Our primary goal is to help you to understand FinTech and to become more confident and persuasive in your ability to analyze and make recommendations to executives within the finance industry regarding how to react to these changes. This FIRST MOOC ON FINTECH IN ASIA-PACIFIC offered by HKUST presents the views of several professors from the top business school in Asia as well as perspectives from industry professionals. HKUST has been ranked for many years as the number one EMBA program in the world, as the number one Finance program in Asia, and as the top MBA program in Asia by multiple independent rating and review journals and surveys. This course offers the combined strengths of HKUST in Business, Finance, and Technology as one the world's leading academic institutions on an important area of technology and business innovations. For students from outside Asia, this also gives an insight into changes happening in the most advanced FinTech markets of the world, since Asia leads worldwide in FinTech adoption and creative innovations. This course (FinTech Foundations and Overview) is part 1 of the HKUST FinTech specialization, there will be 3 other courses in the specialization including FinTech Security & Regulation (RegTech), FinTech Risk Management, FinTech Innovative Disruption: Implications for Society. The FinTech specialization will be launched in Fall 2018, stay tuned!
3.2: Identity, Privacy, and Anonymity (Part 1)
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來自 The Hong Kong University of Science and Technology 的課程
FinTech Foundations and Overview
10 個評分
從本節課中
The Tech of FinTech
The Technology enabling and supporting FinTech is important to understand, and this module provides a brief introduction to each of the areas of technology that enable FinTech business changes, including identity and privacy technologies, blockchain and encryption, big data analytics, AI and automation, and consumer tech innovations. This introduction is designed to be at a level appropriate for business managers or students of business, and is not intended to excite or engage tech geeks.
與講師見面
Theodore Henry King CLARKAssociate Professor
Information Systems, Business Statistics and Operations Management Department
Welcome back to our course on FinTech, foundations and overview.
In this session, we're going to be looking at one of the technologies underlying
FinTech which is the technology related to identity.
Closely linked to identity are also privacy and anonymity.
Sometimes we use alternatives or other perspectives on identity.
Maybe I care about privacy instead of identity or anonymity but they're
really all important in different magnitudes or aspects of our identity.
Identity is important in many ways in both the online world and the physical world.
And we'll talk about how do we identify ourselves today in the physical world,
and how is that different in the digital world.
Privacy also matters and sometimes I might identify
myself too much and revealed too much.
Like I go to a bar and bartender says,
prove that you're 21.
And I might show a driver's license.
That would prove that I'm 21,
it also proves what my weight is,
it also proves what my address is and maybe I don't want to reveal
those things but I have to to prove my age.
I might want to maintain more privacy and say,
"You don't need to see that.
Let me just prove what you need to know."
And in a digital world,
we could do more selective identity or verification of information and just share a bit,
but we may have to prove more.
And sometimes you may say,
"Well, I have nothing to hide.
I'm not embarrassed about my weight or my address,
or I'm not embarrassed about my age."
But sometimes you want more privacy,
and there are trade-offs with privacy.
Some societies value privacy more than others.
Americans think they like privacy and they do in many ways,
but America is one of the least private countries in the world in terms of data privacy.
Much, much data is available about you in many ways,
whereas we may say,
we're not as concerned about privacy in
some other parts of the world but Hong Kong for example,
has extremely high privacy protection.
Now, that's good in some ways,
it's bad in other ways.
When you have high privacy,
it's hard to do data mining,
it's hard to do big data analytics because you don't have as much data.
You can't find out as much about somebody.
You can find out much more about
an American person and do better analytics and therefore,
offer them a lower rate on a credit card or
a lower rate on a loan because I know more about you and therefore,
I can verify that your higher risk or lower risk.
So, I can give you lower health cost, lower insurance,
for life insurance, or other things because I can do better data analytics.
So, sometimes I would trade-off privacy to get lower price or greater convenience.
Anonymity is also sometimes important.
And sometimes you can do that in traditional markets and not just in online spaces.
For example, if I want to make my political donations anonymous,
I can set up a limited liability company,
a corporation, or an LLC,
or a trust, or foundation.
I may not have to reveal to the public who my backers are or donors are.
I may be able to create a shield so that something I'm doing may be hidden or anonymous.
You might be able to say, "Oh I see it's that entity."
But you may not know exactly who's behind everything.
And so, you may be able to have to some degree of anonymity
through virtual identities like corporations that exist online.
In some corporations, you know a lot about
their shareholders but others may be incorporated at
a place that does not allow such transparency and so you may have greater anonymity.
