AI), defined as the theory and development of computer systems able to perform tasks that normally require human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages, has been around for over 60 years.1 In his 1950 paper “Computing Machinery and Intelligence,” Alan Turing opens with: “I propose to consider the question ‘can machines think?'”2 He proposed a test of a machine’s ability to exhibit intelligent behavior, equivalent to, or indistinguishable from, that of a human being, which is now known as the Turing Test.3 AI as an academic discipline began at the famous 1955 Dartmouth conference organized by John McCarthy from Stanford University and Marvin Minsky from MIT.4 This CTO Corner explores both the potential for AI to transform the financial services industry and challenges it presents.


CTO Corner: Tokenization in Financial Services

March 9, 2015

Data breaches at merchants and rising concerns about payment fraud is driving greater interest in “tokenization.” Tokenization also addresses other long-standing concerns including the increasing proliferation and accessibility of customer credentials and sensitive information over the network. This CTO Corner discusses tokenization, including: what it is, how it works, who benefits, how it relates to other payment security solutions such as EMV and end–to-end encryption, and challenges surrounding its use and deployment.

CTO Corner: An Assessment of Cyber Insurance

February 9, 2015

2014 marked an important milestone in the growth of cyber insurance with a significant jump in both the number of companies offering cyber insurance and the number of firms buying cyber insurance. Currently, over fifty major insurance providers now offer cyber liability insurance coverage.


CTO Corner: Do Drones Have a Role in Financial Services?

January 9, 2015

This CTO Corner explores the potential impact of drones on financial institutions, including whether and how they may be applied, and the challenges they present with respect to resiliency, security, privacy, and regulatory compliance.

CTO Corner: e-Cash and Bitcoin and Future of Money

November 1, 2014

In May 2013, I wrote a CTO Corner about Bitcoin1 where I reviewed how it works as well as factors that are both driving and inhibiting its acceptance in the marketplace. This article updates my assessment based on events that have occurred during the 18 months.

Bitcoin is an electronic cash system using peer-to-peer networking, digital signatures and cryptographic proofing to enable irreversible payments between parties. Back in the 1990s, at the start of the commercialization of the Internet, there were many start-up companies offering different e-cash schemes and other innovative payment schemes, but only PayPal succeeded because it addressed the need for on-line payment options for Internet auctions, such as eBay.


CTO Corner: Sharing Economy

October 1, 2014

The sharing economy (sometimes also referred to as the peer-to-peer, mesh, or collaborative economy) involves people lending and sharing assets and services directly with each other, coordinated by a sharing network usually running over the Internet. The sharing can involve almost anything, including Wi-Fi connections, electrical power, rooms, meals, cars, boats, parking spots, car rides, energy, skills and talents, travel experiences, restaurant and theater reservations, and money, and can include activities such as swapping, collective purchasing, and shared ownership. It often results in new communities, organizations and business models. And it is not just for individuals, the web makes it easier for companies to rent out spare offices and idle machines. Start-ups in this emerging category have received huge injections of capital from venture firms. Analysts claim that revenue from the global sharing economy could hit $335 billion by 2025.3 Forbes estimates sharing economy revenue will surpass $3.5 billion in 2013, with growth exceeding 25%,4 and Time considers the sharing economy to be one of “10 Ideas That Will Change the World.”5

CTO Corner: Why Encryption Is Essential and How to Address Potential Vulnerabilities

September 1, 2014

To meet the growing cyber threat it is important for financial institutions to increase their understanding of encryption, a complex subject based on mathematical theory and computer science practice. Although encryption is only one of a number of important and valuable security tools, it is one of the least understood, and as cyber defenses improve and encryption is deployed more widely, we should expect attackers to improve their ability to successfully attack encryption and expose sensitive information. This article provides an overview of encryption, including:


CTO Corner: Impact of The Internet of Things on Financial Services

August 1, 2014

As more consumer devices connect to networks and people, new opportunities and challenges arise. This article discusses the growth of the Internet of Things (IoT) and the ways it could impact financial services. It builds on my June 2013 article, which focused on IoT security and interoperability challenges.

CTO Corner: The Future of Payments

July 1, 2014

Over the last few years, we have seen a growing number of new innovative product offerings in the payments area. Three events are contributing to this accelerating rate of innovation: