Never so Easy: How New Banking Technologies are Revolutionising the Industry
In June, UK bank Barclays spelled the eventual end to security questions, passwords and long frustrating phone calls by announcing the introduction of voice verification technology to its telephone banking service over the next year. The move to voice verification, through which the bank’s customers will be able to log into their telephone banking system simply using their voice, demonstrates the growing customer demand for new and innovative security measures.
However, voice verification isn’t the only new banking authentication technology on the scene. A wide variety of different systems of authentication are beginning to enter the market, with varying levels of support from customers. Intelligent Environments’ recently-released Future Password Index revealed nearly eight in 10 Britons would ditch passwords for more innovative security measures, such as biometric authentication which verifies an individual through the unique characteristics of the human body. These can either be physical, such as iris or fingerprint scanners, or learned behavioural traits, such as the way we speak. Here’s how banking customers ranked each method:
Surprisingly, only 27% of banking customers chose voice verification. Despite being least popular of the five methods rated in the Index and with the drawback of not always being the most appropriate security measure to use – for instance if a customer is outdoors or in a public place – it is still an excellent and extremely secure service. As a result, major banks such as ING Direct Canada have already begun implementing the technology in their mobile banking systems.
Although increased security is vital, with banking systems having to resist online hacks and security breaches on a daily basis, this often comes at the price of usability. As many US banks are beginning to demonstrate however, voice verification technology has the potential to strike the perfect balance between the two demands.
Thumbs up to fingerprint scanners
Fingerprint recognition topped the Future Password Index; 53 % of UK banking customers polled stated they would like their banks to integrate fingerprint scanners into their digital banking services as a method of security.
Fingerprint scanners are a form of biometric authentication, which enables customers to log into banking accounts simply by matching a stored copy of their fingerprint with the one being scanned. It is not surprising that it received the most support, as more people are getting used to fingerprint scanning being built into mobile devices. iPhone 5S sales of more than 10m have helped contribute to the major shift in consumer attitude toward this particular biometric authentication method, as consumers have become used to its intuitive TouchID fingerprint scanner, predicted to be incorporated into iPads shortly.
Banks worldwide are welcoming the increasing customer demand for fingerprint recognition. Biometric ATMs, which enable customers to withdraw or deposit money from their accounts simply by scanning their fingerprint, have already been introduced in Japan, Mexico and Poland. It is only a matter of time before this technology becomes more widespread and banks look at ways by which other forms of biometric authentication can be introduced to make customers’ lives easier.
A snapshot of the future
It’s not just digital banking security that is undergoing a quiet transformation. Following recent changes to legislation, UK bank customers will soon be allowed to pay cheques into their accounts by simply taking a photo of them with their smartphones. While sceptics argue the cheque is an increasingly outmoded form of payment, the reality is that more than 23m Britons still receive cheques as birthday gifts every year, while one in four payments to small businesses are still made via cheque.
One of the main inconveniences associated with the cheque is the hassle of having to physically visit a branch to deposit it. With smartphone cheques, this will no longer be an issue. Businesses regularly paid by cheque will immediately see the impact of this increased efficiency on their bottom line as the clearing cycle is dramatically reduced to two days. Smartphone cheque deposits are also a positive move for banks. Not only can they offer technology and systems to fit into their customers’ busy lives, but they can also dedicate more time to other important services while cutting down on administrative costs.
This is a step in the right direction, as banks and governments are increasingly recognising the need for inclusive technology which integrates both reliable current methods with the latest technology. Indeed, Barclays is already trailing the system by allowing its customers to pay cheques from other Barclays customers via their smartphones. With the new legislation, it will be able to accept smartphone cheque deposits from other banks as well.
A new payments landscape
With 32% of all electronic commerce (e-commerce) payments now made on a smartphone, Facebook, Apple and Amazon have also joined the race to help consumers make purchases easier and quicker. At Apple’s annual Worldwide Developers Conference in June, the firm announced its new operating system, iOS8, which is due to be launched this October. One of the new features will be a capability enabling users to take a picture of their credit card to make payments online more easily. This innovative function will automatically fill in online payment forms for users by using the camera on the iPhone to scan credit card details and extract the card information, a feature predicted to shave crucial seconds off the online checkout process.
More recently, Amazon announced its entry into the financial services sector with Amazon Wallet, now available in beta on Amazon Appstore and Google Play. Where Apple’s scanner saves time, Amazon Wallet saves space, de-cluttering unnecessary cards, vouchers and receipts. The user can scan in loyalty, membership and gift cards, storing all information in one centralised place, and keep on top of the balance of these cards to make money management easier. While the app currently has limited functionality, its potential is clear, and Amazon is even talking of facilitating peer to peer payments via the Amazon Wallet in the near future.
Facebook and Twitter’s moves into the mobile payment market are also likely to shake up the industry and provide more choice and convenience for consumers. Facebook is testing a ‘buy button’ that appears on ads and business pages, enabling users to purchase products advertised without having to leave the social network. Twitter, on the other hand, acquired CardSpring, a payments infrastructure company, with a goal to bring “in-the-moment commerce experiences to our users”. Mobile payments and digital wallets are still burgeoning fields with an array of different products and players. There is little sign of standardisation, but major players making moves like these are clear evidence of the benefits of frictionless payments.
Gone are the days of paper deposit slips and long queues. New banking technologies are rapidly changing the way customers and banks interact with each other, with the demand for in-person transactions disappearing. Biometric authentication offers customers quick and easy access to their accounts, enhancing the user experience whilst bolstering security.
Similarly, smartphone cheque deposits provide customers with fast and convenient customer services, whilst allowing banks to cut down on administrative costs and dedicate more time to other vital services. Mobile payments and digital wallets go hand in hand with these new banking technologies, improving customer experience and shaving crucial seconds off purchases. Undoubtedly, 2014 will prove an exciting year for digital banking. It will be interesting to see what its second half holds as financial institutions seek to capitalise on this new era of customer-centred innovation.