Despite this shift however, the payment card is very much still alive with six-in-ten (60%) UK consumers stating they would not give up their debit card in favour of mobile payments. In fact, a further three quarters (75%) of UK consumers are concerned about the UK becoming a cardless society, where they no longer have access to a physical debit card and can only rely on mobile payments.

Here David Orme, SVP of IDEX Biometrics ASA at IDEX Biometrics ASA, explores the realities of payments preferences in the UK and what financial institutions must do to ensure that we experience a seamless transitions towards becoming a cashless society.

Do you remember coins? When was the last time you actually carried around a pocketful of pennies to pay for something? Given the rapid growth of contactless transactions, mobile payment apps and online shopping, it was probably quite a while ago now. Advancing banking technology, means we are fast moving towards a cashless society. In the UK, cash payments fell behind card transactions for the first time in 2017, while Sweden expects to become the first country in the world to go fully cashless, thanks to a country-specific payment app.

However, despite being hailed as the solution to end our use of cash and cards, mobile payment apps haven’t reached anywhere near the expected level of public adoption in the UK. By 2018, only 13% of the UK population was using mobile payments, due to the majority of the population generally preferring the ease and familiarity of contactless cards.

This is supported by our recent research at IDEX Biometrics ASA, which reveals that six-in-ten (60%) UK consumers would not give up their debit card in favour of mobile payments. In fact, a further three quarters (75%) of UK consumers are concerned about the UK becoming a cardless society, where they no longer have access to a physical debit card and can only rely on mobile payments.

Clearly, the payment card has become a strong part of our daily routine. So much so that, almost two-in-five (37%) of UK consumers stated that as long as they have access to a debit or credit card, the thought of a cashless society wouldn’t bother them. Interestingly, this number even rose to over half (52%) of 25-34-year-olds.

Given this strong evidence that consumers are still loyal to the payment card, it seems that the banking industry is focusing on the growth of the wrong payment technology. As we move towards a cashless world, the future of payments may not be in smartphone apps after all.

A smooth transition

There is a clear generational divide when it comes to the acceptance of digital payments. While over half (53%) of 18-24-year olds believe they already live a mostly cashless life, that number plummets to only 19% of those over the age of 55. Similarly, while four-in-ten (38%) of those aged 25-34 believe cash is now obsolete, only 9% of over 55s agree.

In fact, half (50%) of those aged over 55 are continuing to use cash to buy small-ticket items. Young people, however, are so tied to their card that two-in-five (40%) of those aged 25-34 say they won’t shop anywhere that doesn’t accept cards.

One of the greatest concerns surrounding a cashless society is the potential for inequality. Consumers shouldn’t be locked out of the banking system because they are less familiar with new payment methods or have limited access to digital devices. To keep our economy fair and inclusive, our payments system must stay accessible to all. Therefore, as we approach a cashless society, the UK Government and banking sector should reconsider the cashless transition. Instead of the focus on mobile payment apps, banks and financial institutions must adopt payment card technology that is convenient, secure and reliable for consumers of all ages, particularly older generations who still rely on cash.

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Holding on to security

Consumers are also dismissing mobile payment apps thanks to rising security worries around the new technology and the potential for misuse of mobile payments. Over two-thirds (68%) of respondents still feel more secure using their bank card than a mobile phone to make a payment, while almost three-in-five (58%) fear that if they lost their mobile phone, people would be able to access their bank accounts.

In contrast, half (50%) of respondents say that having their debit card gives them a sense of security. Significantly, four-in-ten (41%) consumers would trust the use of their fingerprint to authenticate payments from their bank card more than a PIN.

Given these concerns, it is evident that payment technology needs to be more secure. It’s time for banks to adopt cards with biometric fingerprint authentication, which can’t be misused without the owner’s fingerprint, even if stolen or lost. Incorporating this advanced biometric technology into payment cards would enhance authentication for transactions and provide all consumers with a safer payment process that offers more reassurance than PINs or apps currently provide.

