Beyond Contactless Cards: Can Biometrics Secure the Connected Financial Customer?

Beyond contactless cards

Technology is reinventing the way we work, travel and communicate, and now the way we pay for goods and services is changing too.

It’s been just over ten years since the first contactless payment cards were launched in the UK, in 2007.

Initial adoption was slow but fast forward to 2017, when there were 111 million contactless cards in the UK, accounting for one third of all card payments. (1)

Digital payments are big business.

With the advances in mobile technology, making purchases and payments on our devices is becoming more common and feeling more natural. Twenty-five percent of electronic commerce is currently mobile in the US, a growth rate four times that of desktop and 10 times compared to physical retail. (2)

Even interactions with our traditional financial institutions and banks are becoming digitised, as mobile banking apps soar in popularity.

Adding to the pressure, tech players are disrupting the money market, connecting more products to the internet, increasingly with payment functionality, from wearable devices even to our vehicles.

However, the convenience of mobile financial transactions needs to be offset against security risks and public trust in trusting apps and devices with their money.

Biometrics could play a very interesting role here.

Beyond Cards: The New Money Market

If you need convincing of the impact of technology on the payments market, Forrester predicts mobile payment transactions in Europe will grow from €52 billion in 2016 to €148 billion by 2021 – a tripling in value in just two years. (3)

From contactless cards to ApplePay and its Android equivalents, we’ve seen striking technological developments in ten years that are radically changing how we move and use money. (4)

Increasing connectivity and the growing IoT is driving us even further than cards.

How about paying for your morning coffee with a watch or even a ring? BI Intelligence forecasts that payment functionality will be included in 62% of wearable device shipments by 2020. (5)

Typically using the NFC technology that powers contactless payments, a range of wearable payment devices are capturing consumer’s imaginations.

The Apple Watch which utilises its successful Apple Pay technology is most notable, but both Visa and Barclaycard have developed jewellery and watch lines which allow customers to make seamless payments on the go.

This connectivity is even branching out into our vehicles. Imagine the convenience of paying road tolls or even drive through food or coffee joints from within your car. Soon, you won’t have to.

The development of autonomous vehicles is driving innovation in personalising the travel experience, including payments.

FIS Mobile are working on solutions that will allow a driver to order and pay for a carwash and even a drive through from within their vehicle, with dashboard functionality.

SAP has developed a partnership with Nokia and Hertz to investigate solutions that will allow users to reserve and pay for parking and fueling online and automatically track expense claims.

Connecting more of our world to the IoT is driven fundamentally by the customer’s want for increasingly seamless, smooth transactions that don’t infringe on their enjoyment of goods and services.

Convenience vs Security

Delivering this type of fast, frictionless payment system comes with inherent and urgent security responsibilities.

Security researchers at the University of Birmingham in the UK last year discovered a security flaw in a number of banking apps, including HSBC, NatWest and Co-op, that could left millions of individuals at a heightened risk of hacking. (6)

Fears also abound that connecting vehicles could leave users at risk of physical harm, if their vehicle was to be taken over in a hostile cyber attack.

Stories like this do little to assuage the fears of individuals who want the connected customer experience but fear the risks, and the organisations serving them.

Rise in mobile biometrics

This is where biometrics could be key.

Fintech and biometrics make a strong partnership.

A diversifying fintech landscape is helping to drive biometrics authentication innovation, which in turn empowers further fintech growth.

Biometric authentication solutions are growing in popularity as a means of securing the devices, systems and data we are reliant on. As the financial landscape diversifies, the greater the need for security solutions that can keep up.

Consumer appetite is there. Mastercard research in 2017 revealed that 93% of consumers would adopt biometric solutions – a confident prediction. (7)

First generation biometrics, including fingerprint (popularised by Apple’s TouchID), voice and iris recognition are already being superseded by the next generation of internal metrics, including ECG.

ECG carries inherent security and is much more difficult to harvest, spoof or counterfeit an individual’s heart rate pattern.

Liveness detection is also an important differential. With most biometrics operating as a static modal, ECG uses dynamic indicators to confirm liveness.

This type of authentication could give us the security and trust our digital payment demands require.

The Year of Biometrics – and Beyond?

Some leading financial and research institutions concur, pegging 2018 as a pivotal year for biometrics.

Unisys predicts that 2018 is the year that biometric authentication goes mainstream:

Eric Crabtree, global head of Unisys Financial Services said:

We expect continued high-profile cyber attacks will keep security concerns top-of-mind.

Those banks that take additional steps to protect their customers’ data, like tapping into behavioural biometrics for their customers, while also embracing new tools like identity-based microsegmentation to encrypt and protect their networks on the back-end, will be well-positioned for success in the year ahead.

Let’s Talk Payments also names biometrics in its predictions for key tech influences on the financial sector.

Let's Talk Payments: Technologies Shaping Fintech

Visa has announced it is to trial a new biometrics contactless card that will allow customers to use fingerprint recognition as an alternative to PIN or signature.

This marks a key real-life application that could really drive biometric authentication further into the mainstream, as predicted.

One thing looks clear and that is the demand for connected financial services and payments is set to grow as consumers develop greater trust in the services themselves and the organisations developing them.

As it does, we’ll need more security that can keep pace with the fintech landscape – biometrics looks well placed to offer that.

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  1. Contactless 10 Year Report: UK Finance
  2. Patently
  3. Forrester Mobile and Contactless Payments Reports
  4. Patently
  5. Business
  6. The Register