By Stan Swearingen, CEO of IDEX Biometrics
“Biometrics” has been the buzzword on everyone’s lips within the payments industry this year, and an influx of pilot schemes has confirmed that the biometric revolution is no longer a distant fantasy, but rather a pressing reality.
Following a number of successful trials using fingerprint sensor technology within smart cards across multiple markets, (including Bulgaria, the US, Mexico, Cyprus, Japan, the Middle East and South Africa) the biometric smart card is reaching its inflection point. Key players within the banking industry, including Visa and Mastercard, are already heavily invested in this new payment technology and anticipate that biometrics will play a key role in the revolution of the payments industry.
With mass market rollout on the horizon, here are five key predictions for the biometric payment industry in 2019.
2019: The year of dual interface
The first half of 2017 reported 937,518 cases of financial fraud, resulting in losses of an astonishing £366.4 million, a clear demonstration that the PIN is no longer fit for purpose. Recent research from IDEX Biometrics supports this claim and found that 29% of consumers surveyed felt concerned about the use of PINs to keep their money secure, and as many as 70% believed that contactless payment cards left them exposed to theft and fraud. As consumer concerns continue to grow around the security of payments, so too does the need for a personalised, secure and convenient payment solution.
Enter the biometric dual interface payment card. 2019 will see biometric fingerprint sensors integrated into cards with both a micro-processor and contactless interface, removing the need for PINs. This will provide consumers with the reassurance that their money is safe as any transactions will require their finger print to authenticate it. 2019 will be the year of the dual interface where biometric authentication will be available for both contact and contactless payments!
These advances in technology and those within the payments market have meant that the concept of biometric authenticated payments is no longer a novelty. In fact, according to forecasts by Goode Intelligence, nearly 579 million biometric payment cards will be used globally by 2023. The integration of the biometric sensors in the payment card will be one of the next-generation transformative innovations to breathe new life into the payment industry next year and assist in the fight against payment fraud.
Remote enrolment will be the key to mass market adoption
For mass market deployment of biometric smart payment cards to be possible in 2019, banking infrastructures must look at the implementation of biometric technology and ensure that this method of enrolment is accessible and convenient to all. The elderly or those with physical health limitations may struggle leaving the house to enrol within bank branches and even those who work a 9-5 day can often find making it to the bank within opening hours a challenge.
The latest advancements in remote enrolment of biometric payment cards will mean that enrolment for biometric payment cards can take place in the comfort of your own home. Card users will be able to enrol straight onto the card by simply placing their finger on the sensor (with the aid of a small device that comes with the card) to upload their print to the card’s highly secure EMV chip. There is no need for an external computer, smartphone or internet connection. Once loaded, the fingerprint never leaves the card, thus eliminating multiple attack points.
Biometric payments will bridge the gap to financial inclusion
In 2019 advances in biometric fingerprint authentication will be a vital ingredient when bridging the gap to financial inclusion. Currently, 1.7 billion adults remain unbanked across the globe today. This is for many reasons, from immigration issues, to illiteracy as well as mental health. Those living with dementia are also at risk of losing their financial independence as their short-term memories decline. A fingerprint sensor on the card can take the place of a PIN or even signature, meaning sufferers are able to stay financially independent for longer.
Currently those who lack access to financial services are missing out on the many benefits financial inclusion has to offer. Fingerprint authentication will remove the barriers that face those with literacy challenges, or face difficulty with memory, as card payments will no longer be about what you know, or what you can remember, but who you are.
Biometric authentication will be a simple, secure and convenient solution eradicating the need for passwords and PINs as a form of authentication. For this to work as a solution to financial inclusion, banking infrastructures and card manufacturers must work together to reach a price point that enables this technology to be available to all.
The possibilities for biometrics are endless…
While biometric authentication technology is already being used with smartphones and passport identification in the UK, 2019 and beyond will see endless possibilities for the use of biometric smart cards into payments and beyond. We can even expect to see biometrics branch into the Government issued identification and IoT enabled devices arenas.
