By Anil Malhotra, CMO of Bango
Mobile phone payments are nothing new. The first mobile phone payment to a merchant can be traced back to 1997, when Coca Cola set up vending machines that allowed users to pay via text. A mobile money transfer system called M-Pesa was launched in Kenya in 2007, and in 2011 Google launched the world’s first mobile wallet. Since then, mobile payments have grown faster than any other payment method, with mobile network operators billing over a trillion dollars to more than 5 billion people every year.
Now, with a reported 54% decline in the number of cash transactions in the UK from 2010 to 2020 and mobile phones predicted to become the second most common payment method after debit cards by 2022, it looks like the future will see traditional wallets cast aside in favour of digital ones.
Why have digital wallets become so popular?
Access and convenience. Digital wallets make payments easy, storing multiple payment methods in one digital home that’s quick to access and use via your phone, smartwatch or tablet. They even allow users to turn cash into electronic money that can be spent on-line or instore.
Digital wallet users will never again have to have an awkward ‘I’ve forgotten my wallet’ conversation. No wallet? No problem. Just tap and go. The device will even give you an instant notification of how much money you’ve spent in the transaction and you can link your loyalty schemes to your digital wallet so that any points, stamps and rewards are automatically calculated.
In the increasingly competitive world of online payments, wallets digital wallets also foster greater financial inclusion. Although some digital wallets such as Apple Pay or Samsung only act as a vessel for existing funds — like a physical wallet — there is a growing number of e-wallets that allow users to generate balance through “cash conversion”.
Users can go to a shop, an ATM or kiosk and deposit cash that will then become electronic money available in their wallets. This feature increases the amount of people who can use a digital wallet and therefore adds to the increasing global popularity of mobile phone payments. For this reason, there is a raft of wallets that have gained government support across regions such as SE Asia, Africa and Latin America.
The effect of the pandemic
The coronavirus pandemic had an effect on the increasing popularity of mobile phone payments last year.
In April 2020 the contactless payment limit in the UK was raised from £30 to £45, with users and businesses alike encouraged to prioritise contactless card and digital wallet payments over cash to stop unnecessary contact with surfaces and reduce the spread of the virus. This dramatically accelerated the steady trend towards non-physical payments.
In some markets, Bango measured an increase of over 50% between April 2020 and January 2021 in the value of payments charged to wallets. This is expected to continue, with many retailers are still refusing to accept cash payments.
But despite the increasing popularity of digital wallets, some remain wary of mobile phone payments.
How safe are digital wallets?
Like any new payment method – for example contactless card payments – one of the nagging questions is whether digital wallets are safe. The short answer is, yes, they are. As safe as any financial transaction can be.
Digital wallets are secured by the password and/or face ID requirements of the smart device they live on, giving users control and peace of mind that their payment information is safe. Key payment identification data is also commonly tokenized, meaning that personal identifiable information and financial identities can be hidden.
They are safe at the point of sale too, with the UK treasury reporting that there was no significant rise in reported fraud when the limit was raised from £30 to £45. As a result, in the UK the contactless payment limit has now been increased even further to £100.
How can merchants benefit from the rise of digital wallets?
The increase in use of digital wallets is good news for merchants. More demand means merchants can justify investing in the technologies that enables digital wallet and mobile payments, technologies that ultimately saves them money.
Wallets offer lower processing costs than other methods, such as carrier billed payments using airtime and even card processing in many cases. They also offer fewer limits on transaction values and frequency.
According to a recent survey 37% of merchants are currently supporting mobile payments at the point of sale, with payments companies like Bango helping them offer mobile payments capabilities on a global scale. And when it comes to growth aided by digital wallets, scalability is key.
Most large merchants operate in more than one country as standard, but with different financial processes, regulation, laws and of course varying types of digital wallets, merchants need to work with companies that can unify and centralise payments.
A unified approach to global digital payments enables merchants and payment partners to innovate and differentiate quickly, helping them stay competitive in the online market and of course grow their business.
Digital wallets also benefit merchants by leaving a digital footprint of sorts. Using commerce platforms like Bango, businesses can analyse wallet users’ payment choices and have a clear insight into what they are interested in buying. This information can be used to target marketing activities through purchase behavior targeting and provides opportunities for merchants to incentivize the use of wallet payments by linking to special offers for your product.
Ultimately, digital wallets are a focused way to acquire customers as well as transact payments. And with digital wallet spending estimated to exceed $10 trillion by 2025, merchants who aren’t supporting mobile payments need to catch-up soon or risk loss of business as a result of not giving customers the easy payment experience they expect.
