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Cybersecurity and the Internet of Things: Time for Biometrics?



By David Orme, SVP of IDEX Biometrics

The Internet of Things (IoT) is growing at a rapid pace, with connected devices and white goods entering our domestic and working environments faster than ever before. Now, thanks to the advent of Wi-Fi, what we once deemed to be white goods are increasingly becoming connected and ‘smart’. It’s now possible to order a pizza, replenish the fridge and download a film to watch, all within ten minutes and without leaving the comfort of your armchair using IoT technology – what bliss!

IoT is, undoubtedly, making life much more straightforward. Gone is the need to trawl shops, to battle for that last space in the supermarket car park or struggle through the high street with bags full of shopping. IoT lets us delegate important every day, but mundane, tasks to connected goods, leaving us free to focus on the more complex and fun things in life. If your fridge can order the milk for you automatically (and if it doesn’t already, chances are you will in due course own a fridge that can), that’s one less thing to think about on the way home from work in a busy modern life.

Yet like most good news, IoT comes with a few caveats. Chief among these is the issue of cybersecurity.

Who’s charging to your account?

For a connected device to take actions on your behalf, be that a payment when your intelligent fridge re-orders the milk, or a smart TV granting or refusing permission for a child to download or view particular media, there has to be a process of authentication. In other words, the device or provider has to be sure that the right person is making the request, just as they do when you use a payment card conventionally. Your connected fridge has to be sure that it’s you who just ordered champagne and caviar, and asked for the charge to be placed on your account/card, rather than it being your teenager, or the cleaner, or someone who’s hacked into your fridge and made fraudulent transactions. Let’s also not forget that your manufacturer or service provider has to make sure that it is a real fridge and that it belongs to you, so that it knows it is talking to the right appliance.  After all, manufacturers need to be able to authenticate that it is the right fridge receiving requests from the right person, as well as authenticating the payment.

As a society we are used to authenticating our transactions, it happens daily. Usually the process involves a PIN or a password — when we use our card in store or check our bank balance, for instance. The problem is, we know that these methods of authentication are no longer fit for purpose. For example, it may be  easy for criminals to guess or uncover a PIN correctly, while passwords are also often compromised .

Indeed, the constantly-repeated advice that passwords must be unique, complex, but never recorded, provides a perfect example of why this authentication method has had its day. If forecasts are correct, there will be more than 20 billion devices connected to the IoT by 2020 and a good proportion will be directly connected to payments.  Providing cyber criminals with up to 20 billion more opportunities, particularly if those devices rely on outdated authentication protocols.

The answer’s at your fingertips

To secure the things that we treasure, a higher level of authentication is required, one that is entirely personal to us and impossible to replicate. Biometrics are the answer for the burgeoning IoT. Manufacturers of smart goods must look to include fingerprint sensors into connected devices themselves, so that authentication can take place on site, without information being sent into cyberspace. Locally stored biometric data for authentication is virtually impossible for criminals to hack or intercept, and impossible for anybody to replicate in person. The only person who can authenticate an action, permission or transaction, where biometrics are involved is the person whose fingerprint is held as a record on the device.

Biometric authentication will end the concerns people currently have about the implications of devices being lost or stolen, and even sold on. Using biometrics to authenticate gives users a truly personalised and secure IoT experience.

After all, if the time comes for somebody to order several magnums of champagne and kilos of caviar from a smart fridge in your home, don’t you want to be absolutely sure that person is you?


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E-commerce marketplaces have become more than third-party platforms



By Luke Trayfoot, CRO, MANGOPAY


E-commerce marketplaces have become an essential driver of e-commerce growth. As found by Ascential in their annual Future of Marketplaces Report, by 2027, third-party sellers using marketplaces will capture 59% of global e-commerce sales. A trend accelerated by the pandemic. Marketplaces are helping more brands cater to the ever-changing needs of consumers.

As businesses are continually being challenged to provide a seamless shopping experience, marketplaces can support this venture. Without the added costs of warehousing, supply chain and logistics for additional products, marketplaces can help to alleviate some of those pressures, especially as consumer demand grows.

Now, marketplaces need to further evolve their offering through payments infrastructure, whilst remaining compliant with payment regulations.