In fact, a whole host of public services is set to benefit from this secure means of authentication. The use of biometric smart cards within the NHS, for example, could see access to sensitive patient records limited only to the patient themselves. Biometric social benefits cards could control how the money is spent and that it is spent by the right person. According to IDEX research, 38% of consumers surveyed would like to see biometric methods of authentication introduced to wider government identification including driving licenses, National Insurance numbers and even passports.
The future of the biometrics – 2019 and beyond!
In 2019, authentication will get even smarter, and further technological advances such as multi-modal or multi-factor authentication will further enhance security within the payments landscape. This refers to technology that combines a variety of different types of biometrics in order to add an additional layer of security, including persistent authentication. For example, instead of having one single authentication, smartphones could continuously scan features to ensure the correct person is using the device.
Whilst the biometric dual interface smart payment card is set to hit the mass market next year – this is just the beginning. The payment card of tomorrow will go beyond just transactions. Biometric smart cards will serve multiple purposes – a payment card, a form of ID for restricted goods and even a loyalty card!
The early days of biometrics where it was felt to be invasive and a privacy concern are long gone. In fact, according to recent research from IDEX, 56% of consumers surveyed state they would trust the use of their fingerprint to authenticate payments more than the traditional PIN. Further to this, 52% would feel more confident if their fingerprint biometric data was stored on their payment card, rather than a bank’s central database.
Consumers are ready for the use of biometric fingerprint methods of authentication for card payments and 66% expect their roll out to authenticate in-store transactions in 2019. We predict that by 2019 biometric smart payment card adoption will go into many millions!
DIGITAL FINANCE: UNLOCKING NEW CAPITAL IN DISRUPTED MARKETS
Krishnan Raghunathan, Head of Finance & Accounting Services at WNS, explores how a digitally transformed finance department can give enterprises the ability they need to improve cash flow and revenue through better use of data and improved analytics-driven visibility.
Businesses everywhere are scrambling to recover lost revenues and protect cash flow. But as countries globally grapple with a dreaded second wave of the pandemic, imposing far more stringent localised lockdowns and new restrictions, it is set to be the hardest winter in living memory for many sectors.
The likelihood of winter peaks, so often the saviour of sectors such as travel and hospitality, benefitting businesses is diminishing rapidly. While many have pivoted to a greater or lesser degree, few have been able to offset the impact of falling revenues on cash flow. Even retail, riding an e-commerce boom in many regions, is finding itself in choppy waters, with 17 percent of consumers switching brands due to the economic pressures and changing priorities caused by the pandemic.
As one McKinsey article notes, “With some companies losing up to 75 percent of their revenues in a single quarter, cash isn’t just king – it’s now critical for survival”. Where then do businesses find new sources of cash to sustain their operations through the coming months?
Tapping Overlooked Cash Opportunities
For many, the answer could depend on whether they have digitally transformed their finance department. Why? Because many organisations are sitting on unidentified opportunities, funds that could be vital in shoring up businesses over the next few months or plugging the gap between operating costs and government bailouts. Yet those that have been slow to start their digital transformation journey are at a disadvantage;. At the same time, it is possible to identify these hidden seams in an analogue organisation, the process is time-consuming, manually intensive and, without the right digital tools, prone to human error.
Where deploying digital tools helps is by bringing speed, automation and reliable data to the fore. Connecting them with digital finance and accounting systems can give businesses clear insights into how money is being spent, where wastage is occurring, and where opportunities for optimisation exist.
It might be something as simple as automating the accuracy checking, issuing and chasing of invoices and late payments. This could reduce errors and invoice disputes and ultimately lead to faster payments. Accuracy and organisation are also important in billing – better records enable faster billing for work completed, and in turn, should deliver quicker payments.
It could also be around having the ability to review the supply chain and procurement data and identify where a supplier is subsidising a larger customer’s product line through drawn-out payment terms, or where a variety of vendors are on different terms across the business. Using that data and overall knowledge of the business to negotiate better terms that work for both supplier and customer can create new opportunities. It could even be to identify late-paying customers, determine the reason for late payments, and use that intelligence to develop products or financing solutions that continue to support those customers (and improve loyalty) without increasing the burden on the balance sheet.
