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Social Value Creation Report "Safer Cities & Public Services"

Renewed trust in demand
A secure and safe digital society realized by co-creation

The advancement of mobile networks and the permeation of digital technologies,such as AI and IoT, into diverse realms are changing our environment at an unprecedented speed. This rapid digitalization is drastically changing our lifestyles, making our lives and society more convenient and useful, but on the other hand, expanding the threats of new crimes and other problems.

The quick-paced spread of digital services throughout our lives and society can open channels for unexpected fraudulent activities. Once customer data is compromised, a business operator not only loses customer trust, but may also suffer monetary damages and even a business continuity crisis. As society becomes more digitalized, investment in credibility is key to business continuity.

Together with customers, NEC thinks about the security and safety of digital society and contributes to realizing a society where people can reliably use digital implements. This report discusses the progress of digital society and introduces NEC's cutting-edge technologies, including biometrics and AI, as well as the sophisticated applications of these technologies and NEC's concept for the development of a new framework to realize convenience without sacrificing security or safety.

Diverse values and new risks brought about by digitalization in society

Digital services to rapidly infiltrate people’s lives and society

The rapid proliferation of smartphones and the evolution of networks are changing our reality at an unprecedented speed. With multiple devices mutually connected and the Internet filled with useful services, we can now easily get what we want from our smartphones in the palm of our hands.

The worldwide B2C e-commerce market in 2016 for Internet shopping was valued at 1,920 billion USD, a 23.7% year-on-year growth. A two-digit year-on-year growth is expected until 2020, showing how smartphones and the Internet are now indispensable to our lives.*1

Sharing services, where users share or lend/ borrow space, goods, human resources, skills, and other assets, are also rapidly expanding. We are seeing a stream of new services arising such as vacation rental and bicycle sharing, as well as skill sharing, where the expertise and skills of individuals registered online are provided on an hourly basis. The accumulative market size of the countries of the sharing economy was 15 billion dollars in 2013, but it is estimated to increase to 335 billion dollars by 2025.*2

Demand for security and safety in the digital age

The wave of digitalization is rapidly growing against the backdrop of convenience, while also giving rise to various problems and user anxiety.

As an example, with sharing services, user impersonation and breach of service provision contracts are seen in everyday life. Services that do not ensure security and safety can lose users. Incidents of security breaches of customer data managed in-house have harmed business operators’ credibility and caused operators to be liable for damages.

In the Global Risks Report 2018 published by the World Economic Forum (WEF), cyberattacks and data fraud or theft ranked among the top 5 as most likely risks of the year. In particular, data fraud or theft is a new risk added in 2017 that can cost business operators significant sums to deal with.

Against the backdrop of digitalization, we have begun to enjoy and experience unconventional benefits. Simultaneously, service providers are faced with the need to guarantee a higher level of trust.

  • *1:
    Source: “FY2016 Report on Platform Developments Concerning Data-driven Society in Japan” by the Ministry of Economy, Trade and Industry
  • *2:
    Source: “FY2017 White Paper on Telecommunications” by the Ministry of Internal Affairs and Communications

Developing authentication platforms to support security and safety worldwide

Personal authentication and identification system used by 1.2 billion people in India

While digitalization progresses rapidly, shored up by the convenience it brings, it is imperative to build systems with which users can use digital services with peace of mind. Throughout the world, state-run initiatives are underway to realize convenience without sacrificing security or safety.

One such initiative is the Aadhaar program in India, a system for identifying and authenticating registered individuals. Aadhaar is a biometric ID system promoted by the Unique Identification Authority of India (UIDAI)*3 for the purpose of fairly providing public and financial services to citizens and preventing illegal access to welfare benefits. More than 1.2 billion Indian people are currently registered. Using unique IDs issued to individual citizens simplifies various procedures, including providing social security services and opening bank accounts for individuals, by virtue of biometric identification using fingerprints, face images, and iris images to prevent impersonation.

Through the combination of the Aadhaar program and India Stack, the framework for creating a shared national digital infrastructure, an ecosystem is created for the citizens of India that facilitates the development of innovative solutions such as e-KYC, digital signing, unified payment services, etc.

Credit information platforms to become social infrastructure across public and private sectors

Estonia is another digitally progressive country. The government issues an eID card, embedded with an IC chip including electronic certificates for authentication and signature, to every citizen aged 15 or older. Estonians can complete electronic voting and other administrative procedures online as well as use private sector services, including buses, railways, and other public transportation, and subscribe to mobile phone services with just their ID cards. Today in Estonia, citizens can receive services by an app-based Smart ID in addition to Mobile-ID and SIM, which stores certificates on a SIM card.

The backbone of this system is X-Road, a data exchange platform developed by the Estonian government. Outstanding security is achieved by the secure linkage of distributed databases that respectively keep data within themselves.

 Recently in China, a credit scoring system called Sesame Credit, run by Ant Financial, who is known as the provider of the Alipay online payment service, has become commonplace. Sesame Credit quantitatively scores credit based on previous payment history, personal information, and SNS service relationship data. Users with high scores are eligible for benefits such as deposit-free service use.