Futureproofing the payments industry

Although the idea of a cashless society holds many benefits, 55% of consumers actually think a cashless society will be inconvenient. Whether from lack of technology awareness or security concerns, consumers are still fearful of the day when they have to rely on mobile apps to access their money and pay for goods. Given this fear, the financial industry needs to work quickly to enhance payment cards by utilising biometric technology to secure payment authentication, before cash becomes extinct.

Payment cards that provide the convenience of contactless payments with the added security of fingerprint authentication are the key to a seamless transition into a fully cashless society. Such cards will prevent misuse and card fraud, while allowing fast, convenient, secure and direct access to our bank accounts, bringing much-needed reassurance to UK consumers.

UK consumers have made their feelings clear; they are just not willing to give up their payment cards. In a cashless society, cards will still be leading the way – we must future proof them for the next generation of payments now.

Almost a decade in the making since the inception of Bitcoin and with a current market-cap hovering around half a trillion dollars USD, Bitcoin, cryptocurrency and blockchain have become common to the tech savvy, but face several challenges in becoming mainstream processes in the payments sphere. Below Alex Mihaljcic, VP of Product Development for Eterbank.com, talks Finance Monthly through the challenges and solutions ahead.

While most people don’t understand how they work, Bitcoin and cryptocurrency are not only hot topic buzzwords, but they’ve created thousands of multi-millionaires. Even so, the vast majority of people in the mainstream have no interest or intent to embrace Bitcoin and, as such, it still has veritably no bearing on everyday life as one still can’t even pay for a cup of coffee with any cryptocurrency.

In the last year alone, the cryptocurrency market cap has grown over ten-fold, and even taking into consideration “bubble-effects” of hype speculation, the fact remains that, since the inception of Bitcoin, the cryptocurrency market cap is following an exponential growth curve. Today this amounts today to over $150Bn, and various expert opinions estimate its future growth in the next 5-10 years to be in the trillions of dollars. With these kinds of numbers, it begs the question: With over $150 billon of cryptocurrency already in circulation, why can’t we yet pay for coffee or a slice pizza with crypto?

Not only this, but why is cryptocurrency languishing in a tech world of its own, far removed from adoption by the regular consumer or average business? And why does it exist only in a digital space, largely accessible only to the tech-wise cryptocurrency investors? Perhaps the most fundamental question that everyone is asking—from economic pundits to families around the kitchen table—is will crypto will ever become common currency to be used by the average person to pay for their groceries, bills or the hair dresser? Or are Bitcoin and Altcoins just a fad, doomed to remain ensconced in a cult-like tech realm?

While it’s clear that the only way for cryptocurrency to avoid falling into oblivion is by enabling its widespread adoption and acceptance as a “real” payment method, the reality is that the infrastructure and protocols have not been in place to foster this. In fact, there have been seemingly insurmountable obstacles faced by merchants across the board preventing them from accepting cryptocurrency as a viable form of payment.

Four of those key reasons include the following:

1. High volatility promotes fiscal vulnerability
Businesses are not cryptocurrency investors and, as such, they cannot be expected to accept risky payments that may lead to serious financial losses. Every business operates with supply costs, margins, etc. Therefore it would make little business sense to take on a risk of such magnitude by accepting crypto as payment for their goods and services.  What if the local mechanic accepted Bitcoin for several large jobs and then Bitcoin value dropped 20%? This leaves these sort of business owners, whom have fixed overhead costs, in a vulnerable space where they take payments that fluctuate.

2. Technical know-how
Generally speaking, retail operators and cashiers cannot be expected to possess the technical expertise needed in order to safely process a cryptocurrency transaction. This is clearly one of the largest problems preventing mainstream adoption, since dealing with cryptocurrency transactions does require a determined level of technical expertise for which it would be absurd to expect a critical mass of front-line service staff to possess. The fact is that any new person coming across even a simple Bitcoin address can be overwhelmed by its perceived complexity.