How FS organisations can utilise data to boost customer experience
Charles Southwood, Regional VP and GM – Northern Europe and Africa at Denodo
We’ve all heard the age-old adage “the customer is always right”. It insinuates that, in any sector, the needs and desires of those buying a brand’s product or services should be paramount. However, today’s customer has new standards and it is becoming harder than ever for businesses to meet and exceed them.
This is certainly the case in the financial services (FS) sector where getting customer experience right used to be relatively simple. The human touch was traditionally delivered as a bi-product of in-store, transactional interactions. Perhaps, as a result of this, few people ever considered changing their provider and the traditional, established banks ruled the space.
However, with the dawn of online banking and the introduction of new, exciting challenger banks as well as the UK’s unique Current Account Switching Service, the balance of power between the consumer and the bank is changing. Consumers no longer feel locked in. If their needs aren’t being met, they aren’t afraid to look elsewhere and switch their allegiance to other companies. In other words, loyalty is far from guaranteed and customer acquisition is only half the battle.
Retention relies upon delivering strong, unique customer experiences that beat down the competition. In order to achieve this, FS organisations will need to be able to leverage data. Its insights could be the differentiator that enables them to stand out. The positive news is that, in our online world, there is a constant stream of data being produced. However, having access to all this data doesn’t necessarily mean that a brand knows how to effectively analyse and utilise it.
Ensuring data provides insight
The rapid growth in digital technologies and services across the sector has left many FS organisations juggling an unimaginable amount of data. This data is both complex and much of it is lacking in quality. Structured, semi-structured and unstructured, it is stored in many different places – whether that’s in data lakes, on premise or in multi-cloud environments. Before FS organisations can even think about using it to inform customer experience strategies, they need to be able to find it and understand it.
This is where modern technologies – such as data virtualization – can help. Through a single, logical view data virtualization boosts visibility and real-time availability of all data across an organisation. Unlike traditional extract, transform and load (ETL) solutions, it does not move and copy data. Instead it leaves it in the source systems. In other words, instead of just replicating data, data virtualization reveals an integrated view to those trying to find it.
For FS organisations this provides several important benefits. For example, it helps when data sovereignty issues arise and the movement and replication of data outside certain countries is illegal. Data virtualization solutions can also assist in terms of financial reporting by fetching data in real time from underlying source systems – applying the necessary security and obfuscation whilst delivering the performance, the agility and the accuracy needed through the seamless connection of data.
FS organisations that adopt data virtualization, are likely to see an improvement in the overall performance and efficiencies of their business operations. Overheads will be reduced, as will the length of project times. Above all, data virtualization will rapidly strengthen the customer experience by supporting business leaders to think strategically and make decisions based on real-time insights. But don’t just take my word for it.
The proof is in the pudding: How Landsbankinn is delivering on the CX promise
Landsbankinn is just one of the many financial services institutions that has already successfully embraced data virtualization and its benefits. Despite being the largest financial institution in Iceland – with around 40% of the retail and 33% of the corporate banking market share – Landsbankinn used to face several issues when it came to data sharing and analytics.
Over 45 siloed data sources – including Oracle databases, data warehouses and APIs from internal and external sources – made finding and accessing the right data at the right time extremely difficult. Without real-time data to fuel informed decision making, customer experience and operational efficiency were suffering. As a result, Landsbankinn was in need of a data overhaul to streamline and integrate its infrastructure.
To bring together its complex data landscape and collect data in real-time, Landsbankinn implemented the Denodo Platform – a data integration and data management solution built on data virtualization – to build a logical data warehouse. As a result, the team can now aggregate data from multiple data sources, transform that data based on the applied business rules, and then make it available to consuming applications. Ultimately, this means that, throughout the organisation, the data can be utilised by a wealth of employees, even those who are not particularly IT savvy. It also means that the business leaders can use data insights to make well-versed decisions and provide a plethora of services to Landsbankinn customers both quickly and efficiently.
In recent years, customer retention has become the key to successfully growing a business. This cannot happen without an effective customer experience strategy. The ability to convert data into insight is priceless in an economic landscape where the line between a business thriving, surviving and failing is so thin. Those operating in financial services must harness modern technologies – like data virtualization – to stay at the top of their game and ahead of the competition.