Generating Reliable Insights for Faster Decision-making
To do any of these manually would take months, generating data slowly that would quickly go out of date. But digital finance departments have evidence they can trust to inform business decision-making. That’s because old, manual processes built around Order-to-Cash lack the flexibility and agility that businesses require in today’s markets. The fact is that even before the global pandemic crisis, the pace of digitisation across all sectors was demanding new approaches to finance and book balance.
The opportunities are significant – from cognitive credit and improved forecasting accuracy to enhanced customer analytics. All use similar tools, based on artificial intelligence and quality, trusted data. Cognitive credit can be deployed to quickly make decisions on whether to advance or restrict credit, based on individual company positions and available data. Doing so enables businesses to either capitalise on opportunities (for instance, agreeing credit for a supplier that has run out but is a supportive and integral partner) or avoid risk (in the cases where a business might be in administration).
With more accurate forecasts, businesses can better manage their currency purchases and deposits, selling currency that is not required or buying more where predictions identify an upcoming demand.
It is the same with customer analytics – with a greater understanding of customer needs, businesses can make decisions based on the right mix of the product (and how it meets demand) and supply chain suitability (such as production costs and location in relation to customers).
In many ways, the events of the past year have accelerated the process. In doing so, the problem is the pandemic has also accelerated the speed at which failure to act can lead to obsolescence. Therefore, it is vital that businesses, and more particularly their finance and accounting departments, kick start their digital transformation. This will enable them to deploy the tools and analytics that is needed to capture data, generate insights and drive fast, accurate decision-making to uncover previously untapped sources of cash and reverse revenue degradation.
The Importance of Digitally Enabled Finance Teams
Forward-thinking CFOs have already begun the process of digitising their departments, but for those that have been slow to start, now is the time to push forward. It is only through digital tools and analytics that finance leaders can identify both the internal and external opportunities to recover revenue and improve cash flow. Whether that’s releasing working capital, minimising revenue loss and accelerating revenue recovery, reducing total cost of ownership or enhancing customer retention – only digitally enabled finance teams will be in a position to capitalise and, ultimately, bolster business performance during what will be a trading period like no other.
About the author: Krishnan Raghunathan
Krishnan Raghunathan is the head of Finance & Accounting (F&A) practice and operations at WNS. He also leads the international delivery locations in China, Costa Rica, Spain, Sri Lanka, Romania, The Philippines, Poland and USA.
Prior to this, Krishnan was Chief Capability Officer for WNS, in that role he headed Horizontal practices across Finance & Accounting, Customer Interaction Services and Research & Analytics, Transformation & Process Excellence, Program Management (Transitions) and Solutions development.
He has more than 27 years of experience across Finance & Accounting, Business Process Management, Sales Solutions and Capability functions including 7 years in Accounting practice.
Before joining WNS in 2013, Krishnan led several challenging roles at Genpact, supporting strategic deals and consultative selling. In addition, Krishnan was also the business leader for a number of industry verticals at Genpact, including hospitality, transportation, logistics, media and professional services
Krishnan is a Chartered Accountant, a Certified Six Sigma Green Belt and a trained Six Sigma Black Belt
DATA DILEMMAS IMPACTING ESGS
Mario Mantrisi, Chief Strategy and Knowledge Officer, Kneip
It’s been well documented over the past few months that the COVID-19 pandemic has had a positive impact on ESG funds. ESG funds are typically portfolios where environmental, social and governance factors have been considered as part the investment process. Research from Morningstar shows that globally investors poured $45.6 billion into sustainable funds in the first quarter of 2020. In comparison, the overall fund industry saw outflows of $384.7 billion.
This trend is predicted to continue. Worldwide, attitudes are changing and a younger crop of ‘conscious investors’ with strong ethical views are now increasingly influential. Today, you’re less likely to see someone invest in an oil company. Instead, they are looking for innovative technology companies which fall under the ESG bracket, and more companies are entering this space. For example, United Nations Principles of Responsible Investment, which launched in 2006 with 100 signatories, now has more than 3,000 supporters, with a combined $100 trillion of assets under management.
