The Short Names

In what appears to be a significant and somewhat groundbreaking decision, a federal court in Illinois ruled that a couple whose online access to their credit line was compromised could hold the bank liable for failing to adequately safeguard the account.  (Shames-Yeakel v. Citizens Financial Bank / Case No. 07-C 5387) (first blogged by the Digital Media Lawyer Blog here and picked by Wired’s threat level here).  Wired links to the ruling here: [pdf].

Background:  the facts are *somewhat* straightforward.  The plaintiffs were customers of Citizens Financial Bank.  In 2007, someone gained unauthorized access to plaintiffs’ credit line, obtained an advance of $26,500, transferred the amount to the plaintiffs’ account, then to a bank in Hawaii, and finally to an Austrian bank.  By the time the dust settled, and plaintiffs reported the situation to the bank, the miscreants were long gone, and the Austrian bank refused to refund the money.  Citizens (plaintiffs’ bank) was unable to retrieve plaintiffs’ funds and told plaintiffs it intended to hold plaintiffs liable.  Citizens sent plaintiffs statements when monthly payments became due, and when plaintiffs disputed and failed to pay, Citizens sent the matter to collections.  Plaintiffs brought suit (I think) seeking to hold the bank liable for the loss, and alleging violations of other rules, including the Fair Credit Reporting Act, Truth in Lending Act, and the Electronic Funds Transfer Act. 

What happened?  the bank moved for summary judgment.  The court denied the bank’s motion, holding that the bank could be liable in negligence for failing to adequately secure the plaintiffs’ account.  As the Digital Media Lawyer blog notes:

The aspect of the case that may have the largest precedential impact was its decision on the plaintiffs’ negligence cause of action.  A major basis for the negligence claim was the theory that financial institutions have a common law duty to protect their members’ or customers’ confidential information against identity theft.  While the court did not find controlling state law precedent on point…it noted that Indiana courts have held that a bank has a duty not to disclose information concerning one of its customers unless it is to someone who has a legitimate public interest.  The court then stated:  “[i]f this duty not to disclose customer information is to have any weight in the age of online banking, then banks must certainly employ sufficient security measures to protect their customers’ online accounts.

There were several other claims, some of which survived and some of which didn’t, and many factual disputes (was the account used primarily for personal or business purposes) , but the key portion of the ruling is on plaintiffs’ negligence claims.

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The take aways? 

Out of Pocket Loss:  I guess the first one is that data breach claims may succeed where there is actual out of pocket loss.  This is pretty consistent with what the courts rejecting data breach class actions say, but to date, the claims (from a consumer standpoint) have not been presented in the context of actual money stolen. 

What Security Standards Should Have Been Used:  The court’s discussion of what standards the bank should have used is interesting.  Citizens just used a standard user name + password means of identifying the users, and the court was receptive (at least at the summary judgment stage) that the bank should have used more (e.g., an identifying question in addition to name and password, computer identification, tokens, etc.). 

How Was the Account Compromised:  The court didn’t discuss this much, but I was definitely curious as to how the plaintiffs’ password was compromised.  Maybe they were careless with it, or gave it to someone?  Maybe they used open wifi?  There wasn’t any actual evidence that the hacking occurred on the bank side.

What About the Terms of Use:  The bank pointed to exculpatory language in the terms of use, but this did not undermine plaintiffs’ claims.  The court didn’t go into detail on this point, but one way of looking at it is that contract language doesn’t always limit claims based on negligence.  There’s always some wiggle room as to whether a claim sounds in negligence, and some resulting uncertainty as to whether contract language sufficiently insulates against these claims.  Some duties cannot be disclaimed by contract.

State vs. Federal Law:  The court’s decision here is based on state law.  To the extent this represents any sort of a trend, companies operating across state lines will lobby for some sort of federal legislation governing this, at least as to particular industries, such as financial institutions?

Should Other Types of Online Providers Be Worried:  The court’s decision is based on recognition that “fiduciary institutions have a common law duty to protect their members’ or customers’ confidential information.”  What types of institutions does  this cover, in the internet era?  How about Facebook, for example?  Does it have a common law duty to protect its members’ confidential information?  Probably not, but I’m guessing this is something that will come up in the future for them.

Nokia (NYSE: NOK) used the opening day of its two-day Nokia World gathering in Stuttgart to announce a widget that lets mobile Facebook users add location data and maps to their status updates. It’s a lifecasting plugin for the existing beta Ovi Maps app and uses handsets’ built-in GPS.

But it is a pretty modest step, given Nokia’s previous grand LBS announcements like Point & Find, which hasn’t yet been delivered to the mass market. Nokia’s previously heralded SoLo (social location) idea, which would combine the phonebook with location data, is again due to be discussed.

