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CASHLESS POCKET MONEY: HOW CAN BIOMETRICS BETTER PROTECT PREPAY CARDS FOR CHILDREN?

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By Vince Graziani, CEO, IDEX Biometrics ASA

 

For many of us, our first experience of money came from the pocket money we received as children or through gifts from family members during the holidays. This money would then be eagerly stashed in a piggy bank to save up for the latest toy or treat. While the average UK weekly pocket money of £7.55 may be significantly more than many of us got when we were growing up, the main motivation behind the payments – parents wanting their children to understand the value of money – remains.

However, as we move closer to becoming a cashless society, many time-honoured habits and traditions around money are changing. Today, children are just as likely to receive their pocket money in the form of prepaid payment cards as through cash. Introducing children to the banking experience at an early age.

 

Learning money skills for life

Such technology is helping make managing money more relevant for children of the 21st century. So much so, that it is thought that almost one-in-three (31%) parents now pay pocket money digitally, with payment mechanisms specifically designed for children such as GoHenry and RoosterMoney proving especially popular. Launched within the past few years, these colourful cards are already being used by millions of children to learn lifelong money skills.

Both companies offer prepaid top up cards which allow parents to transfer money securely into a dedicated account for their child. Here they can set spending limits through an app and even assign exactly where their child is allowed to spend it. No more teeth-rotting sweet shop splurges for the youth of today.

 

The first cashless natives

There is no doubt that as well as being an effective way of distributing money, prepaid top up cards are also an excellent tool in helping young people learn how to manage their money in a way that we have not seen before. They allow parents to educate, motivate and empower their children financially so that they have the reassurance that they are fully prepared for a cashless future.

As we become increasingly cashless, parents are finding it harder to make money tangible for children. However, there is no turning back. The children of today are the first cashless natives. Research from GoHenry shows that card payments in store account for more than half (53%) of the spending by children on its prepaid cards and online transactions make up an additional third (33%). The withdrawal of cash adds up to only a paltry 14% of all transactions.

 

Better security is required

As young people take their first steps into the world of banking and payments, it is important that their accounts are safe from potential fraud or hacking. Unfortunately, this is not always the case. Passwords are increasingly recognised as being ineffective as an authentication mechanism. This is because, as the number of passwords we are forced to remember increases, general password hygiene continues to go down. It is simply not possible to remember multiple credentials. Therefore, the same passwords and PINS (yes 1234, 0000, qwerty and password1 we are looking at you) are used time and time again.

Whilst the use of prepay cards for children makes a lot of sense, they still face a significant hurdle. Namely, a lack of personal verification that links a user to their card. This unfortunately causes fraud to be rife. Therefore, a more secure form of prepaid card is needed that maintains their convenience but protects impressionable children from the potential of misuse and fraud. Instilling a sense of confidence and safety among children on their first tentative steps into the world of banking.

 

An additional layer of authentication

To make prepaid cards less susceptible to misuse, it is important that payment authentication becomes inbuilt to protect the user. The best way to do this is to ensure verification happens before a transaction is even begun ensuring that the prepaid card is completely, undeniably attached to the users’ identity.

A technology we are familiar with from our mobile phones, fingerprint biometrics provides a valuable additional layer of authentication onto prepaid cards and increases security and confidence for those that use them.

With the user simply having to touch their finger to the sensor, authentication is fast and more convenient than traditional cards with PINS and passwords. They also deliver end-to-end encryption which means that they are not only impervious to fraud, even if stolen – ensuring the child’s data is protected without fear of it being found and misused.

 

Ensuring peace of mind

Our world is changing. It is important that children are fully prepared for the digital economy and the continued rise of a cashless society. There is no doubt that prepaid cards for children is a positive way to channel pocket money and exposes young people to adult transactions in a controlled, inclusive, and manageable way.

With the addition of fingerprint biometric sensors, these digital piggy banks become far more secure without compromising their convenience. So children can develop some all-important financial independence and parents can have peace of mind.

 

Technology

How Digital Adoption Platforms can enhance digital transformation and customer experience in the insurance industry

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By Vara Kumar, CPTO & Co-founder, Whatfix

 

Like many industries, the insurance sector was prematurely hastened towards digitalisation due to the Covid-19 pandemic. Now, digital adoption continues to be a key focus of many organisations to strengthen their fully or partially remote workforce with nearly 50% of IT spend being put behind the growth of core applications and infrastructure, and an additional 25% being invested into digital solutions.

But with millions of claims processed every year, needing to provide superior customer service to drive retention, complex procedures and processes to navigate and both internal rules and external regulations to follow, digital transformation plans for insurance organisations are filled with challenges.

