By Catharina Eklof, CCO of IDEX Biometrics

From the visually impaired to displaced migrants, the unbanked, and people living with dementia – a burgeoning financial gap exists across many areas of society. In fact, as of late 2021, almost one-third of adults around the world were reported as unbanked according to the World Bank Group. That’s around 1.7 billion people – with half coming from the poorest 40% of the world’s population. Being financially excluded in this way means not having access to common financial services including savings accounts, loans, a credit rating, or even a bank account. Those who are awaiting clearance to join a country’s financial ecosystem, such as migrants, are also finding themselves left behind by the modern financial infrastructure.

As societies reliance on digital and contactless transactions over cash continues to grow, this financial gap is only set to widen. In less than 10 years, the share of Americans not using cash for payments has increased by double digits, reaching 41%. By 2031, cash payments are expected to make up only 6% of all transactions.

Fortunately, biometric smart cards can bridge this gap for people in the Global South, migrant populations, as well as those with visual or cognitive disabilities worldwide, who deserve to feel secure, included, and independent.

The challenges surrounding passwords

 COVID accelerated the transition from cash to contactless payments and the use of digital wallets, creating a challenge for many. By 2024, it is expected that digital wallets and cards will account for 84.5% of all e-commerce spend.

Digital transactions traditionally rely on the use of PINs that can easily be forgotten, as studies have found that we manage 100 passwords on average across various sites and services. In the US alone, consumers report relationships with more than three financial institutions and have more than four accounts per household. The challenge of password recollection is only growing. To counter rising cybersecurity threats, several countries now mandate two-factor authentication for retailers and service providers, creating further complexity.
However, organizations are responding to financial exclusion. Card provider Mastercard introduced its contactless PayPass offering, as well its Touch Card developed alongside Amjan Bank which enables the visually impaired to distinguish between their cards. Both look to provide a better customer experience for people struggling with the digital changeover. For those living with dementia, Mastercard has also partnered with Sibstar and the Alzheimer’s Society to create a specific card where limits, transactions, top-ups and notifications can be viewed and managed via a complementing app. Likewise, Turkish neo bank Papara introduced a Bluetooth debit card that provides visually impaired users with audio prompts when making payments.

Protecting the visually impaired

There are at least 2.2 billion visually impaired people globally. In 2019, it was found that 89% of visually impaired have been victims of fraud or have made errors when paying for goods and services. This figure comes prior to the pandemic, and the proliferation of digital transactions, suggesting an even bigger concern today.

PINs present an obvious security issue for this demographic, with others able to oversee their inputs and then manipulate them. Contactless payments go some way to solving that problem but pose the risk of fraud as there is no PIN verification below the increasing threshold amount, now at £100 in the UK, where the average annual wage is £27,756. In India, where the average annual wage is 9,45,489 rupees (roughly £9000), contactless limits are set to 5000 rupees (£48). Many accounts also require visual-based inputs to prove identity, such as CAPTCHA, proving as a barrier for the visually impaired.

Enhancing awareness on a regulatory level is key for driving change and reassuring vulnerable groups. The EU Accessibility Act is an example of how payment service providers are obliged to comply with accessibility standards. This includes making interfaces perceivable, operable, understandable, and robust, to ensure that individuals with disabilities can effectively navigate payment interfaces.

Paving the way with biometrics

 Including braille on cards for easy identification is a crucial step for the visually impaired. This can also be used on biometrics smart cards, with sensor textures to confirm the user has selected the correct method of transacting. Not only do these cards provide convenience and inclusivity, but they also promote ultimate security by linking a person’s identity directly to their fingerprints. This data is encrypted within the card itself, reducing any concerns surrounding fraudulent behaviour or of data being lost via a centralized breach or large-scale hack.

In this context, biometrics can be used to serve the unbanked and those currently unrecognized within national infrastructures. South America is an example of an early adopter of biometrics, turning to the solution to cope with swelling population sizes, and the challenges associated with accessing proof of identity when setting up traditional bank accounts. Meanwhile in India, pension payment fraud has dropped by 47% thanks to bypassing the need for prior credit ratings or credentials.

Liveness detection, however, which ensures the biometric sensor is reading a true biometric source (rather than a false or recreated image of one), is vital to the success of financial aid programs globally. Securing remittances through biometric authentication ensures transparency and better fund control. Directing funds to cold wallets or biometrically authenticated cards can also improve program efficiency, safeguarding the interests of individuals and communities.

