Opinion | Covid-19 ushering in an era of secure and convenient digital banking
4 min read.Updated: 20 Aug 2020, 12:46 PM IST
Digital banking solutions offer customers with the confidence to complete purchases while at the same time ensure a secure experience.
The current health crisis has fuelled the rate of adoption of contactless payments.
With the outbreak of covid-19, social distancing is the new normal. The anxiety of the pandemic is pushing people to limit their time outdoors, making them more sensitive to restricting physical contact with areas or surfaces that could be exposed to many people.
In this scenario, digital banking and payment solutions are witnessing a surge and have gained more importance than ever. All around the world, as consumers focus on reducing physical contact at brick-and-mortar branches and at the points of sale (POS) due to health and safety reasons, there has been an increase in online spend as well as contactless payments. In fact, according to Mastercard, India witnessed a surge of 200% in its contactless payments in the month of May. Analyst Juniper Research forecasts that annual global contactless transactions will reach nearly $6 trillion (5.5 trillion euros) in 2024, up from the current $2 trillion in 2020.
Looking at the digital payment domain, biometric contactless cards are among the safest technologies. Adjusting to this new reality of restricted physical contact, a solution like fingerprint verification can come in handy as a very safe, secure and convenient alternative cardholder verification method (CVM), instead of PIN or signature. Here, the innovative card has an in-built biometric sensor that verifies the person’s fingerprint in order to instantly validate the transaction and eliminates the need to hand over your card to the retailer or touch the payment terminal’s keypad.
A similar solution of digitized cards is also offered through the medium of a mobile wallet. Although the customer has to still use a device to interact with payment terminals, the authentication is done on their mobile phone itself (in most cases using biometrics such as fingerprints) eliminating the need of entering the card PIN on keypad for amounts above the established limit. Today, biometric cards are available in the market. They come without any need for an in-built battery as they draw power from the payment terminal itself to complete the transaction.
Another significant digital on-boarding solution that can be very helpful and relevant in the current situation is eKYC (know your customer). Banks need to verify their new customer or even existing customers at regular intervals as per RBI’s regulations. However, asking customers to physically visit banks for it poses a health risk for customers as well as for the bank employees.
This also adds extra load on the bank branch’s infrastructure and time required to serve other more important transactions. All this leads to extra costs as well. Hence, digital on-boarding solutions like IdCloud eKYC enable people to do the online KYC process in minutes and get access to digital services from the convenience of their homes.
Such a solution presents a trustful and secure way for banks to tackle identity fraud while offering to their customers—or future customers—a flexible and convenient manner to prove who they are, remotely. The eKYC can provide an important security layer of identification and verification of people from the comfort of their home avoiding the risk of visiting branches filled with people. It also arises as a key structure in ensuring protection against financial crimes and money laundering which can witness a rise with more transition to the digital medium of payments.
As an overarching category, digital banking solutions come with multiple benefits for all stakeholders, including contactless payments giving consumers a faster way to transact payments as it is on average, twice as quickly than using a PIN—another extra code to remember—and even much quicker than using cash.
For users, contactless payment comes as a convenient, safe and secure experience, especially with smartphones and contactless-enabled payment cards or wearable devices now becoming a commonplace which allows a customer to pay the same way in any country that accepts contactless payment and is not required to remember the PIN for contactless purchases.
It comes with layers of security of biometric and secure authentication on the payment device (whether mobile or card) as they have the same technology embedded in EMV contact cards.
The biometric payment card comes with the “trust nobody else but the holder", can use it and brings the confidence the bank won’t deal with personal biometric data as it is securely stored in the smart chip of the card only. The eKYC allows thorough identity verification and genuine user confirmation, therefore protecting the enrollment of customers to bank services and eliminates fraud stemming from identity theft.
Digital banking solutions offer customers with the confidence to complete purchases while at the same time ensure a secure experience. The current health crisis has fuelled the rate of adoption of contactless payments. A post-covid-19 environment is set to see a shift in the consumer’s preference for digital banking and hence it becomes more important for banks to ensure the digital banking methods are convenient and secure.
Emmanuel de Roquefeuil is vice-president and country director of Thales in India