By Lina Andolf-Orup, Fingerprints
In 2018, we wrote: “Biometric smart cards are emerging as the next innovation in payment cards.”
Jump forward a year and NatWest called biometric payment cards “the biggest development in card technology in recent years” when announcing its pilot of the technology.
It is staggering how far the market has come in only one year as banks, retailers and consumers recognize the value the technology can bring to our daily lives. Pilots are in progress around the world, commercial roll outs are happening and some of the biggest companies and organizations around the world are backing the technology.
Below are some of the key milestones from the past couple of years as we march towards a world where biometrics are enabling more trust and convenience for our card-based payments.
Pilots & trials around the world
2018 saw the technology go from lab to trial. 2019 moved it to next phase of pilots in both debit and credit cards, and the first commercial deployment.
There are now more than 20 pilots of contactless biometric-enabled cards in progress around the world, from North America and the Middle East to Europe and Japan. All of them using Fingerprints technology.
2019 saw the world’s first volume order of fingerprint sensors for dual-interface payment cards placed by global digital security leader Thales, in addition to the UK’s first biometric payment card trial announced from Royal Bank of Scotland and NatWest with a mission to scrap the £30 payment cap.
Ending the year with a bang, Swiss Corner Bank announced the launch of the limited edition Cornèrcard Biometric Gold, the first commercial launch of its kind enabling users to make high-value contactless payments.
Awareness of the benefits of biometrics is clearly growing, with banks, retailers and consumers recognizing the value of improved customer experience and reduced payment friction. In addition, banks can reduce fraud and foster trust to retain and attract customers while retailers can maximize throughput and reduce drop-outs, increasing revenues.
Most importantly, consumers no longer need to compromise security in the name of convenience, they can have their cake and eat it!
Rock & enroll!
Defining the process of registering fingerprints onto cards is a crucial element in getting biometric smartcards to consumers. In fact, 83% of issuing banks we interviewed cited enrollment as the most important thing to get right.
With this in mind, we set out to define a straightforward and secure solution with UX design specialists BlockZero that we launched earlier this year. Our ‘out of the box’ enrollment concept provides an easy, secure (and dare I say ‘fun’!) way to register your biometric data! See what we mean on our YouTube channel.
Of course, this is just one scenario and we are working with the industry to explore a range of in-branch and at-home enrollment options to meet the needs of every consumer.
SCA & PSD2
With a lot of focus on PSD2’s mandate for the implementation of SCA (or, to those unfamiliar, Strong Customer Authentication) in 2019, biometrics is set to play a big role in muscling up banking’s authentication. The European mandate and its implementation by banks has stirred a lot of discussion across the continent – especially in the UK.
It’s great to see the fruits of years of work filtering down to consumer end points. PSD2 aims to make consumers’ lives and services better, and SCA is just one example of the regulation in action. But some consumers are already seeing every fifth contactless transaction rejected to force an authentication, creating confusion and frustration at the point of sale.
Biometric payment cards offer the perfect answer to SCA requirements. By adding strong authentication to the ‘tap’, consumers can benefit from greater security without harming the user experience of contactless. Or slowing throughput time for merchants!
Aligning bank priorities with consumer perceptions
When introducing new solutions and services, aligning a bank’s transformation strategy with the desires of consumers is an interesting chart to plot. Following our consumer research, we set out to understand how the opinions of banks compared – including understanding the importance placed on biometrics and why.
The one thing that everyone can agree on is the importance of contactless payments. Both banks and consumers consider them to be the most important payment method. Whether this is through a card or a mobile, the days of mag stripe (and, dare I say Chip & PIN!) are numbered.
88% of the banks we spoke with agreed that contactless is the main payment priority in the coming years.
However, there is one striking difference between consumers and banks when it comes to contactless payments. For the banks, the biggest issue with contactless is being able to lift the payment cap, but security is consumers’ main concern.
38% of consumers see security as key barrier to using the technology, with 51% being worried or very worried about fraud.
Introducing biometric payments can help address consumers’ security concerns while empowering banks to finally lift the payment cap. The widespread proliferation of biometrics for smartphone authentication means consumers are comfortable with the technology. Plus, with added security, it can finally enable those high-value contactless payments, creating a win-win for both banks and consumers.
All stakeholders now recognize the value of biometric cards. Consumers want the technology, the largest card manufacturers are driving implementations forward, and banks around the world are prioritizing biometrics in their roadmaps and those in pilot have the ambition of scaling up to a commercial launch, which CréditAgricole in France has stated as their goal in 2020.
But how fast will biometrics be adopted for payment cards? No one really knows, but it’s interesting to put it in perspective and to consider the historical adoption rate of new technologies in the payment card area. Chip & PIN smartcards were introduced around 1995 and reached one billion cards about 18 years later, then came contactless cards in 2007 and took about 8 years to reach one billion cards. In both these cases the payment terminal infrastructure had to be upgraded, at a major effort and cost. For biometric cards to take off this is not necessary however as they already work in today’s contactless or contact-only terminals. Therefore, the roll-out might be faster this time around. In 2020, all POS terminals will be contactless, which is also an important driver.
Standardization and certification efforts are in progress and this will be the final, fundamental step before widespread commercial implementations. Fingerprints is working with the ecosystem to support the development of specifications and test plans to ensure the functionality and security of this technology is testable. With this in place, the technology can be implemented in an assured way, enabling it to go from strength to strength.
