CLS And IBM Launch Blockchain App Store With Banks And Fintechs
CLS and IBM have developed a secure environment for #banks and #fintechs to create and share #blockchain apps.
Financial Technology
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Banks Get Personal With Digital Customer Info
#Banks have pushed customers to online and #digital channels and now realize it takes some special skills to build relationships with them. Junk mail just isn’t enough.
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Movers and Shakers: Notable Summer Hires in Digital Financial Services
Behind every great #technology is a human mind… well, obviously, right? That’s why FIs are always on the prowl for finding the most adept people that fit in with the institution’s #digital philosophy. Whether it’s a chief innovation officer spearheading major initiatives like creating an AI-powered bot or engineers orchestrating smaller changes to enhance the […]
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Banks’ 360-Degree View Of Customers Could Include Their Mental Health
Financial difficulties and #mental #health are often linked, but they are usually treated separately. Silver Cloud Health has developed an online coaching program, Space from Money Worries, to help people gain confidence over money issues.
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Payments: The first key battlefield signaling broader change in US banking
Fueled by innovation, the US #banking market is undergoing tectonic shifts. Many players are looking to #payments as a crucial #battlefield for #change. Incumbents—#banks and established fintechs, such as networks and card processors—have transformed the transactions environment over decades for the benefit of end users. New generations of #fintech players, both partners and competitors, have used digital business models to enhance the customer experience and open the door to new segments and revenue sources. Now, with the growing influence of Amazon, Apple, Google, Facebook and other similar big #technology (bigtech) firms, along with increasing customer sophistication and ongoing overseas disruption, the fundamental aspects of revenue drivers and share are in question.
The storm beneath the surface
Accenture examined potential trajectories of current trends, which could present revenue challenges for US banks in payments. Our analysis indicates that incremental revenues are projected to accrue primarily to non-banks over the next few years. The beneficiaries include players already in the value chain (those less exposed to customer demands, such as rewards, and with more direct access to key platform levers, like processing) and new forms of fintech, bigtech and other third parties phasing into the market.
Figure 1: US payments revenue ($ BN)
Source: Accenture research and analysis US disruption is anticipated to differ from that faced in Asia, Europe or other markets where the external impetus—competitive or regulatory—is accelerated and often direct. At least initially, established players may be situated to benefit financially; as evidenced by ApplePay, it can take years for new, disruptive platforms to scale. For those who are unprepared, gradual pricing pressure and value leakage may begin to erode many existing business models.
Open to change
Of course, a wide range of scenarios are possible for the future of US payments with several factors much #broader than payments (including artificial intelligence, #blockchain, cross-border transactions, major geopolitical movements, Open Banking, privacy, regulation and security) at play. Recognizing the range of potential outcomes, US payments players have the ability to position themselves for success.
Incumbents have already begun moving to protect their revenue base by introducing innovative solutions, such as Zelle. Going forward, technology deployment needs to happen faster with more agile adoption and monetization of technologies, such as data analytics, blockchain, and AI/machine learning, that can rewrite the payments equation. These new technologies offer a pathway to optimize the go-to-market model, breaking down silos to improve revenue and efficiencies internally and value chain orchestration externally.
Banks and other payments players can increase relevance by focusing on the customer journey and use cases to add value. Amazon Go, a new kind of technology-based retail store from Amazon, is just one example of looking in and beyond the existing value chain to rethink the customer experience. If incumbents view the customer as the North Star and are open to all that is possible, then they, too, can be disruptors, instead of the disrupted.
Change can be challenging. However, payments players are in the fortunate position to be able to write their own story. Now is the time to do so.
I invite you to read our report, Driving the Future of Payments
Special thanks to Tom Skomba, who contributed to this blog.
The post Payments: The first key battlefield signaling broader change in US banking appeared #first on Accenture Banking Blog.
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From Cause to Cure: How Technology Can Solve Skill Gaps in Financial Services
The digital revolution of #financial #services is here, and the question isn’t whether your organization should adopt a digital-first approach, but how quickly can you catch up with the digital leaders in your industry. Customers expect smart products; whether it’s payments, bank accounts, or finance options, if it’s not digital, instant, and available when your […]
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APIs: An enabler for transformation in financial services
Guest blogger Conrad Sheehan shines a light on the emergence of #APIs as innovation drivers.