With data now playing a fundamental role in the way funds, both ESG and typical, are managed, what role will data play in accelerating growth in this space? Although ESGs are doing well, we are seeing a critical issue which will determine their future growth – and it stems from data.
Across the board, ESG scores vary, and despite increased regulations from the UN, EU and individual countries’ regulatory bodies, there is no unified definition on what constitutes an ESG. This is why you’ll occasionally see oil companies pop up in an ESG fund. Tied into this, the way a lot of companies analyse data is biased toward larger companies who publish more data about themselves and are therefore likely to score higher in a fund manager’s ranking.
It’s clear changes need to be made to make it easier for fund managers to convert the interest investors are expressing in ESGs into proactive investments. The first change to be made is better sustainability reporting from companies. The second is improving data measurement and reporting. By making changes to these areas we will be able to accelerate the growth of investment in ESGs.
Let’s start with what we need from companies. Currently, most reporting on sustainability is aimed at stakeholders such as NGOs, which isn’t most relevant to investors. However, data management platforms can dissect and digest these reports to provide a reliable assessment of ESG performance. The state of play is rapidly improving, for example there are various EU directives and UK laws that require companies of a certain size to report non-financial information on an annual basis, but is this enough to attract conscious investors, driven by a sustainability motive?
Currently, many companies are missing out on potential investment from a host of conscious investors. To make themselves more desirable as a viable ESG option there are several steps that they can take to improve their reporting. Recent research from Harvard Business Review recommended the following:
- Articulate your purpose: Companies should demonstrate their purpose within a society, not just their profits. When reporting they should clearly explain how they produce profits by providing a solution to problems people and the planet face. The easiest way to articulate this is by producing a Statement of Purpose
- Improve engagement with stakeholders: Company reports should include an analysis that identifies the ESG issues that affect financial performance. Such a report is an effective way to demonstrate to shareholders and other stakeholders that the company recognises its role in society
- Improve measurement in reporting: Investors want to know how ESGs affect society as a whole and are committed to investing in these impacts. However, most companies aren’t demonstrating the positive impact they’re having. For some, this will be because of a lack of framework available to report this. The UN’s Sustainable Development Goals (SDGs) provides a reliable list of objectives that companies should recognise when preparing stakeholder reports. The SDGs recognises 17 goals that the UN identified as necessary for a sustainable future, including eradicating poverty and hunger, ensuring responsible production and consumption, and promoting gender equality.
We are also seeing moves toward data standardisation when it comes to ESG reporting. Standards such as the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-Related Financial Disclosures (TFCD) leading the way. The European Commission has also blazed trail here, in pushing for the standardisation of ESG data, from the Non-Financial Reporting Directive, which entered into force in 2017, to the EU Action Plan on Sustainable Finance, which will impose ESG reporting obligations on European investors from 2021.
However, it will take time – possibly years – before we see more companies begin reporting around ESG in a structured and standardised way. Until then, fund managers wanting to satisfy the increasing appetite from investors for ESG, will need to find ways efficient ways to make sense of disparate pieces of information and spot ESG opportunities for their clients.
Tech and innovation needs to be at the forefront of how reporting platforms support fund managers so they can effectively advise their clients.
A combination of data-driven processes is needed to measure and analyse the complex and unstructured ESG data that is available today. Technologies such as artificial intelligence and expertise in handling Big Data make it easier to analyse ESG data. In addition, machine learning and natural language processing (NLP) allows for algorithms to infer context as they sift through a variety of sources, such as annual reports, NGO reports, academic papers, regulatory and legal disclosures to assess a company’s sustainable credentials and performance. Furthermore, using these technologies removes biases and allows fund managers to review a much broader range of sustainable funds available to them.
It’s clear that ESG growth is going to continue to rocket as investors across the world become more conscious of their impact and look for ways to invest money more sustainably way. Smart fund managers will augment their own skills with the right data management platforms so that they and their clients can ride this wave of growth.
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