Technology is radically changing the way we live and interact. Customers are increasingly expecting smart, easy to use, one-click, mobile and personalised services. Insurance is part of this too, and as Irene van den Brink and Ingo Weber from the Digital Insurance Group point out, it’s time for the industry to be spiced up.

Data, analytics and AI are exponentially putting pressure on incumbent insurers to rethink every element of their business model. New initiatives are popping up, innovation garages are becoming popular in most traditional insurance companies and above all, we’re witnessing the rise of InsurTechs.

Initially, InsurTechs like Knip served as a wake-up call to incumbents. In the meantime, all insurance companies were at least talking about digital transformation. In the past few years we have seen an impressive rise of InsurTechs aiming to shape the future of the insurance industry and even though the number of start-ups is stabilising a bit, investment in more mature InsurTechs is consistently increasing.

Combining the efforts of InsurTechs and traditional players would have the most sustainable and impactful results in the market. Exploring ways to collaborate, we see a lot of traditional players setting up VC funds to invest, we see partnerships, and we see incumbents taking over InsurTechs in an attempt to accelerate their business. Let’s explore the three benefits that such collaborations could bring for both sides.

Combining the efforts of InsurTechs and traditional players would have the most sustainable and impactful results in the market.

Scalability

If we purely look at numbers, the impact of InsurTechs is still limited: traditional players still have access to a large customer bases whereas InsurTechs are often struggling with distribution and have a small market share. They both thrive on big numbers and scalability cuts both sides: a massive benefit of technology is the scalability it offers. In essence, technology allows for a digital model where increasing sales can be done at a stable cost level and the same goes for claims. Dutch digital insurer InShared was able to double in volume at the same cost levels, thus decreasing the cost ratio dramatically. Starting from scratch and getting to substantial numbers takes time.

While InsurTechs have innovation, they still lack volume, which is where the traditional players come in: they have the volume but need to find a way to serve at a lower cost. Getting existing portfolios on a platform helps in getting to higher volume and therefore, better ratios.

Time to market

The fast pace of an InsurTech can motivate traditional players to start ‘running’; there’s one comparison that has been used frequently – oil tankers versus speedboats. While traditional players used to be fine with yearly renewals of their base, InsurTechs are continuously developing or reinventing themselves – their middle name is ‘flexibility’.

AXA has announced that it’s launching a new cyber insurance with Slice Labs, which will allow them to launch a digital end-to-end cyber offering for SMBs in just three months. They use Slice Labs’ technology, underwriting and claims expertise - all combined with their own current dominant position. Another example is Zurich Insurance that works globally with the Digital Insurance Group to build new digital propositions on top of existing IT infrastructure at a record speed.

The low interest rate environment, weak insurance markets and changing customer behavior have put insurers’ profits under pressure.

The big challenge is to let InsurTech have its own speed, with different measures and KPIs, without trying to put the big oil tanker on top of it, as it will end up sinking. The best way to approach this is to use the entrepreneurial spirit and tech DNA of InsurTechs to inject new processes into traditional players’ offerings and work towards improving their customer experience.

Services

The low interest rate environment, weak insurance markets and changing customer behavior have put insurers’ profits under pressure. Acquiring new customers is becoming more expensive, which is why insurers need to find new ways to differentiate themselves from competitors and find new revenue streams. Introducing new services would be a great way to add new revenue streams as they not only open new business models, but can also add a huge value to clients.

Think of the way Ping An is boosting an ecosystem where they (as a traditional player) are the central platform to a number of different services (like health checks or telematics). InsurTechs can potentially be the providers of these services, and they could actually benefit from the enormous database that Ping An offers.

In Europe, Generali was given the exclusive rights of the Vitality programme (which originated in South Africa) as part of their plan to move away from simply paying their clients when things go wrong and focus on preventing bad things from happening. They see the Generali Vitality programme as a way to frequently engage with the customer and to reward them for looking after themselves, being careful and maintaining good health.

What we can take from all of this is that InsurTechs can undoubtedly help traditional insurers and contribute to building partnerships and ecosystems through API middleware, customer engagement platforms and new digital tools. When trying to determine whether they are friends or foes, it currently feels like they are both, but together, they have the potential to mutually benefit from one another and shake up the industry – watch this space!