The adoption of powerful, open application programming interfaces (APIs) provides an opportunity to shape product innovation and partnerships across #financial #services, particularly in the payments industry.
APIs are the connectors, making it possible for producers, consumers, products and services to connect and create value. #Banks, payment service providers, fintechs, and other financial services-related companies are using them to expose business data, functionality and services to the outside world—stretching beyond their customary internal borders to create broader, unique business partnerships. It is how financial institutions are beginning to establish themselves as an integral part of a full, rich ecosystem. Indeed, APIs represent new opportunities to enable and accelerate #transformation of financial services in highly efficient ways to deliver enhanced customer experiences.
Figure 1: How APIs work
Source: Accenture Both regulation and market demand around the globe are influencing and shaping perspectives of Open Banking API product innovation in local markets. The European Union’s revised Payment Services Directive (PSD2), for example, is one of the most notable acts of regulation that aims at nurturing innovation, competition and data sharing in ways that better serve customers. PSD2 sparked similar legislative action in Australia and Hong Kong to create an open environment for their financial services markets. In the US, NACHA’s API Standardization Industry Group is an example of a market-driven initiative focused on defining API standards in payments. The ability of APIs to enable payments players to deliver more valuable, customer-focused payments experiences and find engaging ways to offer true value beyond the transaction itself continues to fuel demand across the digital ecosystem.
I was delighted to participate recently in a panel discussion at SWIFT’s Latin America Regional Conference 2018. When polled about API enablement, 70 percent of the audience indicated that their organizations are using APIs. The audience also shared about the areas that APIs are helping facilitate: internal #technology (25 percent), third-party integration (18 percent), and business flows (8 percent); nearly half (49 percent) answered “all”. The results further highlight that APIs have evolved from back office to front office and are enablers of third-party partnerships. Panel participants articulated that it is essential to start with strategy, and while organizations are competing, that there is a need for standards. The discussion also emphasized the importance of being mindful of trust, security and data protection as well as learning from initiatives around the globe in markets such as Asia that are leading innovation. Throughout the conference, there were other discussions about APIs such as SWIFT global payments innovation, which has APIs for banks to integrate the payment tracker into their channels. There are countless examples of APIs as products emerging from Open Banking and as propriety offerings across financial services.
We see five key benefits of APIs as building blocks for the transformation of payments and financial services overall:
- Productization. In the increasingly open financial services industry, an API is more than simply a means to access back-end services. It is a product in and of itself that providers can monetize and set as a foundation for other new services.
- Collaboration. Some of the most popular (and profitable) uses of APIs result from third-party developers working together and creating apps that define new markets and create new revenue streams.
- Enabling “API First”. For a digital business, it’s all about how you engage with API consumers—providing exactly the data they need, in the format they want to use.
- Speed to Market. APIs can be provisioned quickly, often with minimal back-end refactoring required.
- Security. The leading API Gateways have been vetted for security and are compliant in many areas (PCI, HIPAA, etc.) They also offer OAuth and LDAP support.
As organizations seek to adopt digital business models, they need to ensure that everything and everyone can interact with what they have to offer. It’s no longer just about enabling mobile apps or even embracing the Internet of Things. It’s about having an API-driven ecosystem that can power your digital business and provide stakeholders the information they require in a faster world.
Read more of our insights on open APIs in Driving the Future of Payments and The Brave New World of Open Banking
Conrad Sheehan,
Managing Director – Payments
The post APIs: An enabler for transformation in financial services appeared first on Accenture Banking Blog.
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How will biometrics balance payment security & convenience under PSD2?
The European Union’s new regulations, the General Data Protection Regulation (GDPR) and Second #Payment Services Directive (#PSD2), require secure transactions and data handling as well as good customer experience. PSD2, in particular, requires strong customer authentication (SCA) methods, which dictate “two-factor authentication” to ensure all payment approvals are in place. Two-factor authentication means that authentication of a customer’s identity must be based on two or more of these elements: knowledge (something the user knows), possession (something only the user has) and inherence (something the user is).
