Beware of new threat of cyberattack to worldwide banks

17

October

2017

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Earlier this year, 5 European banks have been reportedly stolen of up to 10 million dollars each by an unknown well-organized cybercrime organization.

How does it come about?

The 6-month-long theft operation happened like this: The attackers initially recruit mules, economically enticing them to open bank account with given counterfeit documents. Upon receiving debit cards, the attackers gained access to bank employee’s credentials via phishing websites or emails, gradually acquiring control of processing network. With the malicious installed payloads, the attackers were able to manipulate risk ratings and overdraft limit at random, while at the same time removing all anti-fraud control in place. The adept cash withdrawal took place   instantly within minutes after the draft limit change made via card management application.

How well-planned was the cybercrime organization?

Some victim banks even remain unconscious of the loss well after the completion of criminal action. All these evidence strongly indicates this as a knowledgeable, well-organized cybercrime group. In addition to adopting emerging high-end tactic coupled with physical elements, they elaborately select solitary ATMs, mostly in remote areas, but essentially without security guard protection and without withdrawal limit. Moreover, the attackers spared no effort in wiping out the criminal tracks by leaving an exe. in the system before restarting it. Thanassis Diogos from Trustwave’s SpiderLabs security team even expressed not previous knowledge about this TYPE of attack ever before, which is really astonishing.

How shall the other banks worldwide react in the future?

The key lies in cooperating and learn from failures. In retrospect, though, inspire of the well-planned criminal, banks have many more things to do in terms of enhancing its defensive system. First, filtering and management of phishing emails.   Second is regulation of personal card risk ratings and overdraft enablement. Cyber attacks is a eternal topic across all industry, affecting individuals alike. In order to prevent potential loss in the future, banks worldwide shouldn’t just sit around, but collaborate together, with stronger resolution to combat against die-hard cybercrime.

Sources:

http://www.computerweekly.com/news/450427919/Cyber-heist-hits-banks-in-Russia-and-eastern-Europe

https://www.darkreading.com/endpoint/cybercrime-gangs-blend-cyber-espionage-and-old-school-hacks-in-bank-heists/d/d-id/1324222

 

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Further thinking on pricing strategy of information goods

27

September

2017

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Unlike ordinary physical goods, information goods bear extremely high fixed costs and virtually zero marginal costs for reproduction and distribution, thus scheming out differential pricing strategies is crucial for producers to reap profit. As discussed in class, the price discrimination can be classified into 3 groups: First degree price discrimination (perfect price discrimination), second degree price discrimination (group pricing ) and third degree price discrimination( versioning price).
Practically, perfect price discrimination is too ideal a pricing strategy because of its implementation difficulty. As for group pricing strategy, the marginal revenue for incremented sale is already very low, thus it won’t make sense to conduct group pricing strategy for information goods. Finally, third degree pricing has been applied in many ways in terms of information goods pricing. Principles of classification include user segmentations, product classifications, etc. However, someone has pointed out that there still exists certain feasibility problems hereof. For example, airline company intends to offer differentiated prices to business travelers and tourists, but how to distinguish business travelers from tourists is a problem.
However, for information goods, costs come not merely from reproduction and distribution. Cognition costs, which refers to time and energy that consumers have to invest in certain information goods, constitute a unavoidable part of product costs. Typical example include the different user interfaces and usabilities of Microsoft Office suite and other similar softwares.
Another pricing theory mentioned in class is bundling. Mixed bundling wins overt competitive edge over pure bundling because of its flexibility in choices for consumers. One interesting comments in the article” Bundling, pure bundling and mixed bundling” raises questions of a weird phenomenon that people tends to buy things that they even don’t want as a bundling. Similarly, bundling boosts sales for low-use journals which might be otherwise cancelled by subscribing institutions [HaOp99]. One rationale behind it might be derived from consumers’buying behavior of gaining extra advantages even if they don’t want the things contained.
So does the revenue of information goods producers really come merely from consumers payment? Is there any information goods almost offered for free but are still operating robustly? Yes, there really is. In reality many information goods around us are free of costs, for instance, newspaper and magazines. The bulk of its revenue comes from advertising. They would be more than happy if more consumers are willing to take a look of their products.

Source:
https://www.forbes.com/sites/hbsworkingknowledge/2013/01/18/product-bundling-is-a-smart-strategy-but-theres-a-catch/#24aa258d7a51
http://firstmonday.org/ojs/index.php/fm/article/view/473/394#SECTION0003
https://www.helpscout.net/consumer-behavior/

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More than shopping——Local convenient store tells you who your neighbors are

13

September

2017

5/5 (2)

Despite that we have been talking about big data for so long, never have we seen a truly smart grocery store in the sight. Can you imagine entering a store specially designed for you and your community, with precisely the cinnamon flavor biscuit you love, and exactly the Spanish red wine that your parents prefer?  That’s what I am going to share with you today——Tmall community store in China.

How it works

Alibaba, China’s biggest online retailer,  aims to transform the operating model of thousands of  local grocery stores. Armed with big data analysis and precise marketing, the local grocery stores will be specifically rebuilt upon storeowners’ conditions and local consumers’ preferences. For instance, Alibaba will decide upon product categories and quantities based on storeowners’ age and investment, store area and consumers’ portrait. Furthermore, the intelligent distribution system will track down sales and inventory of every products, make analysis and automatically adjust stock plan. More interestingly, you could even guess from the dog food from the store that your neighbor is a dog lover, or your neighbors are more in favor of Colgate toothpaste other than that of Crest! Wouldn’t that be fun!

How well it works

Junwei Store, a local grocery store in Hangzhou, China, has been operated by a couple for years.After first trial and renovation, things are completely different. As we can see from the picture below, the store used to coduct inventory management and accounting manually, with 6000 SKU, but nowadays with data-driven intelligent system, the store can withstand larger capacity of sales volume with fewer labor force.Statistics show that there is a sales increase of 45% and increase of 26% in consumer flow.

Old look of Junwei Store

Fig 1: Old look of Junwei Store

New look of Junwei Store

Fig 2: New look of Junwei Store

Future outlook

In the long run, the whole-new Tmall community store will know more about you and your family member, and even prepare the Decathlon tent for your trip on next Monday( Who knows how it knows it!). Tmall community stores will also consider integrating whole business chain, including suppliers and superior distributor, so as to make data analysis more precise and stock supply more intelligent and efficient. All those big data analysis and whole-link analytical system are just gonna add more color and life to the convenient store in your community!

So in terms of new operating model for physical grocery store or convenient store in the future, do you have any other expectation? How can we make our shopping life more convenient and tailored to individual? What might be the new opportunity for e-commerce in terms of conjunction with local stores?

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