The marketplace offering – lowering barriers to entry

 Beyond access to the best deals, seamless checkout and quick deliveries, marketplaces also exceed consumer expectations for an intuitive one-stop shopping experience. Through marketplaces, retailers can continue to evolve their proposition, collecting data on what their customers want and need and continually refining their offerings at the right time and in the right place (web/app).

Marketplaces can also support businesses entering new markets or competing with bigger players in their respective fields. Entering a marketplace network allows small businesses to quickly gain influence, benefiting from larger audiences and quickly generating high sales volumes.

With multiple sellers, many with an international presence, implementing a sophisticated payments environment is much more complex than building one for an e-commerce website. Trading globally has different rules and regulations to adhere to per country which means payments environments must be multi-layered, accepting various forms of payments, which can be an inhibitor to businesses scaling at pace. Marketplace’s innate customer-centredness must be maintained end to end, including the purchase journey, so a sophisticated environment is essential.


Building the right payments environment

 A crucial part of the customer experience, it is important that merchants provide a choice of payment methods at checkout. As payments have evolved, marketplace operators should consider what options they provide to sellers, and subsequently, their end consumers.

The number one expectation is of course payment security, which is a key step in building a long-term relationship based on trust. Increased control points, however, generally means more friction being introduced into the payment process, so this is a balancing act.

As the retail landscape continues to grow, so does competition and as new players enter the market, businesses must find new ways to innovate, and the creation of payment options is one of the most important avenue to do so.


Considering regulation at every step

 Increased marketplace activity has led to the introduction of regulation for the platform economy. In the UK, HMRC has implemented changes to VAT reporting requirements for digital marketplaces and their third-party sellers, especially for overseas sales. Across Europe, KYC (Know Your Customers) regulations intended to protect customers from data breaches on a marketplace and identify the persons (legal or natural) with whom the marketplace does business, as part of anti-money laundering and terrorist financing directives, have also been enacted.

As online platforms continue to play an increasingly significant role, the implementation of the Digital Services Act supports creating a safer, online experience for citizens. This regulation enables the expression of ideas, communication, and online shopping by reducing exposure to illegal activities and dangerous goods. Regulation can seem extremely daunting, especially for those looking to enter the market. However, its purpose is to protect both the business and users.

Marketplaces need to work with payment infrastructure specialists that can support providing methods for local users, as well as options that are familiar and trustworthy for a global audience. Additional flexibility also needs to be built in to adapt to different demographics to ensure that a variety of consumers are appropriately catered for. If a brand wants to establish itself in a new market, varied payment methods are not a nice to have, but a must.

Despite the current economic climate, global e-commerce will continue to grow in the years ahead. Those that will be able to stay ahead of the curve will ensure that their customers’ experience is balanced with greater choice and varied payment options, in tandem with regulatory compliance.







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Banking Technologies To Thrive In The Modern World




By Frank Arellano, Founder and CEO of Revolv3.


According to research by Digital Banking Report 2022, 36% of financial institution executives believe that expanding digital products and payment capabilities is the next step in bringing about dynamic industry change in 2023. With connected commerce driving the digital economy and the ever-growing demand for agile, flexible, operating models, banking and financial institutions need to step up their innovation game to stay relevant to the modern customer.

Traditional banking structures and neo banks have much to learn from each other

Traditional banks have assets and resources that most payment innovators do not have, and technological innovations play a critical role in bringing the best of both worlds to merchants and customers. However, traditional banks are losing market share to their neo counterparts due to a lack of well-established digital capabilities to complement the retail side of things. Whereas, neo banks still have room for improvement when it comes to customer support and service- as a portion of the modern-day customer base still expects the kind of services they are used to getting from face-to-face or in-person interactions.

Particularly with digital banking, customers are looking for convenience and flexibility in handling their finances. According to a study by McKinsey, 71% prefer multi-channel interactions and 25% want a fully digitally enabled private banking journey with remote human assistance available when needed. They no longer want to choose between this or that when they can have it all.

What banking technologies are expected to bridge the gap between where institutions currently are and where they aspire to be?