The strict PSD2 RTS requirements may lead to friction in the payments process in online and POS (point-of-sales) checkout. Existing SCA methods such as SMS-TAN and iTAN will be considered non-compliant and not user-friendly. However, PSD2 aims to improve user experience and keep #security—namely inherence. Inherence is the element that allows leveraging of biometric data and mechanisms for SCA.
Technological advancements are augmenting e-commerce payments and payments innovation methods, which further enhance the consumer appetite for seamless, frictionless and secure payments experiences. #Biometrics is one of the latest and most cutting-edge technologies being adopted. It’s usually integrated into applications to strengthen security and curb identity fraud. Fingerprint payment is the most common biometric payment method; however, experts predict that other systems—including face, eye and voice recognition—will become more widespread over time. The question is, are these mechanisms compliant with the new regulations and what do #banks need to consider about biometrics in a highly regulated business?
The RTS indicates the following high-level criteria must be applied while assessing whether an authentication method qualifies as SCA:
- Dynamic linking: All information about the amount paid and payment recipient must be passed on across all phases of the authentication. For biometrics, the numerical representation generated from the data points collected at the customer’s device needs to be dynamically linked.
- Independence of channels: The channel used for the initiation of a payment or account information transaction must be separate from the channel used for the receipt of the authentication code.
- Creation and validation within the bank’s environment: For biometrics, the creation of the templates needs to be performed in the bank’s environment. The software that collects data points from the device must also be provided by the bank.
- Underivable authentication codes: The biometric data points collected from the device must be changed in such a way that every data point package can be considered a new “authentication code”, which is unique for every request and, at the same time, is capable of being verified by the bank in the matching process.
- Non-disclosure: Biometric data points or raw data and matching templates must not be stored in the device or the bank to prevent reverse engineering of the raw biometric data.
Customers and banks are keen to use biometrics
Consumers are inclined toward using biometric solutions to protect their transactions because of their #convenience and speedy authentication process—and more and more banks are adopting biometric #technology as part of their identity verification process to improve user experience. The future of biometrics in the online payment process is promising.
Innovation in biometric technology
New technologies are now enabling rapid innovation in two areas of biometrics: visual biometrics (face recognition, fingerprints, finger-vein, hand/finger geometry and iris/retina recognition) and behavioral biometrics (dynamic signature verification, keystroke dynamics and voice recognition). Alongside the emergence of these new modalities, other innovations are also in development:
- Biometrics as a Service (BaaS), which is based on sharing data with a remote server holding a centralized biometric database and offering biometric-based authentication as a service over the internet.
- Biometrics and the Internet of Things (IoT), which enhances security for the millions of new devices joining an IoT network by combining passwords with an additional layer to achieve two-factor authentication.
As biometric solutions gain momentum and uptake, they face challenges associated with their implementation, such as the need to comply with the PSD2 RTS requirements, technology to ensure the solution’s functionality and security, and the need to develop an ecosystem in which biometric methods are used in a consistent and standardized way, across multiple markets benefitting from network effects.
Though not without its obstacles, adopting biometric payments provides a future roadmap for a seamless, safe and frictionless payments experience. It will be interesting to see how biometrics develops in the coming years, adapting to customer expectations and overcoming the hurdles of implementation.
The post How will biometrics balance payment security &038; convenience under PSD2? appeared first on Accenture Banking Blog.
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Digital Lending Platform P2Bi Inks Partnership with Amalgamated Bank
#Digital #lending is becoming an important business even for smaller community #banks. Larger banks, which have the resources to build their own #technology or buy a #fintech provider (KeyBank acquired Bolstr; JPMorgan Chase acquired WePay). Smaller banks, on the other hand, tend to opt for partnerships, creating an opportunity for digital loan originating and management […]
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Open Source Expands In Finance With The FINOS Platform
#FINOS is expanding #open #source choice for financial services by providing a trusted #platform for fintechs and #banks to work together.
Financial Technology
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