THE NEW BATTLEGROUND: IS FINANCIAL SERVICES PREPARED FOR THE IPHONE X?

By Clayton Locke, CTO Intelligent Environments

Although Tim Cook introduced Apple’s newest iPhone as just “one more thing” during his annual keynote, the new phonemay just mark a revolution in smartphone technology. There is no doubt that the OLED display, advanced biometrics, wireless charging and an impressive chipset set X apart – but does this phone really represent a step change, or incremental evolution? What does the launch of iPhone X mean to Financial Services (FS)? And what are the significant advances in iPhone X that deserve a closer look?

Facing the Future

In the iPhone X, the Apple button and Touch ID are no more. Instead, Apple is introducing an innovative approach to biometric security guaranteed to excite consumers: facial recognition. Combining its new front-facing camera with improved facial scan technologies, it appears that iPhone X has finally cracked the code on biometrics. It is fast, built on a neural engine chip, and works in the dark using infrared. Face ID appears robustly secure. It will make an instant connection with millennial selfie generation.

For FS organisations, it means that Apple may have just stolen a march in the FinTech industry’s long-running battle for biometrics. It also means biometrics is not only here to stay, but starting to pull away from late adopters of biometric scoring and progressive security.

What do I mean by progressive security? At Intelligent Environments, we use a progressive security framework to protect our applications and data. Basically, this approach adjusts the security requirement to the appropriate level according to the risk. Looking at your account balance on your phone is low risk, and may not require a credential. Making a £1000 payment is higher risk, requiring more authentication. The industry has been trained to think in terms of binary factors of authentication.  But the iPhone X Face ID service returns to the app an authentication factor between 0.0 and 1.0.  The closer to 1.0 the better the match between the enrolment image and the verification image – in other words, there are shades of grey in the authentication factor, it is no longer a binary ‘Yes’ or ‘No’. This puts more nuance into how authentication factors can be used in progressive security framework.

More Power, More Potential

As with every Apple launch, the technology is described as the ‘most sophisticated Apple has ever developed.’ While we should cut through the hyperbole, the iPhone X represents a step-change in both hardware and software. Improved camera, an OLED panel, faster CPU, better power efficiency, and an emphasis on machine learning means that the potential of this device far outstrips its predecessors.Samsung’s grip on the panel market and Android phones have forced Apple’s hand to maintain their share of the extraordinary profits to be made in the device market. The pace of this race will get even faster.

As the devices leap forward, the also open up opportunity for FinTech differentiation.Machine learning, embedded in Apple’s chipset, can be a key technology to deliver new services to customers on device. New use cases in augmented reality, increased internet of things connectivity, and intelligent workflows can used to drive more consumer engagement. For banks, using these emerging technologies to full effect presents a significant challenge, but those that figure out how to make use of these innovations open up opportunities for differentiation, surprising and delighting their customers.

There is no doubt that the consumer appetite is there: a study by Deloitte found that 40 per cent of adults had a banking app on their smartphone. For millennials, this rises to 63 per cent. Clearly,winning real estate on the smartphone is already a must-win battle for banks.  The iPhone X gives us a glimpse of what it will soon take to win the hearts and minds of customers who are deciding what bank they want to download.

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