In his keynote, CEO Olli-Pekka Kallasvuo addressed onlookers’ criticisms that Nokia has been too trigger-happy with its announcements: “The critics have been right,” he said, promising all services previewed at this Nokia World will be available to try within 48 hours.

This year, Nokia finds itself with falling market share, a worsening image in the US and behind Apple’s curve on smartphone UI innovation – but it still has the opportunity to deliver location-based services to the masses.

“We know we still have a lot of work to do,” Kallasvuo said, “but we have a solid plan in place … our ambition is nothing less than to create the biggest delivery platform for services for mobile …

“Piece by piece, we are building a new Nokia. Is it an up-hill climb? Of course it is, and we still have a way to go – but we at Nokia relish the role and challenge of the underdog.”

Although the latest flagship consumer handset, the N97, has received poor reviews, Kallasvuo said it was selling at a faster rate than its popular N95 predecessor. Future Nokia devices will come in three categories, he said: “Phones, smartphones and mobile computers.”

Nokia World is giving the handset maker a chance to further discuss the Booklet 3G netbook (full specs, €575 price), N900 smartphone and Nokia Money announcements already made in the last two weeks.

But it also announced two new touchscreen music phones, the X3 and X6, which will be a Comes With Music device, and an N97 mini, a slimmed-down version. Release.

Nokia Messaging is getting an upgrade to facilitate status updates to social services.

NOTE: Please use the company’s name as 3i Infotech ONLY and not as 3i or 3i Info

 

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State Bank of India, 3i Infotech launch India’s online financial inclusion model for rural India

 

Mumbai – August 28, 2009 – 3i Infotech Foundation (3i Infotech) has joined hands with the largest bank in the country, State Bank of India to provide revolutionary Kiosk Banking facilities to the rural citizens of India. 3i Infotech Foundation is a National Business Correspondent for State Bank of India, and shall leverage the I-SERV stores of 3i Infotech across rural India to provide banking services to the hitherto unbanked population of the country. These services include opening of Accounts (No frills, Savings, Current, etc) as well as Cash transactions, apart from facilitating such services like various types of Loans (Crop, Home, Automobiles, Business loans, etc.), and deposits (Fixed and Recurring Deposits).

 

The tie-up, which will provide SBI access to over 6,000 villages in Tamil Nadu alone through more than 2,000 I-SERV stores of 3i Infotech (apart from various other states where it will be gradually rolled out) over a course of time, will go a long way in achieving the goal of financial inclusion in the country, especially in rural India. This model, whereby, the I-SERV stores of 3i Infotech become a virtual bank for rural citizens, holds promise of taking banking to the remotest corners of the country.

 

The State Bank of India has been at the fore-front of the technological developments in this area and has been able to successfully develop a simple and easy-to-use internet based banking transaction model. This model will involve the use of biometric devices which will enable verification and authentication of the identity of customers through recognition of their fingerprints. It will therefore enable a rural customer to carry out the aforementioned banking transactions at the remotely located Kiosk, instead of having to travel several miles to the nearest bank branch.

 

Mr. J Chandrasekaran, Chief General Manager, State Bank of India, Chennai Circle said, “SBI has pioneered the use of technology to build an online financial inclusion model, thus simplifying the processes and cost required to reach out to the remotest corners. SBI is happy to partner with 3i Infotech Foundation to offer the banking services through their I-SERV stores into remote rural India”.

 

“3i Infotech is committed to utilizing technology to add value to rural lives. The I-SERV initiative of 3i Infotech brings together a plethora of services across spaces like education, agriculture, banking, travel, and insurance to the rural citizens – all aimed at enriching rural lives. With its emphasis on introducing such services, for rural customers in particular, I-SERV is proud to bring the SBI Kiosk Banking Initiative to Tamil Nadu. We are sure that this initiative will scale-up rapidly and bring real value to a large section of citizens in Rural Tamil Nadu”, said Mr. Anirudh Prabhakaran, Executive Director & President, South Asia, 3i Infotech.

 

For more information, please contact:

M.B. Battliwala

Senior General Manager

3i Infotech Limited

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E-mail: battliwala.mb@3i-infotech.com

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            Logica’s messaging hub, FASTWIRE Open, benchmarks at record five million messages per day

Benchmark enables banks to reduce costs and manage business expansion

 

August 28, 2009: Logica ,a leading IT and business services company, today announced the results of a high-performance benchmark test carried out on FASTWIRE Open, Logica’s messaging hub, powered by IBM processors. The hub can now process over five million SWIFT Fin messages per day. The test was carried out in conjunction with a tier one banking client, which is one of world’s largest users of SWIFT – demonstrating the hub’s ability to support global banks.

 

FASTWIRE Open can scale to support the future growth of user banks, enabling them to not only reduce operational and network costs but also to take advantage of high throughput and adaptability to meet their demanding and growing requirements.