Overall, the biometrics market is expected to grow to US$87.4 billion by 2028, at a CAGR of 17%. Whilst its value as a simple and secure method of transacting is growing substantially, you can’t put a price on its impact on those who have so-far fallen through the gaps of finance’s digital revolution.

By Joman Kwong, Strategic Solutions Manager, Financial Services at Laserfiche

Today, digital transformation is imperative for every industry. After all, technologies like artificial intelligence promise unparalleled efficiency improvements, while even the most technophobic customers are now accepting and using a variety of online facilities, from movie streaming to grocery deliveries. Simply, digital is becoming the dominant method of producing, improving, and selling goods and services. And this is perhaps nowhere truer than within the banking sector.

Digital transformation is crucial for banking institutions to keep pace with customer expectations, while also addressing the macroeconomic disruptions that other financial institutions are currently facing. These including lower liquidity due to hiking interest rates and inflation rates, higher operational costs, and reduced consumer spending as businesses cut back on production, which lowers loan amounts.

While digital transformation is a top priority for many banks, only 30% that have implemented transformation initiatives report success. So, what is standing in the way and how can banks break through?

Customer-Centricity

Customer centricity continues to be the key driver of banks’ digital transformation strategies. Banks are using different approaches to be more customer-centric, such as:

• Improving customer onboarding processes
• Reducing friction in the customer journey (e.g., having AI chatbots for 24/7 customer service and automating the loan origination system to streamline lending processes)
• Providing a self-service portal for customers to access their financial documentation and make service requests anytime and anywhere
• Securing customer data and transactions

After deploying technologies to achieve these goals, however, banking institutions may uncover the difficulties of maintaining data integrity across applications. It’s imperative to have a secure, consolidated information backbone that enables the organisation to process data intelligently. This system can centralise data in a single source of truth, as well as integrate line-of-business applications to eliminate information silos, and leverage data to support automated workflows and drive informed decision-making.

Competing Priorities

As business leaders and teams embrace digital initiatives, banks may experience competing priorities and uncertainty about where to start. The solution here is not to try and solve everything at once — work with a business analysis team to map out operations with pain points and potential solutions and prioritise them.

Meanwhile, scarce internal resources or a lack of bandwidth, especially for IT professionals, will require the implementation of new software and the development of new solutions, which further increases the demand for IT resources. Banking institutions should always consider software manufacturers with low-code, no-code environments to develop and design apps while providing an intuitive interface for users. The ability to design and create processes should not be limited to IT professionals, either. With proper training, citizen developers and other non-IT employees should be able to create and deploy their own processes as well.

Data Security

Data security will also remain critical as more confidential customer information is released through mobile banking. Banks have also begun using AI to provide faster customer services and reduce repetitive administrative and back-office tasks, such as data capturing and migration. However, they need to be extremely thoughtful when incorporating AI into their tech stack to avoid breaching confidentiality or facing legal or reputational risks. Ultimately, tech like AI is the future of banking and commerce—but organisations must be well-versed in its use to make it a success.

With the implementation of new technologies, plus increasing scrutiny and emerging regulatory requirements to secure customer data, trading and financial services, information governance and records management become even more important. Organizations implementing records management and content services platforms should vet providers to make sure they provide the security tools needed to maintain strict access control for users in-office or working remotely, such as enterprise-level identity management; and built-in document lifecycle management functionality.

The Future of Banking Technology

With the ubiquity of smartphones, digital banking will no longer be an option but rather a must-have for the industry. Therefore, improving omnichannel operations will be one of the key priorities, along with streamlining banking processes like lending and buying homes. Take buying a home as an example: Customers are looking for a more comprehensive, connected, and seamless process. Different parties — such as brokers, insurance, mortgage providers — should be connected, allowing information to be passed along without customers having to repeat submissions.

Customers will also demand more personalised banking services, driven by millennials and Gen Z. This includes receiving quick and accurate financial suggestions from bank representatives and advisors. Banks will invest in technologies to better manage data intelligently, leveraging data across applications for more accurate, real-time customer analysis and informed alerts.

Change will continue to drive digital transformation in the banking industry, and digital initiatives will continue to evolve. The key to success lies in organizations’ business agility — how they react and adapt to today’s challenges and anticipate tomorrow’s opportunities.