Japan has been bullish on virtual money and has set up a system requiring exchanges to be licensed to help protect consumers. The system is also meant to make Japan a global leader in the technology. Bitcoin has been a legal form of payment in Japan since April 2017, and a handful of major retailers here already accept bitcoin payments.
Identity and verification are interlinked concepts which have a critical role in the continued digital evolution of retail banking. From showing photographic ID to completing a transaction in person, to demonstrating proof of address when applying for a financial product, customer ID&V is something long-familiar in retail banking. But these methods of identification and verification still rely on the presentation of a physical document, a practice which defies the nature of digital banking, and conflicts with its main benefits like convenience, speed and remote access. Consumers are abandoning the branch in favour of mobile apps and online banking. Banks are now in a situation where traditional ID&V methods are being quickly redefined for the digital banking era, especially with the forthcoming PSD2 evolution.
Digital technologies are transforming the way people access banking services, as well as turning digital banking fraud into a fast-growing global industry. But huge regulatory changes are also approaching that will create new potential threats to bank security and give banks wider liabilities for fraudulent transactions on their customers' accounts. From early 2018, the European Union's second Payment Services Directive (PSD2) will come into force, alongside the Open Banking competition remedies imposed in parallel by the UK's Competition and Markets Authority on the country's nine largest banks. These two measures will oblige banks to facilitate the sharing of highly-confidential data with third-party services providers via Open Application Program Interfaces (APIs). For banks that have historically concentrated above all on protecting their customers' data and ensuring confidentiality, the PSD2/Open Banking rules represent a significant challenge; provided customers give their consent, banks must enable third parties to access the customer's transaction history and to initiate direct payments from their accounts to pay for goods and services.