3. Brand Confusion
The very word “crypto” suggests cryptic. Mix that in with all of the other various terms that are used including virtual currency, digital currency, alt coins, and Bitcoin, and it all creates confusion. It will be paramount for industry insiders to adopt consistent language to be consistently utilized in the mass market.

4. Uncertain regulatory environment
Regulations regarding cryptocurrencies are still not even close to being set in stone. As concerning, these same regulations actually discourage the use of such currencies in a B2C environment, regarding them as an “unnecessary risk” that may lead to legal problems for any business down the road.

Collectively, these four points above paint an ominous picture for the future of cryptocurrency. Not only relating to its progress and adoption, but also for its very survival in a very real scenario where an innovative payment technology fails to fulfil its potential. In fact, this isn’t the first technology to be introduced with the aim of creating a major cultural shift. Twenty-five years ago, fax communication was far more common and even preferred over email messages.

The Innovation Life Cycle Must Ensue
In all forms of innovation, there is always a lag between the advent of the actual innovation and the time that the average intended user starts to adopt and employ the technology. As the “technology adoption life cycle” has well established, in order for people to adopt and use a new innovation, technological abstraction layers are needed to hide all of the complexity of the core product and make it unequivocally user friendly. Of course, this takes time and innovation of its own until all the layers have been developed and refined around the core product, which is the main reason why there is always a lag between innovation and mass adoption.

The Game Changer: Crypto-to-Fiat Point-of Sale Solution
The tremendous amount of complexity associated with using Bitcoin and other cryptocurrencies in the real world financial marketplace, as exemplified by the four problems detailed above, has ushered in a new breed of leading-edge technology aimed at wholly solving the glut of mass market limitations. Emerging Point-of-Sale (POS) applications are finally permitting cryptocurrencies to be transacted as easy as a credit card payment, allowing small and large businesses alike to accept and instantly translate crypto into U.S. dollars, thus eradicating any risk and uncertainty. With this advancement, technical or crypto-specific know-how on the part of the consumer or the merchant is rendered unnecessary and businesses can readily convert crypto to real cash. Not only will this Point-of-Sale development quickly shift brand perceptions, but the regulatory environment will also eventually temper given the reduced volatility this POS technology proffers.

Once this business-friendly solution is adopted as a viable transaction method, enabling consumers to very easily spend their crypto currency and retailers to charge and settle crypto payments in the business’ preferred currency—whether dollars, euros or other, technical proficiency will no longer be barrier and volatility will subside since businesses will continue to deal strictly in Fiat currency (government-issued legal tender), resolving any possible crypto-specific regulatory issues that are rendered a non-concern.

Given its extrapolated impact, a POS innovation of this nature would be poised to unlock the full potential of the cryptocurrency industry and its utility in the real-world. A Crypto-to-Fiat business tailored POS solution will effectively allow for cryptocurrencies to penetrate the consumer market and truly disrupt day-to-day payments as we know them. The first business with a minimum viable product (MVP) will be to cryptocurrency transactions what AOL was to email.

Retailers today are accustomed to using Point-of-Sale terminals for processing credit card payments, and are increasingly adopting new solutions in the space such as Square’s retail POS smartphone app, replacing bulky hardware with Android and iOS devices. In order for merchants to accept and adopt a Crypto-to-Fiat POS solution, it must be tailored in a manner that seamlessly accommodates the retailers current understanding and knowledge base, with a near zero effort or learning curve required to adopt the new solution. At the same time, the innovation must demonstrate its ability to drive new value, new customers and, ultimately, new profits by expanding its ability to process transactions—and at a fraction of standard costs.

Such an end-to-end solution can truly catalyze cryptocurrency adoption, finally bringing Bitcoins and Altcoins to “Main Street” and crossing that crucial milestone for blockchain technology—and technology as a whole—to usher cryptocurrency into the modern world is a genuine, viable and enduring way.