Increasingly digitalised workforce

With the pandemic came an overhaul of how we work. Remote and hybrid working is now the norm, and across most industries, there’s been a huge expansion in both the number and type of digital applications used to communicate, collaborate and enhance productivity across an organisation.

For the insurance industry, this has meant that every employee, from underwriters to customer service agents, has had to adapt to handling their steps of the process, from setting up coverage to filing a claim, remotely, and across multiple platforms and tools.

The challenge is ensuring this more digitalised workforce fully understands how to successfully navigate each application effectively and efficiently to ensure they can deliver on their services and customer experience (CX). But putting together a skilled, high-performing IT team can be difficult – according to an enterprise study, 54% of organisations said they’re not able to accomplish their digital transformation goals because of a lack of technically-skilled employees. This is further complicated by the fact that, in an age of labour shortages, the sector is forced to get creative and find ways of managing the workload and navigating new technologies with a smaller workforce.

Changing customer expectations

On top of the challenges that the increasingly digitalised workforce is experiencing, the tech-savvy customer of today also expects more from their insurers. Indeed, the pandemic forced customers as well as organisations to become more IT-literate, and in the customer service space in particular, customer expectations are high.

Customers today want and expect to be able to make maturity or house insurance claims in an efficient and straightforward manner, across multiple platforms, from phone to email to social media, preferably in a matter of minutes.

McKinsey observes that improving the value chain from the customer’s point of view is an important step within digital-ecosystem efforts, and HubSpot found that 90% of consumers expect an immediate response to a customer support issue, with 60% defining ‘immediate’ as under ten minutes. Even pre-pandemic 44% of customers were comfortable utilising chatbots for insurance claims, and 43% were comfortable using them when buying insurance policies.

Undergoing a digital transformation on the customer side is crucial then, as insurance providers that can meet these changing customer expectations are more likely to attract and retain customer loyalty now and in the future. However, just 30% of insurers believe that they have the capabilities to fully digitalise their customer experience.

So, what can insurers do to meet the technological demands of a digitalised workforce and a multi-channel CX for tech-savvy customers?

Using DAPs to boost digital transformations and CX

In a rapidly changing market, Digital Adoption Platforms (DAPs) can be a huge advantage to insurers looking to manage the challenges of today and come out on top. A piece of instructional no-code software that sits as an additional layer on top of other software applications, such as Claims Management or Policy Administration Systems, to help train and guide users on how to best use the software, DAPs can massively improve the agility and effectiveness of business processes across an organisation.

On the employee side, for example, DAPs can help insurers to manage challenges of a frequently changing workforce by making it easier for employees to get to grips with new digital applications. With the likes of  guided walk-throughs and task lists, which help employees through each step they need to know and just-in-time nudges to reduce policy administration, claim, or underwriting processing times, employees are more efficient and technology adoption is streamlined and accelerated. Easy to integrate into existing systems, DAPs can be used to not only train and onboard new employees but also upskill veteran workers, training the workforce as a whole on the latest technologies being used across the industry. As a result, everyone from underwriters, claims, and service representatives will better understand insurance tools that will enable them to be more productive and better deliver customer experiences leading to better business outcomes. Indeed, from the customer perspective, DAPs can enable companies in the insurance industry to keep CX positive and smooth. Firstly, by training on near real-life scenarios and secondly, by being able to more easily navigate applications, processes and systems internally, customer service representatives will be able to spend more time and focus on the customer and on resolving their queries, without being hindered by technological hurdles. For example, errors made in policy or claims processing can be reduced if employees can use self-help elements of DAPs to mitigate issues and solve queries themselves, in real-time. As a result, customers will be happier with their service, and more likely to stay loyal to that brand.

Customer-facing platforms can also be improved using DAPs. Typically, legacy apps whether on our phones or online, can make it difficult for users to complete their tasks, leaving them frustrated. With DAP user-specific content and just-in-time support, such as pop-ups, automated walk-throughs and user guides for every part of the user journey, customers can experience a smoother journey and have their queries and issues resolved more efficiently..

Drive efficiency and customer satisfaction

DAPs are already growing in popularity, with Gartner predicting that by 2025, “70% of organizations will use digital adoption solutions across the entire technology stack to overcome still insufficient application user experiences.”

So, now is the time for insurance providers to leverage this technology to facilitate their digital transformation plans. By ensuring their increasingly dispersed and digitalised workforce can use the latest applications to their full potential, and that their customer journey is as efficient and easy-to-use across the multiple channels customers expect, insurers will see huge benefits, from increased efficiencies to improved customer satisfaction.

