Four innovations changing the face of the financial industry

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[ This article was originally published here ]

Technological advances and changes in customer expectations over recent years have made a huge impact on the banking and financial services sectors. In many cases, the transformation has been dramatic, with digital technologies enabling new services and totally resetting consumer expectations. For example, earlier this month NatWest Bank announced that it is trialing our biometric technology with credit cards in the UK, meaning that customers will soon be able to make ‘infinite’ contactless purchases that are above the current limit of £30.

The pace of disruption and innovation in finance is unlike anything we’ve seen before, but the industry has shown that it’s become much more comfortable with the shift to digital processes, whether internal or customer-facing.

With further innovation arriving almost daily – from opening an account with a selfie to social-media led cryptocurrencies – I’ve picked out four recent developments that in my opinion have had the biggest impact on businesses and consumers alike.

Making purchases with your fingerprint

While the smartphone industry kick-started the mainstream use of fingerprint authentication a few years ago, we are now seeing other biometric factors become part of our everyday lives, especially in payments. Furthermore, contactless payments have become so popular among consumers in the UK, for example, that they accounted for half of all debit card transactions in July 2019.

The biometric EMV payment card combines the convenience of contactless with the trust that is associated with biometrics, and with no spending limit.

The enrolment process for the card is very simple, secure and mindful of data privacy. Whether you’re activating your card at home via a secure sleeve or at the bank branch, there’s no biometric data handling outside of these premises. Your fingerprint is only stored on the card, and your bank has no access to this information.

The fact that the card keeps its ISO form factor and can be used in contact mode, or at the ATM for cash withdrawals, will ensure that EMV payment remains a truly universal payment device over the longer term.

Digital payments and mobile wallets

Ever wondered how paying with your smartphone for goods and services became so widespread? It’s thanks to a white label payment application, designed for mobile wallets that is based on EMV standards. The application supports proximity, in-app and online payments and it’s compatible with the latest security standards such as 3D Secure or PSD2. The technology can convert any type of plastic card, be it contact, contactless and even magstripe, into a digital card available on a smartphone in just seconds. The digital card can be used for in-store payments via NFC or QR code and also for in-app and ecommerce transactions.

This technology is widely deployed across the world, used every day by millions of customers. So, if you’re using a mobile wallet for ecommerce and contactless payments, it’s likely that it’s based on this technology.

Intelligent and adaptive fraud prevention

Authenticating users in any number of given scenarios is a challenge for every bank. But as the number of services that require authentication gets larger, managing them has become an increasing burden.

Support in this endeavor is here in the form of cloud-based solutions for user authentication management. These systems use multiple layers of real-time risk management algorithms to set an appropriate level of authentication for any use case, by leveraging contextual analysis and historical data. For example, it could determine how much authentication is required by examining the device the customer is using, the time of day and their location. This results in a secure and frictionless user experience for consumers, as well as reductions in operational and fraud management costs for the bank.

With banks adding new services frequently, a cloud-based management platform can allow them to flexibly integrate their own risk assessment solutions, or best-in-class solutions from third parties. This means they can try several solutions quickly to find out which suits their needs best or change their solutions as new types of fraud emerge. This way banks can maintain the best possible user experience, combined with low fraud rates, over time.

Using blockchain to manage customer identity

Today, we create multiple online login credentials, which are often unsafe, for websites and service providers – and in many cases we even use the same easy-to-remember password for multiple accounts. Managing several digital identities is not something our brains are wired to do. Besides the inconvenience, this also presents a huge security threat – insecure passwords cause an estimated 80 percent of breaches, according to a report from Verizon.

Financial institutions need access to users’ personal data in order to operate, and it’s important that this information is reliable and trustworthy. Adopting a decentralized digital ID platform based on blockchain allows organizations to provide customers with one consistent and secure process to register, login and transact in the form of ubiquitous digital identities. Incorporating blockchain into this process represents a major shift in power and convenience for end users.

For example, the Self Sovereign Identity scheme relies on blockchain to bring together trust and security to mutualize Know Your Customer (KYC) efforts and monetize access to verified information to relying parties. Instead of relying on a central authority to control the verification of IDs, it leverages the capabilities of multiple trusted parties that create attestations on the distributed ledger. The end user’s personal data remains under their sole control and they can decide what identity attributes can be shared and with whom.

It’s a hugely exciting time to be part of the financial industry due to the sheer pace and scale of technological innovation taking place. These shifts have brought countless benefits with regards to streamlining services and operations, fraud management, customer experience and satisfaction – and in many cases it’s already hard to imagine life without them. What do you think is coming next? Let us know in the comments below or by tweeting us @Gemalto.