About Digital Insurance Group
Digital Insurance Group is an InsureTech and a next-generation technology partner to insurers, banks and brokers globally that enables clients to innovate at record speed while leveraging their existing IT architecture.

However, dipping into an unarranged overdraft can have costly consequences.

Did you know that dipping into an unauthorised overdraft could incur a number of fees from debit interest, transaction fees to monthly and even daily fees? Usually these fees and charges combined can mean finding yourself in more debt than anticipated, which you may later find more difficult to get out of.

According to Sunny, the consistent use of an unauthorised overdraft can negatively impact your credit score which could affect your chances of getting a mortgage, credit card or loan in the future.

Learning to manage your money is crucial, particularly when it comes to avoiding unauthorised overdrafts and all of the potential consequences that come with it.

Discover more about unauthorised overdrafts and exactly what charges you could face for spilling over into an unarranged overdraft. This handy guide is full of tips and tricks that will help you avoid any money mishaps.

Provided by Sunny Loans

Although most are actively participating in the industry, others may not be mindful that they are directly involved. Below, Finance Monthly gets the lowdown on crypto investment from Adrian Thompson, Global VP of Marketing at Sapphire Technology.

More people are starting to understand the benefits cryptocurrency has with its ability to reduce the risk of fraud and offering scalability. Fraud is one of the main concerns when it comes to the financial space and because digital currencies are transferred through blockchain all transactions are recorded and therefore secure. Another advantage of cryptocurrency is that it is safer when transferring internationally. Carrying cash, credit or debit cards can be risky and with the use of cryptocurrencies, exchange and transaction fees can be reduced. This being said, these benefits may not be known by some people and in extreme cases, some are not even aware that they are directly involved in the crypto sector.

Being associated with the cryptocurrency industry doesn’t necessarily mean that you have to purchase cryptocurrencies, it could be that someone works on a mining farm or manufactures mining rigs. There are said to be 114 countries around the world that have mining farms, mostly located in cold countries, with China being the leader in mining. They are positioned in remote surroundings due to the high volume of electricity being generated and the heat they emit. These mining farms are directly linked with the cryptocurrency industry, working to solve problems and accepting transactions. They are thought to be the most secure and stable methods of operating blockchain. The mining farms provide hundreds of jobs and is a profession that requires a certain amount of expertise to ensure that the computers are running smoothly and prevent any hacking. Many employees are required to work long hours, night shifts and usually live on site. Whilst these employees might not be actively exchanging cryptocurrency, they are a significant part of the ecosystem that keeps the industry moving forward.

Manufacturing mining rigs is another way people are involved in the cryptocurrency industry. These manufacturers may not be following the market on a daily basis but are usually aware of what is required to mine coins and are experts when it comes to creating the rig in order to mine.

In the past, home computers were adequate to mine cryptocurrency. However, today specialised hardware is required and that is where these mining rigs come into play.

Built for both personal and commercial mining, these rigs are made up of graphics cards, a power supply, a processor, cabling, memory and a cooling fan. There is a fierce competition in the mining sector and producing the best is always a top priority. Additionally, the emergence of stronger and more powerful machines are ever evolving, meaning staying ahead of the competition is a must.

In addition to individuals unknowingly contributing to the growth of the sector, numerous different industries are associated with cryptocurrencies in some way or another and assisting with the development of the space. . For example, cryptocurrencies are founded on the basis of transforming the financial space and therefore it’s not surprising that this is the sector it is most established. Those that work within traditional finance are most likely aware of the trends in the crypto space leading to financial and banking services adopting cryptocurrencies and incorporating them within the sector.

The market for cryptocurrencies has increasingly grown in recent years and has created a financial evolution. These digital currencies are able to help erase unnecessarily high-interest rates and can cut out the middleman associated with traditional currencies, helping to save money.

Another sector that can benefit from cryptocurrencies and becoming increasingly involved in the space is real estate which holds similar benefits there are within the financial space, in terms of reducing costs. In real estate, bookkeeping costs can be kept to a minimum with cryptocurrencies and sellers are able to transfer large purchases easily and efficiently.

What was once a buzzword for crypto enthusiasts has now become a mainstream entity. Despite critics weighing in on the viability of cryptocurrency, it is without question one of the fastest-moving industries with developments and discoveries made on an almost daily basis. With cryptocurrency continuing to establish itself within various sectors, we will undoubtedly find more and more people who will become indirectly involved in this transformative and exciting industry.