Data should be one of your strongest assets, not a confusing uncertainty or a burden to work with. Alastair Luff of global information services group Experian here talks about how you can make the most of the data you gather and use it for e key decision making in your operations.

Big Data has become a buzzword in the Financial Services industry. Put simply, it’s about businesses having an amount of data so large, it becomes difficult to digest and define a clear strategy.

Information is created every second of the day, and its complexity is advancing as new data comes onto the scene. The volume of data is growing significantly, presenting a notable challenge to businesses. On its own, data isn’t valuable – it’s the business insights it provides which makes it a vital asset. The more information, the greater the insight, and the bigger the opportunity to drive optimum outcomes.

Data – a confusion or a complement?

Data can seem daunting. It needs to be controlled, understood and used to avoid hindering compliance, and to create real value. It can also confuse the customer – with less than 8% understanding how their data is being used within organisations.

But it can also complement. Organisations are not only faced with external data sources, but also first party data generated internally. But two data streams doesn’t result in a complete customer profile, and in some situations, information captured over an extended period of time may become outdated. Overlaying current and validated data, such as credit bureau data, can add a layer of insight that fills gaps and helps complete a fuller picture.

The more comprehensive view available, the better lenders can tailor credit risk policies to ensure financially inclusive lending strategies that consider all relevant data assets, e.g. within credit scoring.

Scoring with the customer

Credit scoring is nothing new, but it’s not just about banks and lenders. Industries outside of finance are beginning to recognise its benefits and scoring is offering enhanced outcomes for customer engagement and enhanced credit risk provisioning. In Africa, for example, data from mobile phone usage is helping with credit scoring where no financial services data exists, giving more people access to credit.

While scoring itself is well established, the process behind it has evolved. Organisations, lenders especially, are approaching scoring differently, considering individual risk strategies, profiling and in some instances different data assets. All of these factors, whether standard or bespoke, can provide an automated risk assessment that identifies the credit strategy of an individual.

Simplifying complex information

The ability to make responsible lending decisions comes down to how well information is interpreted. This is where scorecards come in to their own. They can help rationalise complex insights and automate decision making. Businesses who overlay internal insight into scoring, with enriched external insight achieve a more comprehensive view of each customer’s credit history.

In an era confused by a mass of information, a more demanding customer and pressure on minimising loss, businesses need to understand the value and opportunity – but balance both. This extends beyond scoring as an action, and therefore it would be prudent businesses automate this area – using available insight to free up resource to support developments across other business areas which aren’t so easily resolved.

Using comprehensive scoring can provide advanced data feeds that contain varying benefits for the organisation, for example:

1. Understanding affordability. What does the future financial health of an individual look like? Are they likely to experience problems?
2. Geographical insight. Some people have little or no bureau data. Using geographical analysis can provide a view of how the region and area is trending to support any credit review.
3. Considering circumstance. Data for those with limited data, for example people living at home with their parents, can have their profile enhanced by overlaying relevant data. In addition lenders can consider the financial status of an individual, or an associate who they are linked to financially. This can provide a rounded view of any associations and identify any causes for concern.
4. Ensuring the person is genuine. Fraud is on the rise and using data to assess and identify the genuine intent of a person can be critical to losses and also protect customers.
5. Understanding how a person behaves. Behavioural data can provide rich insight into a person’s financial behaviours. From cash advances on credit, to limit vs. spend assessments. This can be particularly helpful in understanding a person’s financial trends and providing a prediction into their probable future trends.

Differing and advanced data assets can be used to on-board, and when a customer is on-boarded. It can be particularly useful during the lifetime of a loan in order to understand better any potential alignment to a business’s growth strategy.

In a world of Big Data, organisations have the opportunity to translate information into a currency. Understanding what insight it can bring, embedding it within credit risk and scoring policies can ensure accurate assessments and appropriate lending. Businesses just need to understand what data provides what – and why.