In the light of the coming digital society, the development of authentication and credit information platforms is accelerating worldwide as a social infrastructure that supports digital services across public and private sectors and industries.

  • *3:
    Unique Identification Authority of India (UIDAI) is a government agency that serves as the issuing authority for Aadhaar unique identification numbers (UIDs) and cards

Service providers’ new measures against fraud in the digital age

Initiatives in detecting fraud using advanced digital technologies

The digitalization of society has made our lives drastically more convenient, which has been the primary attraction of this trend. Nevertheless, however convenient digital services may be, it is meaningless if they cannot be used safely. As digital technologies now comprise our lives’ infrastructure, a concurrent realization of convenience without sacrificing security or safety is in demand.

To cater to this demand, digital service providers have started taking measures to improve service reliability by adopting artificial intelligence (AI) for security and safety. For example, flea market app Mercari has started analyzing previous violations and using AI and other new technologies to detect fraud in parts of their operations. Yahoo Japan Corporation also announced its plan to use deep learning starting in 2018 for fraud detection in selling and tendering performed on the Internet auction site Yahoo! Auctions.

Aggressive implementation of AI is also observed in the financial and securities industry. In February 2017, the Tokyo Stock Exchange announced that they would be among the first in the world to adopt AI for fraud detection. Both SBI SECURITIES Co.,Ltd. and Rakuten Securities, Inc have started demonstration trials to discover market misconduct using deep learning.

Creating systems that prevent fraud from ground up by design and technology

Services are beginning to be planned for “security by design” to ensure safety and systems that are inherently fraud- and crime-proof.

A familiar example is Japan’s Suica and other smartcards for public transportation. Not only do such digital systems enable quick passing through ticket gates and reduce chances of problems as part of improved convenience, they also achieve fraud-fighting mechanisms that prevent cheating on fares.

The next-generation shop Amazon Go is another example. Users display a member barcode on their smartphones upon entering the shop and leave when they are finishing picking their purchases. In the background, ICT-driven processes complete payment via the customer’s Amazon account based on the data of what they chose. The customer traffic and product selection are digitally managed and linked with credit card information, which hinders criminal activities such as shoplifting. These examples well-represent the achievements of security system development using digital technologies to prevent fraud and other crime in the real world.

The simultaneous achievement of convenience, security, and safety by advanced digital technologies is key to accelerating further digitalization.

NEC’s efforts to realize security and safety in a digital society

NEC’s biometrics Bio-IDiom to become the key to the digital age

On one hand, digitization has blessed society with overwhelming convenience.on the other hand, as the real world grows closer to the digital world, the new risk of frauds and crimes, such as impersonation or data fraud , also increases. To prevent this, it is thus necessary to correctly maintaining the seamless continuity between the real world and the digital world.

This is where biometrics authentication using face, fingerprint, vein, iris, etc. come into play. Recognition based on bodily characteristics makes it remarkably difficult to impersonate another individual and thus ensures a high level of security. At the same time, the lack of physical media, such as an ID card, saves rightful users from having to implement measures against loss and theft.

NEC’s face recognition has won first place four times consecutively in NIST’s benchmark evaluation*4 and is contributing to safety and security in various areas of the digital society.

For example, the Aadhaar Program in India has adopted NEC’s biometrics. It registers fingerprints, face images, and iris images as biometric information and uses them in combination to compare data for personal identification. By issuing a unique ID to each registered citizen, the system ensures their reliable access to various services.

Another example can be found at Universal Studios japan., where face recognition is used for personal identification at admission, greatly reducing admission waiting time as well as preventing unauthorized entry and ticket scalping. *5

NEC contributes to creating “the world everyone can use digital at ease” by effectively exploiting face recognition and other biometrics based on biological information unique to individuals. NEC calls its biometric technologies Bio-IDiom and makes efforts to deliver a wide range of solutions for everyone.

Creating a cross-operator credit information platform using blockchain

Blockchain is another effective means of maintaining the seamless continuity between the real world and the digital world.

NEC has commenced a joint project with SBI Holdings and SBI BITS that involves a demonstration trial of Know Your Customer (KYC) operations using blockchain technology for the first time in the industry with 14 financial institutions. This trial is intended to increase convenience for customers at the time of opening accounts at securities companies and to streamline the operations of securities companies by sharing KYC information quickly and securely among other securities companies through the use of the blockchain technology, which is characterized by its reduced susceptibility to data falsification and loss, as well as enhance the safety and security of the gateway to the digital world. This is expected to bring in an estimated 1.7 million potential customers who are hesitant to open accounts due to procedural hassles accompanying financial activities.