Handling financial transactions also comes with its own risks, such as online fraud, that can have serious financial implications on day-to-day bank operations. The good news is, blockchain technology could turn the traditional banking industry on its head by making banking services seamless, transparent and more secure for customers. So far,
33% of commercial banks are expected to adopt blockchain technology in 2019.

Blockchain technology is set to disrupt the banking industry in a number of ways:

1. Reduced Payment Costs

Technological innovations have enabled more people to work online and even receive payments for their work-from-home jobs through their smartphones or computers. With banks adopting blockchain technology, the cost of sending payments is expected to reduce drastically. This will help eliminate the verification requirements from third parties during bank transfers. The processing time for payments will also be reduced, and the additional fees that banks charge eliminated. For instance, Bitcoin and Ethereum can take 30 minutes or a few hours to settle a customer's financial transaction compared to bank transfers that can take up to three days.

2. Direct Clearance and Settlement of Transactions

Traditional banks use a centralized SWIFT protocol to transfer money between two parties, with the actual cash being processed by intermediaries. The processing of SWIFT payments can take approximately 30 minutes if both parties screen and approve the transaction. However, if the corresponding banks don’t reconcile their ledgers in time, the transaction fails. With blockchain technology, the clearance and settlement of transactions are instant. Blockchain allows banks to track and keep their decentralized ledgers in their public network rather than relying on custodial services and correspondent banks. According to Goldman Sachs, banks would save at least $6 billion in settlement fees and related costs annually by adopting blockchain technology.

3. Lower Security Exchange Fees

The purchasing and selling of securities in the current financial market are done through brokers, central security depositories, custodian banks, and clearing houses before processing is complete. The manual process is tedious, sometimes inaccurate and prone to deception as it passes through several parties during the exchange. Blockchain technology will help eliminate intermediaries and brokers who are present during the transfer of stocks and assets, saving $17 to $24 billion in processing costs. Through blockchain technology, clients can transfer their securities and assets via cryptographic digital tokens like Bitcoin and Ethereum much faster and with lower exchange fees. Big banks such as JP Morgan and CitiBank, who are large custodians of assets worth over $15 trillion, are already adopting blockchain technology to lower security exchange fees.

Blockchain technology has immense potential in revolutionizing the banking and finance industry. Many financial institutions are expected to adopt it in 2019 and beyond to enjoy the benefits it offers.

Ralf Gladis, CEO of Computop, answers questions surrounding regulation and global consensus, with some interesting pointers on privacy and trade therein.

Cryptocurrencies are expected to reach a major turning point in 2019, but they still attract a great deal of controversy. There is no doubt that the digital currency market is growing, and fast, but support from the institutions that matter is far from consistent.

In November, Christine Lagarde, head of the IMF called for governments to consider offering their own cryptocurrencies to prevent fraud and money laundering. Governments, by contrast tend to err on the side of caution, with the vast majority sceptical of what they see as the ‘Wild West of crypto-assets‘ in which investors put themselves at unnecessary and heightened risk. In part this is because a core role of government is to prevent turmoil in central systems, however many have acknowledged that cryptocurrency has a momentum that cannot be ignored and that regulation could help to bring about a more sustainable and less volatile crypto environment.

The scenario is changing all the time, and it is worth considering what would actually happen if all governments agreed that digital currencies were good:

1. Currency formats: If all governments loved crypto currencies they would probably not love the same currency, so if one country introduced Bitcoin and another Ethereum, we would then be faced with the difficulties of handling the exchange.
2. Economic Policy: The value of money is a playground for politicians of all sides. Expanding the availability of money, for instance, leads to devaluation of a currency which is supposed to help export-orientated economies when selling goods and services abroad. Such policies can only work if a government has the sole power to expand or decrease the amount of money within its own economy. No central bank would be willing to give that power away. That’s why we would end up with many crypto currencies in different countries.
3. Regulation: It‘s vital for a government to avoid money laundering, fraud and tax evasion. This is simply necessary to protect the country from financial crime and to comply with international rules. Therefore, a crypto currency would be regulated by each country’s central bank according to current local requirements for Anti Money Laundering (AML) and Know-Your-Customer (KYC).
4. Cash: Despite the availability of crypto alternatives we wouldn’t get rid of cash quickly. With no experience of what a non-cash society means, there are huge risks simply because of a fascination with a new technology. What about people who are travelling abroad, or those who are unbanked?
5. Privacy: A crypto currency can ensure privacy. However, it can also be designed to be open and very transparent. If crypto currency was THE new currency it would need to be transparent to regulators and criminal investigators. If the design were open to government access this could cause a privacy nightmare. Currently, payment data is distributed over many issuing and acquiring banks. Accessing this legally is not easy and requires a judge. A large transparent crypto currency database which is open to governments sounds like an invitation for misuse by government agencies that might mean well but would do ill anyway.
6. Trade: B2C transactions require payment schemes that act as a mediator between merchants and consumers. Schemes like Visa and MasterCard have established a worldwide rule-set that balances the interests of merchants and consumers. What if a fraudster used a fake identity and the actual consumer required the merchant to pay back his money? What if a consumer sent back a few products and required a partial refund? And if the merchant failed to react? Many such exceptional but nonetheless possible scenarios are the reason why issuing and acquiring banks have to enforce the rules set by Visa and MasterCard. That also applies to other payment systems like American Express, Discover and PayPal who set and enforce their rules themselves directly with both consumers and merchants. B2C payment needs schemes. In that respect it doesn’t matter whether the currency is digital, physical or crypto.
7. Ecology: Several central banks have already tested crypto currencies. The result was devastating. For large scale use crypto currency is much too slow and requires too much energy and storage consumption to be feasible.

It looks like there is still a lot of work to be done before crypto currency gets anywhere near to being acceptable to governments.

As a result, they have expect payments to be easy, convenient, flexible, secure – in some cases they even want to be rewarded for making transactions. Below, Abhijit Deb, Head of Banking & Financial Services, UK & Ireland, at Cognizant, explains the ins and outs of card payments and the threats this payment method currently faces.

Customers will not stay loyal to their card providers if the service no longer meets their needs or expectations. As a result, we are entering an age where payment industry providers either have to be the source of transformation or face disruption from competitors challenging their market share. To avoid the latter, card providers should continue to innovate, creating new capabilities and features to bring greater security, added-value services, collaboration and convenience for their clients.

The future credit card

The shift in the payments landscape over the past few years has brought a substantial evolution in the role of payment cards. This transformation has not only impacted the types of cards that companies are launching – for example, Gemalto has developed fingerprint recognition credit cards  – but has also affected card providers’ strategies and aspirations.

But how long will we keep physical cards in our wallet? Will the move to cashless lead us to ultimately become wallet-less?

Payment networks like Visa, MasterCard, Discover and American Express have built a massive infrastructure, also known as ‘payment rails’, for processing transactions globally. As purchasing trends shift online, credit and debit cards are increasingly being used more for their ‘rails’ than for the traditional plastic card we use in-stores. Thus, the battleground for card providers is how to remain the default payment option across every channel, keeping them in the top spot in a spender’s digital wallet.

Apart from the obvious revenue advantages associated with being a preferred payment choice, such as interchange fees and interest charges, card providers with ‘top of the wallet’ status also have access to a rich pool of information. By harnessing data, card companies can provide an innovative and hyper-personalised customer experience to differentiate themselves or create a new stream of revenue, as seen with companies such as Google recently purchasing Mastercard credit card data to track users’ spending.

Evolving competitor landscape

With the incursion of the concept of ‘digital cards’, card issuers and their corresponding business model are under threat, no matter what position they hold in the rank.

With the incursion of the concept of ‘digital cards’, card issuers and their corresponding business model are under threat, no matter what position they hold in the rank.

Card providers have access to increasing amounts of payment and account information, and more assertive competitors are moving quickly to commercialise the opportunities. Online players, like PayPal and Square, are already poised to take a bigger industry lead over traditional credit card issuers thanks to their established online presence.

And, as their dominance grows, we are likely to see other digital players enter the payments space. Amazon, for example, is well known for having a business plan for every industry – and it is likely payments will not be any different. Having just launched a small loans service to SMEs, it is not hard to extend the logic to where Amazon is your bank and runs your entire network by Amazon “rails”. And the same could easily be said for Apple.

We may also see social media players get involved, coupling their user data with account information to provide quick credit checks or banking services.