Bank of England’s Haldane says inflation “tiger” is prowling
By Andy Bruce and David Milliken
LONDON (Reuters) – Bank of England Chief Economist Andy Haldane warned on Friday that an inflationary “tiger” had woken up and could prove difficult to tame as the economy recovers from the COVID-19 pandemic, potentially requiring the BoE to take action.
In a clear break from other members of the Monetary Policy Committee (MPC) who are more relaxed about the outlook for consumer prices, Haldane called inflation a “tiger (that) has been stirred by the extraordinary events and policy actions of the past 12 months”.
“People are right to caution about the risks of central banks acting too conservatively by tightening policy prematurely,” Haldane said in a speech published online. “But, for me, the greater risk at present is of central bank complacency allowing the inflationary (big) cat out of the bag.”
Haldane’s comments prompted British government bond prices to fall to their lowest level in almost a year and sterling to rise as he warned that investors may not be adequately positioned for the risk of higher inflation or BoE rates.
“There is a tangible risk inflation proves more difficult to tame, requiring monetary policymakers to act more assertively than is currently priced into financial markets,” Haldane said.
He pointed to the BoE’s latest estimate of slack in Britain’s economy, which was much smaller and likely to be less persistent than after the 2008 financial crisis, leaving less room for the economy to grow before generating price pressures.
Haldane also cited a glut of savings built by businesses and households during the pandemic that could be unleashed in the form of higher spending, as well as the government’s extensive fiscal response to the pandemic and other factors.
Disinflationary forces could return if risks from COVID-19 or other sources proved more persistent than expected, he said.
But in Haldane’s judgement, inflation risked overshooting the BoE’s 2% target for a sustained period – in contrast to its official forecasts published early this month that showed only a very small overshoot in 2022 and early 2023.
Haldane’s comments put him at the most hawkish end among the nine members of the MPC.
Deputy Governor Dave Ramsden on Friday said risks to UK inflation were broadly balanced.
“I see inflation expectations – whatever measure you look at – well anchored,” Ramsden said following a speech given online, echoing comments from fellow deputy governor Ben Broadbent on Wednesday.
(Editing by Larry King and John Stonestreet)
Bitcoin slumps 6%, heads for worst week since March
By Ritvik Carvalho
LONDON (Reuters) – Bitcoin fell over 6% on Friday to its lowest in two weeks as a rout in global bond markets sent yields flying and sparked a sell-off in riskier assets.
The world’s biggest cryptocurrency slumped as low as $44,451 before recovering most of its losses. It was last trading down 1.2% at $46,525, on course for a drop of almost 20% this week, which would be its heaviest weekly loss since March last year.
The sell-off echoed that in equity markets, where European stocks tumbled as much as 1.5%, with concerns over lofty valuations also hammering demand. Asian stocks fell by the most in nine months.
“When flight to safety mode is on, it is the riskier investments that get pulled first,” Denis Vinokourov of London-based cryptocurrency exchange BeQuant wrote in a note.
Bitcoin has risen about 60% from the start of the year, hitting an all-time high of $58,354 this month as mainstream companies such as Tesla Inc and Mastercard Inc embraced cryptocurrencies.
Its stunning gains in recent months have led to concerns from investment banks over sky-high valuations and calls from governments and financial regulators for tighter regulation.
(Reporting by Ritvik Carvalho; additional reporting by Tom Wilson; editing by Dhara Ranasinghe, Karin Strohecker, William Maclean)
Britain sets out blueprint to keep fintech ‘crown’ after Brexit
By Huw Jones
LONDON (Reuters) – Brexit, COVID-19 and overseas competition are challenging fintech’s future, and Britain should act to stay competitive for the sector, a government-backed review said on Friday.
Britain’s departure from the European Union has cut the sector’s access to the world’s biggest single market, making the UK less attractive for fintechs wanting to expand cross-border.
The review headed by Ron Kalifa, former CEO of payments fintech Worldpay, sets out a “strategy and delivery model” that includes a new billion pound start-up fund and fast-tracking work visas for hiring the best talent globally.
“It’s about underpinning financial services and our place in the world, and bringing innovation into mainstream banking,” Kalifa told Reuters.
Britain has a 10% share of the global fintech market, generating 11 billion pounds ($15.6 billion) in revenue.
“This review will make an important contribution to our plan to retain the UK’s fintech crown,” finance minister Rishi Sunak said, adding the government will respond in due course.
The review said Brexit, heavy investment in fintech by Australia, Canada and Singapore, and the need to be nimbler as COVID-19 accelerates digitalisation of finance all mean the sector’s future in Britain is not assured.
Britain increasingly needs to represent itself as a strong fintech scale-up destination as well as one for start-ups, it added.
The review recommends more flexible listing rules for fintechs to catch up with New York.
“Leaving the EU and access to the single market going away is a big deal, so the UK has to do something significant to make fintechs stay here,” said Kay Swinburne, vice chair of financial services at consultants KPMG and a contributor to the review.
The review seeks to join the dots on fintech policy across government departments and regulators, and marshal private sector efforts under a new Centre for Finance, Innovation and Technology (CFIT).
“There is no framework but bits of individual policies, and nowhere does it come together,” said Rachel Kent, a lawyer at Hogan Lovells and contributor to the review.
Britain pioneered “sandboxes” to allow fintechs to test products on real consumers under supervision, and the review says regulators should move to the next stage and set up “scale-boxes” to help fintechs navigate red tape to grow.
“It’s a question of knowing who to call when there’s a problem,” Swinburne said.
($1 = 0.7064 pounds)
(Reporting by Huw Jones; editing by Hugh Lawson and Jason Neely)
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