Embedded finance: In a nutshell, embedded finance places a financial product in an otherwise non-financial customer experience, journey or platform, and as a natural extension, offers financial services through a multitude of possibilities like digital wallets, customer loyalty apps, accounting software and shopping-cart platforms. Supersized by the exceptional rise of e-commerce and marketplaces, embedded finance, and specifically embedded payments, is becoming increasingly common for all B2B2C and B2B2B businesses as a core value proposition. It has extensive potential to scale and achieve a sort of invisibility that will enable the integration of frictionless payments into customer journeys.

Today, banks have the opportunity to continue providing customer-centric services that they are uniquely positioned to, but at the same time make the best use of embedded fintech in delivering suites of integrated fintech products and services to match customer requirements as per relevance. As identified by a study from Cornerstone Advisors, embedded fintech opportunities for banks include bill negotiation services, subscription management, data breach and identity protection, wealth transfer management and cryptocurrency investing. This integration of fintech products and services into the financial institutions’ offerings and processes also means new revenue streams for banks as well as keeping up with the competition.

PayTech: With laser focus on enhancing the payments value chain, PayTechs make up 25% of FinTechs and are valued at over USD 2.17tn. Emerging PayTech ecosystems will be fully capable of securely storing, managing and leveraging customer and merchant data generated through transactions. Consider the popularity of Buy Now, Pay Later (BNPL), a credit option increasingly favoured by merchants and customers alike. What BNPL essentially offers banks is an opportunity to delve into an interesting new area to drive lending as well as collaborations with FinTech partners.

It’s also interesting to note that innovations in the payment space makes it easier for exciting yet complex business models to navigate their unique set of challenges. Subscription-based businesses, for instance, rely heavily on the quality of customer experiences that can make or break the relationship. Quality payment solutions play an inevitable role in ensuring that false declines and customer churn stay as low as possible. Technologies such as dynamic routing make this possible by reducing declines, optimising payment approvals and ultimately, achieve higher customer retention.

Open banking: It’s truly revolutionary how open banking is literally opening up a whole new ecosystem of global banking, driven by emerging technologies and the omnipresence of digital experiences. Application Programming Interfaces or APIs enable FinTechs and banks, each with their own set of advantages to come together and leverage each other’s assets to create the best possible outcomes for their customers. The open API market was estimated to be worth $2.48 million in 2022 and is expected to grow at a CAGR of 24.81% to over $14 million by 2030.

By eliminating the need for certain expensive labour and hardware, open APIs will enable pushing out microservices that are capable of reducing integration layers, especially when it comes to introducing or removing products and services with ease. Moreover,  BaaS enables banks to generate more revenue as they allow FinTech to use their payment infrastructure for a fee and at the same time FinTechs benefit from the traditional banking infrastructure to build innovative financial products.

The ongoing transition from traditional to new-age

Banks have historically been risk adverse in their approach and operations, having taken their own time to adopt technological advancements, but are now increasingly catching up with new age banks. Complicated regulatory environments as well as the need to ensure security and reliability have slowed down the process of technology adoption but we’re starting to see promising developments, especially in mobile banking along with an overall infrastructural change from on-site to cloud based technologies.

The growing number of smartphone users is making ‘mobile-first’ strategies an inevitable area of focus for banks. With this, cybersecurity is a major concern for the sector and reinstating this issue is the fact that at least 39% of customers cite fraud and security threats as their top fear and frustration while engaging with online banking products.

Needless to say, not just the future but also the present belongs to those who embrace change and make the best use of opportunities. The more the banks act as controllers of money supply, the more opportunities there are for disrupters to own up spaces they carve out of challenges. Irrespective of being digital natives or legacy banks, those who choose not to move with the change will be the ones who will be left behind.


About Frank Arellano

Frank Arellano is the CEO and founder of Revolv3, a fintech SaaS platform based in Laguna Beach, CA. Frustrated by the lack of subscription management payment systems that could minimise false declines and maximise first pass payment approvals, he built his own. Frank started his career with startups. Afterwards he led as an executive at Ingram Micro and Experian for over 20 years. Now, backed by Rosecliff Ventures, he intends to reshape the recurring payment market.

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