The Importance of Digital Trust in Banking and Finance
By Maeson Maherry, COO at Ascertia
With the rising adoption of eSignatures and the acceleration of digital transformation, trust in digital systems is more important than ever before. As a recession looms, the ability to trust digital systems is critical to the stability and security of the banking and finance industry.
So, what should businesses prioritise in an increasingly online world? Information security, data integrity, and digital trust are crucial for ensuring regulatory compliance and customer satisfaction.
Digital trust is empowering banking and finance institutions to effectively tackle issues of identity theft and fraud.
What is digital trust?
On the surface, digital trust refers to a digital system or platform that is secure and can be relied upon to protect and properly handle sensitive information.
Building the confidence that people have in digital systems, platforms, and technologies to handle their sensitive information, protect them from fraud, and function as intended is paramount for decision-makers going forward.
Trust online encompasses various aspects, such as data security, privacy, authenticity and reliability. Digital trust also involves assessing the trustworthiness of digital entities such as websites, apps, and online services, as well as the trust in the integrity and reliability of digital communications and transactions.
Digital trust is a key element of digital transformation, the additional step to ensuring the digital systems in place are secure. This can include the following:
- Online banking platform for customers
- Digital document approvals and workflows
- Secure digital signature solutions
- Know your customer (KYC) checks
- Electronic anti-money laundering procedures
Why is digital trust important for banks?
One of the main reasons why digital trust is so important in banking and finance is that it helps to tackle issues of identity theft and fraud. Customers and regulators require reassurance that personal and financial data won’t fall into the wrong hands. This includes customer statements, investment authorisations, legal records and customer personal data.
Online banking is now well established but the technology continues to evolve and so do the potential threats to data security. With phishing and other identity theft a daily concern, establishing digital trust in the industry is key.
Digital trust provides a means to trust in the identity of a person or document online, to the same degree as meeting or signing in person. This requires additional checks and layers of security to verify identities and the security of documents.
The role of eSignatures in banking
Digital trust is vital in the secure implementation of eSignatures.
In the banking and finance industry, eSignatures are becoming increasingly popular as they allow for transactions to be conducted quickly and securely. However, for eSignatures to be effective and to provide digital trust, all parties involved must trust in the transaction. This is done by ensuring eSignatures are valid and that the person signing the document is who they claim to be.
There are global standards to ensure the authenticity of eSignatures for digital signing. This means there is a way to validate the digital trustworthiness of eSignatures if implemented and used in a manner that meets certain criteria for security and authenticity.
For instance, digital signatures that are compliant with internationally recognised standards, such as eIDAS (Electronic Identification and Trust Services) in Europe, can be considered digitally trustworthy. It’s important to understand not all eSignatures provide the same level of security and to ensure the correct eSignature is used for the purpose and security required.
eSignatures that use advanced digital signature technologies such as Public Key Infrastructure (PKI) or biometrics, can be considered more digitally trustworthy as they provide a higher level of security and authentication.
These technologies use cryptographic methods to ensure that the signature is unique to the signer and cannot be replicated or forged. These standards establish a legal framework for the use of electronic signatures and ensure that they are legally binding, enforceable and offer the same level of trust as traditional signatures.
How does digital trust prevent fraud?
If the public loses trust in digital systems, it could lead to a loss of confidence in the financial system. Fraud, in particular, is at the forefront of public concerns.
Digital signatures are well positioned to offset the risk of financial fraud, largely due to three critical factors when assessing the digital trust of an eSignature:
- Authentication: To verify the identity of the signer, eSignatures employ sophisticated technologies such as PKI. This confirms that the person signing the document is who they say they are and aids in preventing fraud through impersonation.
- Tamper-evident: Tamper-evident features are often included in high-trust eSignatures, which identify if a document has been changed after it has been signed. This helps to prevent fraud by identifying manipulated papers and giving an audit trail of the signature.
- Compliance: International standards such as eIDAS ensure that eSignatures are legally binding, enforceable, and provide the same level of trust as traditional signatures.
The banking industry specifically will benefit greatly from investing in digital trust ecosystems that include eSignatures, biometrics and encryption software to provide verification and assurance for customers.
In the future, financial institutions will adopt Know Your Transaction (KYT) as a means of implementing cybersecurity measures at the transaction level in their banking protocols.
By utilizing digital signatures at the transaction level and verifying them upon receipt, the financial industry can achieve KYT, ensuring that the source of information is under the control of the endpoint and that transaction information has not been tampered with.
This level of security will be a crucial aspect of achieving digital trust in the financial industry moving forward.
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