And if you value that,
there are ways to do that in the physical traditional world.
It just may be more costly or more difficult than it is in cyberspace.
So, we may be able to do anonymity cheaper in a digital world.
We may be able to do privacy cheaper, easier or faster.
And we may have some problems with identity but we may be
able to identify the owner of an asset easier than in the physical world.
Well, how do we do identity today, and historically?
It's important and it's fundamental to secure
financial transactions to be able to identify this is my cash,
this is my account,
this is my asset,
this is my property.
You care about identity,
you care about ownership and that's part of the financial world.
In ancient times, identity was often tied to your face,
or your family, or your name.
I know you, you're John Smith's son.
And I know John Smith,
and he's a man of honor,
therefore, you probably are a man of honor.
So, identity would be associated with your clan,
your village, your family, your face.
A merchant might say,
"Sure, I'll give you credit.
I've known your father for years,
I've known your brothers and sisters,
I know your family,
you're good for the money."
But that changes as society changes.
As society becomes more mobile,
the village breaks down,
our village becomes a global village or
at least a much larger more fluid village of people moving in and out.
We can't rely on the local community banker saying,
"I know you, I've known your father,
I've known your grandfather,
therefore, you're good for the loan.
Here's your mortgage on the property," or "Here's your money to start up a new company.
I know you're good for it."
That doesn't work as well in a modern society and so we need other proofs of identity.
And if we don't have proof of identity,
and we don't have ways to at least recognize people and verify identity,
we have a lot of inefficiencies of trying to connect information, goods,
people, we end up with bankless societies or other inefficiencies,
we end up with fraud.
And so, this is a problem in India with many people who don't have government issued
IDs or didn't in the past with difficulties of collecting taxes,
difficulty distributing social benefits,
food or other things to help poor people.
Difficulties of voting and fraud,
lots of inefficiencies and lots of fraud when you can't verify individual identity.
So, we care a lot about that not just FinTech but in society at large.
In the physical world,
to have verify identity,
we'll use different techniques.
For a long time, we've used signature.
That might work, but it's becoming increasingly
easy to commit fraud in one way or another.
You can copy a signature,
you can forge a signature,
and so signature may or may not work as a proof of identity.
It has limitations.
We may use some kind of documents or paper like a physical check.
How did you get a hold of that check if you're not the check holder?
Well, I may actually be able to commit fraud with that too,
it's not that hard to print a check.
It's not hard to photocopy a check with
digital photocopiers and magnetic ink and other printers.
I can commit fraud in that way too,
so that can be difficult.
IDs can protect your identity sometimes with pictures,
sometimes with magnetic strips that are
associated with the ID like a credit card that has a magnetic strip,
it's a piece of magnetic tape on the back of the card.
It might be part of your government ID or your company ID
that gives you access to buildings or other kinds of access.
This kind of digital information connected to a plastic card,
sometimes with a picture or other verification,
really came out of the 1960s.
In 1960, a employee of IBM came up with
a secure plastic card for
security services invented with this magnetic strip on the back,
and that's 60 plus year old technology,
almost 70 year old technology now,
which is still being used to a large extent for much of
the digital payments that we use in the financial world today.
Credit cards, that comes out of the 1960s.
So that's really old tech,
and it's not as secure as we'd like it to be, fraud happens.
Passwords can be used and often are used to protect
our identity both in the physical space and in the digital space.
You may enter a password to get into a building or a password to
get into a room within a building,
and you feel like that's secure,
it may or may not be secure.
Fingerprints or other biometrics may make you feel secure and it sometimes works,
it sometimes could be bypassed or find ways around it.
All of these things work sometimes in some ways,
but if our goal is to prevent fraud,
we may have problems.
Signatures can be defrauded.
IDs, pictures, magnetic strips,
codes on the back of a card can be stolen.
On average, in the United States, last year,
2017, there was one credit card fraud approximately every two seconds.
That's a lot of fraud across society.
Tens of millions of credit card IDs have been stolen.
Does that make you not want to use a credit card?
Well, you might worry about your security,
your ability to protect yourself,
but you also may say,
"Yeah, but it's really convenient.
So, I've got to live in the world."
Fraud also happens in currencies.
We have these documents like paper currency and fraud happens there as well.
You may do some things to protect yourself,
but it's not always easy.
Passwords are sometimes stolen or sometimes inadvertently shared.
Even fingerprints can be taken without your authorization.
For example, a young child ordering things from Amazon,
getting them delivered to her house and her mother says,
"How did this happen?"
