Cypod: All in one - Julius Thomas

Traditional banks need to wake up to the fact that technology is changing everything, believes Julius Thomas who built his new establishment Q5 Bank from scratch, and clients are demanding more secure platforms than ever. He speaks to Future Banking about the importance of a modern, flexible security platform from Cypod when building his new bank.

Global card fraud losses last year totalled more than $8 billion, and have increased more than 10% year on year. Cyberattacks are becoming dramatically prevalent. As our society becomes ever more technologically advanced, increasing opportunities open up for the bad guys to get their hands on innocent citizens' details, and cost businesses a lot of money.

It's a matter of staying one step ahead; of putting systems in place that can prevent these incidences occurring in the first instance, but many banks are struggling to implement their own equipment to effectively minimise the security risk.

One organisation wanted to consciously defy this trend during the conception of its brand new bank. Aware that the prevalence of online devices had changed traditional banking beyond recognition, the founders of Q5 wanted to learn from the mistakes of others to create an innovative flexible platform - from scratch - with the latest cloud-based technology, which met the general public's increasing demands for advanced security.

"We looked at becoming a client, and transferring funds in a traditional bank. The way the banks operated by giving advice on what to do with money, and the services they could provide," reveals Julius Thomas, a partner at the company who was instrumental in setting up the brand.

"I mean, could they give me money? Could I borrow money? What kind of criteria was it? What kind of collateral did they ask for? For each of these things that we asked ourselves, we found out that the banks can do very little. And if they could do something, it turned out to be very difficult."

Becoming a bank's client is usually no easy task, he acknowledges. They require a lot of details and identification before one is allowed to open the simplest of accounts to use for rent and identification purposes, for example.

"That has the same compliance level as if you want to put $100 million in your account. We thought: that doesn't add up," he says. "What we found was bad or difficult about the banks today was, well, basically everything."

Banking bonus

With a legal and financial background, he'd also noticed the hierarchal nature of staff in a typical branch made banking less flexible than he wanted. A different clerk for a particular service made facilitating something less specific tricky, because each employee was only aware of the workings of their particular department.

"You go in circles, and you do not get proper answers. Now, what we need to have is a flexible bank that has a nice approach to you and can offer you things, rather than earning as much money from you as possible."

That's what they set out to achieve with Q5's implementation in 2009. Five years on, it's now a core assembly of experienced legal experts, financial advisers, professional compliance officers and traders working directly and actively with partners.

It's a streamlined process, says Thomas. The person you're talking to will know everything about the bank and what it can offer. They act as a coordinator of all services, rather than a specialist in one area.

But the primary catalyst for the project was the realisation that there just wasn't the same need for a physical bank as there had been in the past.

"We looked at the online banking situation, where security is really important," says Thomas. "Most people, when they refer to a bank, are talking about logging into a banking app on a mobile phone or computer."

Unless you need something special, you don't often pay the branch a visit, he notes. Q5 wanted to take that online, mobile and modern approach to a bank and combine it with the flexibility its clients craved.

Such a modern bank would require a thoroughly modern security platform. Despite advances in technology to minimise security risk, a lot of banks have failed to adopt such systems. Thomas acknowledges that adapting to new technology is expensive, but he also believes that it's a question of politics when large banks shrug off innovative solutions.

"Sometimes, we discover that the guy who implemented the technical security solution for the bank is one of the board members, and he's never going to change that for something else because he's getting a piece of the cake," he explains.

And, if you can't describe the benefits of a new way of doing things and get the board to believe it will be a big step forward in relation to the costs required, it's not going to happen.

Problem solving

Q5 has managed to solve the cost-benefit equation by partnering with Norwegian-based security technology firm Cypod to provide benefits and reassurance to its clients. Cypod's device provides a highly secure client-side environment with several-factor authentication for multipayment applications.

"Because we're a new bank, we're flexible and we can adapt; we're open-minded; we don't have policy problems; and the techniques work very well together. We're a perfect match there," says Thomas of the partnership.

He believes it works with Cypod because the organisation scores highly in three important categories for Q5: the device itself, the technology underpinning it, and the people.

"The technology and the security level that they have is very well thought through. It's a high-tech security system that complies with everything in the latest model interfacing from that region," Thomas reveals.

Cypod's device itself also fits with Q5's brand. A silver platform with a colour touchscreen, gives it a universally up-to-date feel.

"All those things look much neater than any other bank device that I have in my pocket because they look old, because they are. But this has a much more modern look to it," says Thomas.

Additionally, he reveals it all comes down to complementary attitudes. Cypod's employees think in the same fashion as Q5 does, he says. They understand a modern approach is necessary in banking today, and are aware of its flexibility to adapt the technology that it has honoured. The partnership has enabled sending money to be much easier too.

"With the features of Cypod and the banks together, sending money from one point to another is much easier because you can basically print your own cash card," Thomas explains. "You can give it to your child and load it with money. It can be reloadable, and you can send money from one country to another without Western Union. You can load the card just by clicking your finger on the mobile app,"

A new hope

Everything is thought through from the beginning and the technology created from scratch, so it's fully functional.

"It can easily be expanded at a low cost because it's building on the same system," Thomas says.

He has high hopes for the platform in the future. He knows more banks need to follow suit when it comes to protection and security, adapting to new technological systems and being one step ahead of the fraudsters.

"I think the bad guys are always one step ahead," he says. "And so, we need to turn that around a little bit; the technology's always there, and that's how the bad guys get their hands on it first.

We need to immediately and easily adapt to these new changes so we can prevent things from happening because we all have the same information. The problem is that the bad guys use it faster to do bad things, and we need to be as fast to prevent them doing something bad to us," he concludes.

The Cypod is an intelligent access-control module that increases the ease of use and security of authentication.