In the age of pandemic disease, it’s difficult enough to predict what tomorrow will bring, let alone the longer-term future. Nevertheless, this month is The Future of Finance special event at FindBiometrics, and there are at least a few key trends already well underway in the world of financial services that appear to offer a pretty clear indication of where this sector is headed. In fact, COVID-19 may actually be accelerating these trends.
As we’ll see in our first in-depth feature for our The Future of Finance special event, the future of digital financial services can perhaps best be understood with the maxim “less is more”. That’s because it’s going to be passwordless, frictionless, and contactless.
Passwords have been on their way out for a while now. While username-and-password security was the reigning paradigm of digital security from the outset, cybersecurity experts have now been warning about the vulnerabilities of such systems for years, if not decades. And in the last several years, the mainstreaming of biometric authentication on smartphones and other consumer devices has helped to popularize new security systems that are far more effective than archaic passwords.
By this point, a huge number of banks and other financial services providers have embraced mobile biometrics as their customers have increasingly done their banking through digital and mobile channels. Solutions like Nok Nok’s S3 Authentication Suite have allowed these organizations to let their customers log into their mobile accounts simply by leveraging the biometric authentication capabilities of everyday smartphones.
Likewise, financial services providers have also been capitalizing on the popularity of selfie photos by making the selfie an easy, password-free means of authentication. With the kind of mobile software provided by FacePhi and Onfido, biometric selfie-based authentication can be used not only to access online accounts, but even to open new ones.
Not only do these biometric authentication methods improve security and sweep away the vulnerabilities of passwords, but they also help to improve the end user experience: with fingerprint and selfie-based authentication, there are no complex passwords to remember, and you always have your credentials on you. This means that the authentication process has a lot less friction – it’s smoother for the end user, with less bumps along the way.
Meanwhile, another kind of biometric technology is helping to further smooth out the user experience on digital channels: behavioral biometrics. Increasingly deployed by financial institutions across all digital channels, behavioral biometrics systems are designed to look for patterns in end user behavior in order to further authenticate customers, detect aberrant behaviors that may be signs of fraud, or both. This can add an extra layer of security within an authenticated online session, and sidestep the need for the kinds of “step-up” authentication requests that are often needed for sensitive and high-value transactions.
Perhaps most importantly, solutions like the one offered by BioCatch are designed to run in the background, requiring no specific action from the end user. The anti-fraud system is always on guard, but adds no friction to the user experience.
This is all good news for digital banking, but what about the stuff that we actually use our money for? Here, too, in the world of payments, a clear trend is emerging in the rise of contactless transactions.
Tap-to-pay cards are already widely used in some parts of the world, but in others, such as the US, they’re still lagging behind traditional swipe-based and chip-and-PIN transactions. That has gradually been changing over the last few years, with two new developments poised to accelerate the trend. One of them is the rise of fingerprint-scanning biometric payment cards, which help to solve the lingering security issue associated with contactless payment cards – that is, the fact that no particular authentication mechanism is in place. Cards with embedded fingerprint sensors allow cardholders to securely verify transactions while still not making any contact with a Point-of-Sale device, and virtually no added friction.
The other big trend is COVID-19. Social distancing and hygienic concerns have already helped to push more consumers toward contactless payment cards, and the emergence of biometric security should help to further make their case.
The pandemic is also helping to drive up remote banking, which, in turn, is further promoting the use of behavioral biometrics, selfie authentication, and other innovative security solutions described above. So while a lot of things may seem more uncertain than ever, the “less is more” trends in financial services seem to point even more clearly toward The Future of Finance.
June 4, 2020 – by Alex Perala