Jun 9, 2021

Legend: James Goodfellow, inventor of PINs and modern ATMs

3 min
FinTech Magazine profiles James Goodfellow OBE, the inventor who in 1966 developed the PIN and ATM system still in use today

Previously in our ‘Legend’ section, we’ve examined the lives of prominent investors and financial minds. However, this time we’d like to pay tribute to an inventor who helped shape the modern world and yet arguably still isn’t quite a household name: James Goodfellow OBE, inventor of PINs and the ATM.

Born in 1937 in the Scottish town of Paisley, Renfrewshire, Goodfellow completed an apprenticeship at Renfrew Electrical & Radio Engineers in 1958. Following the completion of his national service, he found work as a development engineer at Kelvin Hughes (now part of Smith’s Industries) in 1961. During this time, UK banks sought a convenient way to reduce Saturday working hours while also maximising service for customers. The concept of an automated cash dispensing machine had circulated for at least three decades prior, but no one had been able to develop it successfully. In 1965, Goodfellow was tasked with the project.

It proved to be far from an easy one. Much like the tech projects of today, the proposed solution would need to incorporate convenience and functionality without sacrificing security. Interestingly, previous research had actually explored the use of sophisticated biometrics (voice recognition, fingerprints, retinal patterns, etc.) to satisfy the latter. However, the feasibility of these methods exceeded both cost boundaries and contemporary tech maturity and were subsequently abandoned. 

  • “I invented an automated system with an encrypted card and a pin number, and that's the one that is used around the world today"

Goodfellow’s key innovation was to combine a personal machine-readable card with a machine equipped with a numerical keypad. Used in tandem with a personal identification number (PIN), the two forms of encryption would be matched to an internal system for either acceptance or denial of service. Customers suddenly had a unique and safe way to withdraw their cash.

His invention received its patent (UK No. 1,197,183) on 2 May 1966. Later, in 1967, John Shepherd-Barron at De La Rue designed an ATM capable of accepting cheques impregnated with a radioactive compound. This was made available to the public in London, and Shepherd-Barron was afterwards widely credited as having invented the modern ATM, despite Goodfellow’s design being registered first and operating in exactly the same way as the ATMs still in use today.

In 2006, Goodfellow was given an Order of the British Empire (OBE) and was inducted into the Scottish Engineering Hall of Fame in 2016. Despite these honours, Goodfellow spoke of his regret to the BBC that wider recognition has eluded him for an invention that changed the world. It is in the spirit of setting the record straight that we honour him in this issue.

Each month, FinTech Magazine will be summarising the lives and careers of the most significant figures in finance. Read about them - as well as industry stats, infographics, exclusive interviews, and more - in our 'Upfront' section.

Image: James Goodfellow OBE (source)

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Jun 19, 2021

AI and the future of global trade

Michael Boguslavsky, Head of A...
3 min
Boguslavsky explores AI's potential in trade finance; could it overcome traditional barriers and usher in a new era of financial transformation?

Artificial intelligence (AI) is becoming entrenched in our daily lives, but the technology is still surrounded by misconceptions and skepticism. Ask the public and they may jump to dystopian scenarios where robots have taken over the world. 

While this makes for a good sci-fi blockbuster plot, the reality is different and more benign. Those products that Amazon suggested you buy? AI. That TV series you were recommended to watch on Netflix? AI. That self-driving Tesla car you crave to take for a spin? You guessed it: AI.

There is no single industry that is not being re-shaped by technology. Until recently, however, there was one noteworthy exception: global trade. Fortunately, that is slowly changing.

The mechanism that underpins global trade – trade finance – is an industry that remains largely paper-based and reliant on manual processes. This US$18tn a year industry is now being influenced by a new wave of technological innovation, including AI.

Exploring the potential of AI in Trade Finance

AI refers to the use of computer-aided systems to help people make decisions or make decisions for them. It relies on large volumes of data and models to make sense of information and draw intelligence. 

In trade finance, AI is helpful in analysing quantitative data, and the repetitive nature of trade finance means that there is a lot of non-traditional data at our disposal. 

This means that when trade finance providers need to assess the risks of funding a transaction, AI models can be a very efficient tool for data analysis and reveal intelligence and risks relating to small companies.

AI helps the industry move beyond traditional credit scoring processes, which are often outdated and remain reliant on historical accounting entries – a barrier that prevents small companies from accessing trade finance and has resulted in a $1.5tn global shortfall. 

Overcoming the barriers

AI can tackle this shortfall by creating accurate credit scoring models. This can include a company’s payment history, measure the risks of funding a transaction, identify supply chain risks, and benchmark them against their peer group.

Trade finance providers can use this information to communicate effectively with their SME clients, ultimately helping establish better business relationships.

Towards a technological utopia?

The adoption of AI has the potential to do a lot of good in the industry, and the industry is in the early stages of radical transformation.

Advances are driven by fintechs as well as a willingness to change. The industry is working together to create new infrastructure for distributing trade finance assets to other investors in a transparent, standardised format. 

The creation of infrastructure is possible due to improvements in technology and integrated across the trade ecosystem in cooperation with banks, insurers, and other industry participants. 

It’s collaboration at its best: together, the industry is using technology to re-shape global trade as we know it.

This article was contributed by Michael Boguslavsky, Head of AI at Tradeteq

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