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BANKS SHOULD NOT TAKE DATA PRIVACY FOR GRANTED IN THEIR BREXIT TRANSITION PLANS

Rich Vibert, CEO and Co-founder, Metomic

 

UK banks are not as prepared as they should be for Brexit. This is unsurprising given the political wrangling, the challenges posed by COVID-19 and the daunting prospect of a double-dip recession. However, with less than 3 months to go, banks and financial services businesses need to get a firm grip on the impact Brexit will have on their customer’s data privacy, and fast.

We need to talk about data privacy in finance

Before diving into the nuances of post-Brexit data protection, the challenges banks currently face when it comes to data privacy must be addressed. A glaring 62 percent of the data breached last year came from the financial services sector, according to Bitglass. Even more worrying, an Accenture report from March revealed that one-third of financial organisations lacked a clear plan or resources to address privacy risks related to customer data. This is a worrying starting point and Brexit will only bring more challenges as data protection regulation will evolve.

What’s behind a post-Brexit data protection law

Data protection in the UK is currently subject to the EU’s General Data Protection Regulation (GDPR)But once the Brexit transition period ends, organisations in Britain will fall under a UK data protection law that is still to be announced. Thankfully, there is a large chance that the UK will incorporate GDPR principles into its own law, but uncertainty and confusion still remains. And should new local measures be implemented, banks will need to move quickly to become compliant.

However, even with a GDPR-based compliance framework in place, challenges will remain. One of these is ensuring banks are able  to transfer data to other European countries; this is important as a quarter of the financial services sector’s annual revenue currently comes from business related to the EU. Financial organisations must also consider the potential consequences of a no-deal Brexit. The UK government has declared it is willing to reach an adequacy agreement, maintaining a free flow of data between countries. However, given the current stalemate, financial institutions should not take that as a given. In a worst case scenario, a no-deal could lead to UK businesses sending data to the EU in 2021 and simply not getting it back. This is not acceptable for a sector that depends on constant transfers of sensitive information such as credit scores. Unpicking the mess will require the investment of time and funds that many businesses can ill-afford.

 

Customer data at risk, reputation at risk

UK citizens are already wary of the way their data is being treated. The government’s acknowledgment that the UK track and trace system wasn’t GDPR compliant and the privacy concerns around the COVID contact tracing app are just a few of examples that have damaged citizen trust. As such, they need to be reassured that post-Brexit their data will be treated in the right way, not only by the government but by financial institutions. Especially as data breaches are proven to compromise corporate reputation; 49% of customers would not sign up to a service that has suffered a data breach, according to Ping Identity. This has to be addressed if banks are going to survive and ensure that that customer trust is maintained.

 

A privacy-first mindset for banks

While the future of data regulation in this country remains in flux, we know that privacy and data protection is top of mind for consumers. To maintain the trust and loyalty of their customers, financial services organisations must think ahead and be prepared for any outcome. Fundamentally, this is more about a change of mindset than it is about exorbitant costs. Your ultimate goal should be to deploy a privacy-first approach across the business. This means putting the customer at the heart of your strategy and investing in technology that will help you have clear and continuous visibility over what is happening to all customer data – from transactions to investments.

Fortunately, simple mechanisms can be put in place to help businesses achieve this. For example, there are solutions that allow businesses to embed data protection rules and protect sensitive data within their IT infrastructure. This puts compliance on auto-pilot, minimising risk. These are the types of investment that banks should be making now, as they will save them thousands of hours per year of auditing and developing data management processes.

Data privacy can no longer be treated as an afterthought. The financial services firms that embrace a privacy-first mindset starting now will be better prepared to protect their customers’ data, and therefore preserve trust and their own reputations, regardless of the Brexit outcome.

 

Banking

THE ART OF BIOMETRIC PAYMENT CARDS: WHY BANKS NEED TO GET DESIGN-SAVVY

Lina Andolf-Orup, Senior Director at Fingerprints

 

Biometric payment cards have ticked several important boxes in the last year. The technology has achieved certification from major payment networks, costs have reduced, and manufacturing has become simpler, and the first commercial launches have begun.

But as more banks move to offer this technology to their customers, it is important to consider design. The look and feel of any new technology is central to its success among consumers, but it can be commonly overlooked or an afterthought. In fact, when asked about biometric payment cards, 30%1 of consumers cited design as important, while just 15%2 of banks we spoke to had it on their agenda.

But why is it so important? And what considerations have already been made to ensure this technology offers not only a technical edge, but a desirable addition to a bank’s offering.

 

A makeover on the cards

Even before the pandemic, the physical bank branch was dying out as consumers moved to digital, on-demand services. As such, the payment card is one of the few remaining physical relationships customers have with their bank.

Mobile-centric challenger banks have captured the attention of consumers with design and user-experience (UX) at the heart of their strategy. Beautiful cards alongside sleek mobile apps are helping them build bigger brands, with the traditional card reimagined by the likes of Monzo with its bright coral card, Starling with its sleek, minimalist front and vertical orientation, and Klarna with its card delivered to you in a fluffy ‘fur-lined’ envelope. Other banks have even launched ‘design-your-own’ options.

Lina Andolf-Orup

For traditional banks, there’s huge opportunity to strengthen relationships and build customer loyalty, especially when launching a new technology. The opportunity to strengthen brand is key, which is just one of the reasons the latest generation of fingerprint sensor for cards is even smaller, meaning more space to play with on-card, and hence more space for banks to build their brand.

 

Defining design

For banks, there’s a business case for a wide scope of consumer segments with biometric payment cards – from millennials and gen Z, to business, more premium, or older customers. While unsurprisingly younger demographics rated the card design’s importance highest, 1 in 4 over 50s also noted it as significant factor.

