For nearly three decades, I have invested in, operated, and launched a number of innovative products and services in the technology industry. During that time, I've come to love every aspect of technology, particularly technology products and services that eliminate the friction for consumers such as mobile payment apps.
That's why as a consumer and a fintech enthusiast, I recently began conducting a personal experiment of sorts. I ditched my wallet – including cash and my debit card – to start using my iPhone as my only method of payment. However, truthfully, I have not gone the "full monty." I still carry my license and one credit card for emergencies.
Recently, I learned that my local Wells Fargo branch had launched their first cardless ATM. The ATM now enables consumers to use a one-time PIN found on the Wells Fargo mobile app to make a withdraw or deposit. As someone who does not carry a wallet or debit card, I was excited to have the opportunity to test the bank's newest feature as well as determine how easy it was for consumers to access their accounts. While the one-time-PIN process was not 100 percent frictionless, my first cardless ATM withdraw was a huge step forward in supporting my wallet-less experiment.
After this initial experience, it occurred to me that the Wells Fargo ATM was capable of NFC, and therefore had the potential of authenticating me through my Apple Pay wallet. So I returned the next day and my second cardless ATM withdraw turned out to be one of the most seamless experiences in banking. My wallet-less experiment is now frictionless at Wells Fargo's ATMs, and it no longer requires the somewhat confusing one-time PIN process.
According to recently published research from The Financial Brand, the biggest trend in 2017 among financial firms is "removing friction" while the second largest marketing spend is on "mobile banking solutions." Wells Fargo has accomplished both with a trifecta of embracing Apple's nearly universal iPhone and Apple Pay.
This new research shows that despite having heard that "the mobile wallet" has been on its way to consumers for years, it has actually arrived! Apple Pay was introduced three years ago and now we're finally starting to see banks embrace mobile wallets for not only merchant transactions, but also for transactions at ATMs and for those between consumers such as the banking system's own Zelle P2P offering.
With use of
mobile and online wallets on the rise, we're also seeing increased use of biometrics (fingerprint, facial and retinal recognition). This method of authentication is infinitely more secure than the standard four-digit PIN we all have. We also now have companies like Apple using secure, tokenized credit and debit card credentials at the point of sale.
Although my personal experience may not seem earth-shattering, it demonstrates that we are finally beginning to see movement in the financial services industry towards truly mobile-only use cases. The adoption of this technology is eliminating the friction at the ATM for consumers and
"the mobile wallet" has ever-expanding value and utility in today's world.
The beginning stages of this technological transformation will likely go unnoticed by most. However, as more merchants and banks begin to incorporate mobile payments, and consumers realize how much more secure they are, the adoption and development of applications surrounding "mobile-only" will accelerate. I am confident that in our lifetime we will see most consumers carrying only their phone in lieu of a wallet.
Changes in consumer behavior continue to be rapid, disruptive, and largely driven by technology influences, such as mobile devices, big data, the cloud, IoT and machine learning. Simultaneously, security breaches are growing and continue to place both consumers and businesses at risk.
While cash and credit cards may never disappear entirely, this convergence of forces is driving one of the most profound shifts to how we pay for goods and services, challenging both financial institutions and retail providers to adjust their strategy for the future of payments. Here are the three leading technologies paving the way.
Contactless payments
Debit and credit cards may never go away, but swiping them just might. Contact less payments rose 164 percent in the U.K. last year, they doubled in Canada in 2015, and 53 percent of Australians have made a contact less payment.
We expect the U.S. to follow suit as more merchants upgrade their point-of-service terminals to accept chip cards, and along with them, contact less payments.
Put a finger on authentication
Rather than forcing customers to tap in their usernames and passwords every time they want to make an online transaction, NCR’s Digital Insight developed Touch ID, which allows customers of financial institutions to log in to their bank accounts with nothing more than their fingertips. In addition to being a uniquely accurate identifier, fingerprints are infinitely more difficult to lose than a password—and much harder to hack, too.
Voice-activated transactions
Capital One customers who use Amazon gadgets can simply ask the virtual assistant Alexa to take care of financial transactions for them. As with fingerprint technology, this innovation saves consumers the hassle of remembering yet another password and going through a tedious login procedure every time they want to make or receive a payment. In the future, especially as voice recognition technology improves, we expect this method of sending and receiving money to gain more traction.
Far from being mutually exclusive goals, efficiency and security are tied tightly together in the world of payments. As we develop the technology to move away from passwords that can be guessed or stolen to more unique identifiers such as voices, fingerprints, and sensors that eliminate point-of-service terminals, we also move toward a more secure future. The very things that will make consumers’ lives easier will also protect them—a win-win if ever there was one.
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