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Biometrics a tipping point for future of payments

The word technology is often used when consumers aren't confident in something.  It's new and therefore, most of us are “consciously incompetent” when it comes to understanding, using or embracing it.  It’s a great catch all label in that sense.

Take a modern car.  Absolutely packed with technology.  But as a user, we're largely oblivious.  A lot of the improvements are simply accepted.  We simply get in and go.  We don't think about the tech. We're familiar and essentially “subconsciously competent”. 

That’s the space that future payments propositions needs to get to.  Whether a physical world solution (network), virtual world (cloud), or a combination of both; the payments proposition needs to get to the equivalent of the “get in and go”.

And to stretch this car analogy, a consumer doesn’t need a different payment vehicle for each payment journey whether in the physical or virtual world.  They need something that is easier, reliable, more secure and beneficial than existing payment methods.

Security in payment innovation remains the primary concern for the vast majority of consumers in most markets.  It’s the biggest inhibitor trust and the displacement of the legacy payments.  For mass market adoption, we’re trying to displace a means of payment that simply works, is familiar and consumers trust.

Smart folks like Jack Dorsey of Twitter have been talking about and removing friction for the best part of 10-15 years.  It's not a new concept, but in many ways the technology is finally catching up in order for us to make things happen under the bonnet (OK - no more car analogies).

The accepted norm for payment authentication has been some sort of user name and password or PIN.  It's a great place to start to develop future propositions.  But this doesn't make mobile or devices any more secure. No real advantage.  And having a contactless card or device that can be used with a bump, tap, pass or wave; doesn’t set minds at ease.

Device manufacturers and electronics manufacturers have an awful lot of skin in the game to set this new standard, alongside the players that manage the market infrastructure.  There are a number of developments underway in Biometric security. Things like Facial Recognition, Fingerprint, Ear scanning and Heart Rhythm.  Capability that could make payment security into a “subconsciously competent” factor.  And of course, this technology could quickly extend into daily life (transport networks, biometric security “keys” to name but two) and come in many forms.

It’s frankly only a matter of time that a PIN is usurped for security in devices, whether that starts with the Apple iPhone 5S Touch ID capacitive sensor, or not.  In the transitional period for payments however, it could be PIN plus, with authentication applied appropriately to journey whether physical or virtual.  If Biometric authentication becomes the norm, it could also enable consumers to pay without a device (although the device could act as an extension or replacement of the legacy network).

When combined with Data integration (geo, profile, calendar, loyalty, browsing and pre/ post purchase behaviours) – it could deliver the potential to make payments a whole lot easier, more reliable, secure and beneficial than legacy payment alternatives.  Biometrics however, will only drive the agenda for ease, reliability and security but these dimensions should be a huge trust enabler for the application of data (purchasing and behavioural).

So in short, whilst I fully expect to see growth in the future payments space and a number of great propositions, until the authentication steps on a level to create a better way to pay, we'll find it hard to displace legacy payment methods.


EDIT 10th Sept 2013 at 19.15pm > Updated the "rumoured Apple Ring" to Apple "iPhone 5S Touch ID capacitive sensor,".

Note: On 10th September, Apple confirmed:

The iPhone 5S has Touch ID, a touch capacitive sensor. It’s 170 microns thin with 500 ppi resolution. It scans the sub epidermal skin layers and has 360 degree readability. It’s in the home button. Laser cut sapphire crystal and a stainless steel detection ring are the top layers of the home button.

The button is made of sapphire crystal, one of the hardest clearest materials available. The steel ring detects your finger using capacitive touch. The sensor analyzes your print, categorizing it by arch, loop, or whorl. It inspects minor variance in ridge direction, among other details. All fingerprint information is encrypted and stored in the A7 chip, accessible only by the Touch ID sensor. It’s never available to other software, other servers, or iCloud.

Touch ID, a touch capacitive sensor

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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

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