So, any design needs to appeal to a broad audience, but what exactly do consumers want to see from their biometric payment card? We sought feedback from consumers to help decide our latest sensor design and the responses made interesting reading.

‘Modern’ and ‘personal’ were the highest rated design traits across all age groups and geographies, with Europeans especially favouring a ‘modern’ design. It makes sense – the excitement of getting the latest technology would undoubtedly be dimmed if it looked just like any old bank card. Interestingly, the Chinese market ranked a techy feel as important too, with over 50% marking it as a preference.

We also wanted to see how different designs made consumers feel. Here there was some variance but undeniably, responses show that consumers felt that having the biometric sensor in the card was something to be excited about and to show off. Crucially, consumers also responded that it was easy to understand how to use the sensor from the design. Which leads me to another important aspect…

 

“Cool card, now what?”

How a technology feels and the UX it delivers is closely intertwined with design. On this point, our research also found a gap between banks and consumer opinion. Nearly half of consumers cited usability, how the card feels, and knowing where to place their finger as a priority, while just 1 in 3 banks saw it as a concern.

Consumers are quick to feel frustrated and abandon new technologies if they are too complex or difficult to use. Poor design can easily lead to poor UX, compromising successful onboarding and adoption even after significant investment.

The enrollment process is another vital aspect. Our consumer research and trial feedback has shown just how important this initial ‘meeting’ with your new payment card is. Enrolling your fingerprint needs to be intuitive and uncomplicated as a minimum. To truly make biometric payment cards a success, consumers need to feel engaged and excited from the get-go, as well as trust that their new card is going to work from first tap in store.

Last year, we collaborated with UX-specialist BlockZero to create an ‘out of the box’ creative enrollment concept with a companion mobile app, but banks have options to offer to their cardholders, including enrolling via a mobile app, with a powered sleeve, or in-branch. Banks need to carefully consider their customer base to select what option best fits, as undoubtedly the preferred way to enroll will differ between markets and demographics. From our research it’s clear however that both consumers and banks want a simple and secure self-enrollment option and a rich first touch-point with these new cards.

 

Looking good

From our research, we shaped our new sensor design to be one that struck the perfect balance between modern, personal, and techy, while gesturing to our branding. After all, design savvy cards need a good-looking sensor, too!

 

Too often, design and UX is shoe-horned in after the fact but for consumers, it is a priority. Already at an early stage we thought about the actual aesthetic design of the new sensor, and not just the technology and performance. For banks rolling out this exciting technology, factoring in ergonomics and design from the start guarantees their customers – and prospective customers – have something they can be proud of, use, trust and maybe even talk about.

Learn more about launching biometric payment cards.  

Fingerprints research in collaboration with Kantar, Dec 2019, 1,200 consumers across France, UK, China

Fingerprints in collaboration with PayTech, 2019. 25 card issuer/banks in 7 countries

 

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Banking

ORGANISATIONAL ALIGNMENT KEY TO MAXIMISING POTENTIAL OF OPEN BANKING

  • Lack of internal alignment risks holding financial institutions back from realising open banking potential
  • 70% of C-level executives recognise the open banking opportunity but just 45% of product owners feel the same
  • Majority of respondents (59%) across financial institutions are confident they have the talent available to make the most of open banking, but only 43% of product owners feel they have the necessary resource

New data from open banking platform Tink has today revealed that whilst there is overall positive thinking about open banking within European financial institutions, a lack of internal alignment risks holding them back from realising its full potential.

The findings reveal notable differences in how the open banking opportunity is perceived throughout financial institutions, and diverging views on open banking capabilities and skills across different parts of the business. This organisational divide reflects the sheer size and scale of the task banks are facing to transform their operations to become open banking ready and meet new customer needs.

According to the new data, over two-thirds (70%) of the C-suite see the opportunity that open banking presents right across their organisation. They also believe it provides good value for money with a similar percentage (67%) believing the benefits outweigh the potential costs.

However, whilst senior teams may be buying into open banking, the research paints a more varied picture across other parts of the business. Most channel owners (63%), responsible for the online, mobile or developer interfaces, recognise the open banking opportunity across their organisation. In contrast, less than half (45%) of product owners feel the same way.

 

 

Differing views on skills and resourcing requirements may go some way to explaining the levels of buy in for open banking across the business. The majority of respondents in financial institutions are positive about having the talent available within the organisation to execute on open banking objectives (59% on average).

Those who work in IT are the most confident (65%) they have the skills to deliver on open banking, followed by groups working with management (61%) and digital or mobile banking channels (60%). However, only 43% of product owners are confident their team has the required resources to capitalise on open banking.

This might explain a lack of agreement on whether products and services being offered to customers are taking full advantage of the organisation’s open banking capabilities. The overwhelming majority of those within the IT department (67%) said they believe open banking capabilities are being leveraged in this way. This is in stark contrast to under a third (32%) of executives in the digital and mobile banking department who feel the same.

 

Rafael Plantier, UK and Ireland Country Manager at Tink, said: Whilst fast-growing challengers in the industry continue to make moves, banks remain in the best position to offer integrated open banking services. As custodians of money and providers of financial services they already have a solid foundation of customers that trust them and are therefore willing to share data.

“However, we should not underestimate the enormity of the task that financial institutions face in transforming their operations to become open banking ready. It is to be expected that there are differing levels of buy in for open banking across the organisation, and pockets of the business that may lag behind in embracing the opportunity.

“As those in the C-suite evolve their open banking strategy, there is opportunity to fill possible knowledge or culture gaps to ensure alignment. Whether it be through strategic fintech partnerships, acquisitions or internal re-alignment, banks can ensure they are well placed in the race to create the best possible customer experience from open banking.”

 

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