All business decisions have risks and there must be mitigating strategies in place to manage adverse occurrences. Hearing your input and perspectives on these issues is an important part of the process for us, and I am fortunate to have the opportunity to meet with many community bankers in the Second District. Some of the most common themes I hear include: an appreciation for the recent regulatory reforms implemented such as the streamlining of the Call Report; the extension of the examination cycle to 18-month for firms under $ billion in total asset-size; and the current discussions around capital simplification. The comment period on capital simplification will close on April 9th, and I hope you all shared input to influence that important policy decision. 1/3  BIS central bankers' speeches  One area where we receive mixed feedback from bankers is the issue of off-site examinations. Some bankers love that idea, while others have stated they like the face-to-face interaction as it reduces the risk of miscommunication, misinterpretations or ambiguities. Still others prefer a hybrid approach with certain portions of examination work conducted on-site and others off-site. All felt critical meetings should be conducted in person. Today’s technology makes all of these options possible, and we will continue to exercise judgment and thoughtful communication with bankers to determine the best option. At the end of the day, our shared goal is a fair and accurate assessment for your institution, and we will continue to work together to accomplish this.
Security of payments The rapid development of e-commerce in recent years and the increased use of electronic channels to initiate payments pose new challenges related to ensuring the security and customers’ data. As of September 2019, it has become mandatory in Europe to implement strong customer authentication. This means that when an electronic payment is initiated, at least two independent elements from different categories – knowledge, possession and inherence – must be used in the process. In the case of remote payment transactions, e.g. via internet, an additional requirement is introduced to perform so-called dynamic linking – linking the code for each transaction to a specific amount and a specific payee. These requirements are implemented by the payment service providers in our country. For the practical implementation of these regulatory requirements, new technologies are again coming to the rescue. Recently, biometric authentication has shown great potential by providing verification of elements characterising the user: fingerprint, iris scanning, facial recognition, etc. Many payment service providers in Bulgaria have already introduced similar customer identification methods using mobile banking applications. Apart from convenience, this leads to a significant increase in the security of the payment process, allowing the use of biometric data for customer identification. On the occasion of the forthcoming review of the Second Payment Services Directive, a comprehensive assessment of the impact of strong customer authentication on the level of payment fraud is to be carried out.