  • *4:
    Ranked number one in performance in the video face recognition benchmark evaluation held by the American National Institute of Standards and Technology (NIST) in 2016 with a data collation accuracy of 99.2%. Following the still image evaluation, NEC received the world’s first ranking in four consecutive evaluation.
  • *5:
    NEC is an official marketing partner of Universal Studios japan™. TM & ©Universal Studios. CR18-1014

AI keeps an eye out for frauds and crimes in the digital society

AI prevents frauds and crimes in the financial and securities industry

Data volume is drastically increasing day by day in every industry. To build a secure platform, fraudulent activities must be ruled out from the vast amounts of data.however, human-based fraud detection leaves room for things being overlooked and the inability to respond to sudden increases in data volume, thus making it unrealistic. To deal with this issue, NEC works with the financial and securities industry on detecting fraudulent activities inside the system using proprietary AI (RAPID machine learning).

Japan Exchange Regulation (JPX-R) and Tokyo Stock Exchange were the first in the world to apply RAPID machine learning to market surveillance operations. In market surveillance operations, first the orders suspected of market misconduct are systematically extracted from a wide range of activity based on preset criteria. The extracted data is then subjected to the surveillance personnel’s review to single out suspicious cases for further investigation.

However, due to the massive amounts of data initially extracted, the surveillance personnel’s monitoring has reached its limits. AI application is in progress to tend to resolving this problem, and as a result of verifying its effectiveness, we have demonstrated its high accuracy in determining the possibility of misconduct.

Similar initiatives have been taken at SBI SECURITIES Co.,Ltd. and Rakuten Securities, Inc, and the momentum toward further application of AI in the financial and securities industry is only likely to increase in the near future.

AI-driven fraud detection to become essential for all services

The RAPID machine learning that we introduced recently is deep learning technology that is characterized by fast, light operations. Machines learn past market misconduct data via RAPID learning to take on a large portion of initial reviews undertaken by surveillance personnel, reducing their tasks to allow them to focus on transactions that require advanced analysis. This also enables the surveillance personnel to capture new market misconduct trends that may have previously gone undiscovered.

NEC’s original cutting-edge AI technologies called “NEC the WISE*6” includes this RAPID machine learning and Heterogeneous Mixture Learning, where machines predict the future based on patterns and regularities that they automatically identified from miscellaneous data. The conglomerate can flexibly and swiftly respond to social issues that continue to become more complex and intricate.

While the financial and securities industry takes lead in AI-driven internal fraud detection, the rapid rise in data volume is commonly observed in all industries and business areas. It has become imperative for business operators to develop systems to prevent fraud and ensure security and safety. In the near future, the utilization of AI will spread to diverse realms, including retailing, distribution, and content development, for purposes such as detecting illegal ticket resales and fraudulent online advertising and blogging.

NEC will continue to advance AI to an even more practical level and contribute to the realization of a secure, safe, and convenient digital society.

Co-creating a digital society that offers security, safety, and convenience

Coming of the age where trust is key to business continuity

The relationship between service operators and customers are drastically changing amid the progression of digitalization and reform in societal mechanisms and customer awareness. A typical example can be seen in sharing services. People’s way of thinking shifted from possessing to using things, creating a change in the relationship between customers and operators.

For example, mutual-help systems between customers, such as ride sharing and vacation rental, are rapidly increasing, which is bolstered by the emergence of platform operators that directly connect people providing goods and/or services with people who want to use them. Business operators themselves are also starting to provide services that share idle assets, such as bicycles and offices.

While the relationship between operators and customers is changing, what is necessary to enhance service and quality as well as continue building competitiveness is data on customers and usage records. This requires business operators to offer further security and safety to customers. In cases where fraud or customer information leaks occur on a platform, the operator running that platform may lose customer confidence, which can further lead to destructive consequences such as loss of trust as an enterprise, monetary loss from damages and compensation, and even compromise business continuity. In order to prevent such consequences, it is essential for business operators to offer further security and safety to customers.

While the advancing digitalization brings the digital world closer to the real world, reliability becomes key to business continuity. NEC believes taking measures with the following three aspects in mind to be important: the aforementioned “maintaining the seamless continuity between the real world and the digital world” and “detection of fraudulent activities in the digital world” as well as “designing and building a fraud-proof system.”

Co-designing systems for secure, safe, and reliable services

NEC puts weight on the concepts of Security by Design and Privacy by Design, which plans and designs systems that forestall frauds and crimes in consideration of security, safety, and privacy. In line with this, NEC developed Bio-IDiom, i.e. biometrics that identify individuals using body characteristics such as fingerprints and face/iris images, and proprietary cutting-edge AI technologies called NEC the WISE, and original blockchain technology that provide fast, secure transactions. NEC aims to create fraud-proof systems by combining these advanced technologies with its proven findings on the development of secure systems. Nevertheless, a digital-safe society cannot be realized with technological advancement on its own. A synchronized maturity of societal culture, morals, and legislations conforming to the digital age is also necessary.

Through co-creation with customers, NEC wishes to contribute to the design and realization of a secure and safe society where people can use digital services with ease of mind.

If you have any comments or concerns regarding the contents of this report or NEC initiatives, please feel free to contact us.

(February 28, 2020)

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