 

“Banks need to gain greater efficiencies if they are to preserve profit margins, given escalating payments volumes and sustained revenue pressure,” said Andy Schmidt, research director at TowerGroup. “Centralised messaging hubs that are scalable and integrated give banks the flexibility and control that their payments businesses require. This allows banks to achieve savings through reduced messaging costs – savings that can be passed on to clients.”

 

Tim Brew, director of global financial products at Logica, commented: “Payments volumes are increasing exponentially as global banks continue to grow, either organically or through M&A activity. Our high performing financial messaging hub enables banks to reduce costs by consolidating their multiple systems onto regional or global hubs. The client that participated in this test has proven that its future FASTWIRE Open-based messaging platform will support significant growth in its messaging traffic. The solution can clearly support our clients’ business expansion, but it also enables banks to reduce the overall cost per message and handle the ever increasing occurrence of unexpected volume peaks in messages.”

 

The benchmark test was undertaken by Logica at IBM’s performance testing facility in Montpellier, France, during June 2009. FASTWIRE Open, Logica’s messaging hub, achieved a throughput of up to 200 messages per second, while actively using only 16 processors, exceeding the target of 150 messages per second.

 

For the test, the system processed SWIFT format messages while concurrently managing day-to-day activities such as archiving and database replication. The platform used an Oracle 10g database, operating with Oracle RAC and Dataguard, and was based on IBM 64-Core Power6 5GHz Based Power 595.

- ends-

NOTES TO EDITORS

 

About Logica

Logica is a leading IT and business services company, employing 40,000 people. It provides business consulting, systems integration, and IT and business process outsourcing services. Logica works closely with its customers to release their potential – enabling change that increases their efficiency, accelerates growth and manages risk. It applies its deep industry knowledge, technical excellence and global delivery expertise to help its customers build leadership positions in their markets. Logica is listed on both the London Stock Exchange and Euronext (Amsterdam) (LSE: LOG; Euronext: LOG). More information is available at www.logica.com.

 

 

About Logica’s payments expertise

Logica has more than 30 years of experience in delivering payments products to the largest financial institutions. Logica is the only company to provide an end-to-end payments hub enabling banks to move from duplicated, siloed payments systems to a modern hub environment. Logica’s All Payments Solution (LAPS) can process the full range of payment types (retail, domestic, international, urgent/timed, single and mass payments) within a single deployment. It is fully SEPA compliant and live, supporting SEPA in over 10 countries. LAPS is the only payments hub capable of supporting SEPA transactions beyond current domestic-level requirements. It can provide any global bank with a single consolidated Europe-wide SEPA deployment for when payments traffic merges in the near future from domestic to SEPA.  Furthermore, this massively scalable and high performing solution enables banks to optimise hardware utilisation and reduce infrastructure costs. For further information, visit http://www.logica.com/payments/400012772

 

About FASTWIRE Open

 

FASTWIRE Open is Logica’s high-end, network independent messaging platform. Based on Logica’s proven service-oriented open architecture, it delivers high performance and reliability on modern low cost infrastructures. It processes and routes all message types including payments and securities messages in SWIFT, ISO, XML and proprietary formats – enabling banks to choose the most cost effective route saving on unnecessary transaction fees.

 

 

Media contacts:

 

Sabrina Mukund                    

Logica India

+91 96633 81233

sabrina.mukund@logica.com

 

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Genesis Burson-Marsteller

+91 99863 62428

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Nokia (NYSE: NOK) announced a new service today called Nokia Money, which will allow people without bank accounts and credit cards to access financial services, so they can easily do things such as pay utility bills or send money to another person via a phone. Release.

The service has a huge potential target market given that mobile phone ownership significantly exceeds bank account usage in some countries. For instance, there are more than 4 billion mobile phone users and only 1.6 billion bank accounts in the world. Nokia did not say how the business would work, and whether it would receive a portion of each transaction, much like PayPal. The Nokia Money service will be developed by Obopay, a company Nokia invested in earlier this year. Nokia will show off the service at its own Nokia World even on Sept. 2 and 3 in Stuttgart, Germany, and will launch it gradually to selected markets beginning in early 2010.

Mobile payments are clearly seen as the next step for delivering financial services to hundreds of millions of people, who don’t have access to banks on a regular basis. Often times, its difficult because of geography—people are not close to urban centers where banks can afford to have physical branches. However, it sounds like Nokia will have to build up some infrastructure, too. In a release, it said it is building a wide network of “Nokia Money agents, where consumers can deposit money in or withdraw cash from their accounts.” It’s unclear if that’s a physical location, however, it does make sense that deposits will have to be made in person to some extent.

Nokia also said the service will be open and interoperable with other payment services as well, which may help with that burden.

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