Turns out, while mom was sleeping,
young daughter knew the four digit PIN to get into the Apple phone,
and while mom is sleeping was able to take a thumbprint and open the phone.
Then with one click ordering,
you can order anything you want on Amazon.
Just wait till mom falls asleep,
taking a nap in the afternoon and you can order anything to
your heart's content because you saw mom once entering the passcode,
and you know mom sleep sometimes,
and I can get the thumbprint.
Kids can be tricky now,
they're in your same household and you would say,
"How risky is that to fraud?"
But it could be risky and there may be other ways to use biometric frauds.
They're better than passwords,
but they're not perfect.
Documents are often relied upon.
Passports, shipping documents, other information,
these documents may prove that you own a car or that you own a property of other types.
But fraud can happen with these too.
You can have misrepresentation or forgeries.
So, what else can we do?
How can we do this in an online space?
Well, in a digital world,
facial recognition can be better and some ways better than the old village.
You may be able to say,
"Yes, that is you."
The AI verifies your face.
The information, the intelligence of the device says that's the same person.
It's better than a thumbprint because in the case of facial recognition,
you may be able to say with the iPhone X not only
do I want to see your face but blink twice with your left eye.
Now, the next thing says,
"Show me your face and smile."
So you have to do something more than a passive picture.
Passwords are still frequently used in a digital world,
they have some problems,
they're not perfect, but they may be able to be
helpful particularly if combined with something else.
It's generally good to have a password plus something else,
a two factor authentication,
but passwords are still frequently used.
Fingerprints, biometrics of other things often are linked to a smartphone.
Not all smart phones do facial recognition.
That's fairly new and high-tech,
but many of them use some kind of biometric verification as well as fingerprint,
as well as passwords.
Social media connections, put it in your Facebook account,
put in your Facebook password,
may be a way of verifying who you are and giving more identity,
but it also has some downside and that you may be giving
away a lot more privacy than you realized.
Secure Crypto ID is like private key infrastructure, private key,
public key can be used to verify identity in a secure anonymous or identified context.
That's a little bit advanced technology,
I don't really want to delve into that world and take you
through the world of PKI because it doesn't matter.
Let's just say, it's a technology that enables you to
identify people better than just a password alone.
It is more secure, and in many ways,
can be combined with other forms of identity to help protect yourself,
and are often very important when dealing in private, anonymous type transactions.
There's tradeoffs between security and high level of security and convenience.
In many cases, you want
the convenience and you're willing to give up some aspects of security.
Maybe inappropriately so, some people don't realize how much they're giving up
in security in order to be convenient or easy to use.
In coming to an end of this session on identity,
identity is important for digital transactions,
for anything in the FinTech space.
For many different areas of FinTech,
we care about identity.
We care about transactions between secure systems,
between IT systems to make sure that the transactions are secure and identified.
We want that for many applications in banking
and e-commerce and many other areas, payment systems, etc.
Sometimes, we also want ways of
converting from physical currency to digital currencies and back.
We want ways of going from a bank account to a cyber currency world or other kinds
of digital tokens or payment representations or value in a digital space.
Sometimes, we're also trying to conduct
transactions efficiently between people who don't know each other.
That may be in a trusted IT environment,
which is a little bit easier,
where you trust a third party and the bank is in the middle or somebody you trust.
But the most challenging is sometimes we want to do transactions between
people who don't know each other in an environment where they don't trust each other.
What's cool about bitcoin and some of the crypto currencies is we can now do
trusted transactions between people who have no reason to trust
each other over systems that have no trusted intermediary.
We can use the technology to create the trust for the transaction
without knowing the identity of the people or the identity of systems involved.
What we do identify is the assets involved in transacting.
So, we may not need to have identity of people,
we may have identity of wallets and coins that substitute for identity of individuals,
maintaining a level of security and
privacy and anonymity that would be difficult in a physical space.
So, in summary, identity is important for many types of applications in FinTech.
We have traditional ways of doing identity.
In the cyber world or digital world,
we have to augment those or think more broadly or differently.
As we think about new ways of creating identity,
either of assets or of individuals,
we open up new opportunities for new applications,
new ways of doing financial transactions,
new ways of reaching out to individuals,
either more secure or more efficient or more private
or more confidently verified in a quick and easy manner, more convenient.
Something about them is different and that creates an opportunity.
Identity is not a product.
Identity is a technology that enables different kinds of products to be developed.
So it matters, but it's a piece of a FinTech application,
and many different types of applications rely on being able to identify users or assets.
So identity matters, it's one of the underlying technology behind FinTech. Thank you.