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Are cyber insurance and incident response budgets the same thing?

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Dominic Trott, head of strategy – UK, Orange Cyberdefense

 

Cyberattacks on businesses increased by 13% in 2021 compared to the previous year. Yet while it’s not necessarily the case that the number of bad actors is increasing, it is the scale on which they’re operating that has broadened exponentially.

In addition, the manner in which cyberattacks are being carried out has also evolved. While some cybercriminals hack for fun, the vast majority of malicious activity is, unsurprisingly, conducted for financial gain and targets organisations on the basis of two simple principles: first, where there is the most value to be targeted; and second, where the attacks are most likely to be successful.

It’s also likely that the full extent of the cybercrime landscape is hidden. Accurate data on the impact of cyberattacks is often hard to come by because, in many cases, the breached organisations are unaware of the full extent of the attack – or even that one took place. They might genuinely not know this information if they don’t have accurate oversight of their digital estate, or keep quiet for fear of incurring legal liabilities or causing reputational damage.

The current security landscape has created the perfect storm for cybercriminals, as cyber insurers and Computer Security Incident Response Teams (CSIRT) often end up fighting over the same budget. Traditionally, it has been relatively easy for firms to obtain cyber insurance coverage at low premiums. However, the heightened cyber risks and exponential growth of ransomware attacks in recent years has led to premiums rising.

The question that businesses often ask, therefore, is ‘why do I need an incident response retainer when I already have cyber insurance? Surely, it’s a waste of money? If the worst does happen, the insurance company will pick up the bill for any damage done after the event’. I would argue that is a short sighted and potentially dangerous approach. Let’s look at the different roles of incident response and cyber insurance.

  1. Cyber Insurance: like other types of insurance, this aims to give businesses a way to ensure that if the worst happens, they can recover some of the costs. Cyber Insurance will likely cover you for some of the tangible costs associated with a breach, but it probably won’t cover all of them. By acting quickly and limiting the scale of the breach, you may be able to reduce the full impact. In addition, some insurance companies will expect you to have demonstrated a level of preparedness before accepting your claim – a bit like having a burglar alarm or dead-bolt locks on your house before a house insurance claim is accepted.
  2. Incident Response Retainer: aims to provide rapid, on-demand expertise in an emergency if the customer calls them immediately after an incident. The key to mitigating the impact of any cybersecurity incident is the reaction time between detection and response. Many companies lack the infrastructure needed to react in a quick and secure manner. Having an incident response team available 24/7 to identify, contain and eradicate threats and to get businesses back up and running as soon as possible may be crucial to their ability to continue successfully trading.

 

Cyber resilience

But isn’t incident response included in the insurance policy? In many cases, it will be. And perhaps this is where the confusion comes. Cyber insurers will often pay out, but only as long as the incident is covered by an incident response retainer. Their objective is of course to help cover the financial losses that result from cyber events and incidents and in numerous policies, the presence of a retainer agreement with an external incident response provider can help prevent severe losses. This will often bring down the premium of the insurance policy. Having a retainer also means you get to choose the CSIRT team that you are going to be working with in advance. You can assess their credentials, their experience, talk to their other customers – all before an incident occurs.

The key thing here is building cyber resilience. Of course, there is no such thing as complete security. For starters, incident response alone is insufficient to deliver cyber resilience from either a technical or procedural perspective. Good practice advocates that solutions should be in place across the full threat lifecycle. For example, the NIST framework recommends that organisations identify their threats and vulnerabilities; protect against them with security tools and operations; detect threats as they address the enterprise; respond to contain and remediate an incident as it occurs; and recover to take lessons learned from incidents and improve ‘business as usual’ appropriately.

But, leaving an end-to-end approach to threat lifecycle management to one side, having both cyber insurance and an incident response retainer working seamlessly together will at least provide organisations with a fighting chance of continuing their core business functions if and when disaster strikes.

 

Making cybersecurity a joint enterprise

There are worrying trends emerging in the cybersecurity market. While attacks are becoming more sophisticated and ransoms are rising, there are concerns that there might not be enough money in the still-emerging sector to cover everyone’s needs. So, what can companies do? They should still invest in insurance coverage, but they also need to look for other ways to cover their potential exposure, including CSIRT rapid response teams.

It cannot remain a budgetary decision for a CTO and a CFO to fight over whether to firefight OR recoup what has been lost in cyber-attacks. Both are important. An incident response team is the first port-of-call to help respond to any cyber accident or incident. Then and only then – once the breaches have been made safe – should you call in the moneymen.

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