So, what does this mean for traditional card providers?

Firstly, it is clear that marketing strategy can no longer be centred around a piece of plastic. Marketers must challenge themselves to think about how they can propagate brand loyalty and acquire customers in this changing market. At the moment, a vast amount of customer acquisition is achieved by cross-selling to other customers with partnerships. For example, the British Airways / American Express credit card enables consumers to collect Avios points on their day-to-day transactions.

Firstly, it is clear that marketing strategy can no longer be centred around a piece of plastic.

And how do they compete on the digital landscape? Many providers are racing to position themselves as the customer’s ‘digital front door’ to take advantage of additional account information. Card providers need to act fast to stay relevant.

In the short to mid-term, credit card providers must focus on trust. Currently, thanks to consumer banking regulations, clients have the peace of mind that if a card gets stolen, they are protected. For the time being, Apple Pay and other providers are not offering the same assurances to customers yet. However, when mobile payments start offering the same guarantees, what can card providers do to stop people switching?

In the long term, card players must ensure that they do not find themselves consigned to the role of the faceless underwriter. Card providers need to think about their role in the entire financial services ecosystem and create new, innovative services that respond to customers’ needs. Many forward-looking players are looking to launch offerings such as 360-degree views and financial management advice services.

In the long term, card players must ensure that they do not find themselves consigned to the role of the faceless underwriter.

By combining machine intelligence with data, other providers are already exploring how technology can create new customer and colleague experiences that are simple, fast, transparent and engaging. For example, American Express’ personal travel assistant app, Mezi, uses AI to help cardholders pay for vacations and business trips based on their preferences. Similarly, Bank of America’s virtual AI assistant Erica is helping clients with effective money management.

Only by creating these value-added services that respond to specific consumer needs can card providers avoid complete industry disruption and stay relevant.

This ground-breaking reform changed previously rigid rules to make the financial services sector more competitive and focused on the customer. 

Cloud-based digital banks have taken advantage of this initiative by offering better services to customers, as 8 out of 10 Millennials say they would switch banks for personalised service. Such fintech players and challenger banks now account for 20 per cent of the banking and payments market in Europe.

However, acquiring these new customers is not enough for digital banks to stay competitive, according to customer relationship marketing experts at the customer data platform Optimove. Challenger banks need to find new and personalised marketing strategies to keep brand-agnostic customers loyal – or else they will be made irrelevant by other agile providers with better product offerings.

Roni Cohen, Director of Data Science at Optimove, comments:  “In the age of Open Banking, the best way for these agile technology driven banks to effectively implement personalisation is to make the most of the available customer data, which is now also available to their competitors.

“A customer-centric approach using advanced technologies can help create a long-term competitive advantage. This can be done by looking at customer data to find out what value means to each person, and communicating with customers in an emotionally intelligent way to create value for each and every customer. By using AI, banks’ marketers can gain actionable insights and build effective campaigns and strategies that will target customers at the right time, the right channel and with the right offer for a fully personalized experience.”

Roni concludes: “As consumers see an increasingly personalised experience, challenger banks will be able to distinguish their brands with promotions and rewards tailored to each individual – just like retailers do.”

(Source: Optimove)

Fortunately, Viktoria Ruubel, Chief Product Officer at IPF Digital, is here to help you stay ahead of the curve, looking forward to 2019 and the top trends that will dominate the industry over the coming year.

1. Banking in your back pocket

Mobile banking has been around for barely five years, but now it is ubiquitous. In the next five years, 72% of the UK population is expected to be banking via their phones. Paper money is dated – new transactional experiences define our daily spending, with contactless cards sharing a crowded market with mobile tech like tap-and-pay.

2018 saw millennials flocking to digital wallet providers like Monzo and Revolut. In 2019, this sort of tech will go mainstream, with a wider range of providers and services, all targeting improved customer experience, financial inclusion, and digital service.

2. The global fintech opportunity

The global payments industry processed over $1bn per day in 2017. In Latin America, and Sub-Saharan Africa, where traditional institutions shied away from investing, fintech firms have plugged the gap in the market.

The restrictions enforced by old-fashioned lenders have catalyzed the development of mobile banking. Mobile payments enabled by technology grant financial inclusion to users who wouldn’t meet the criteria for traditional banks

Smartphone adoption lies behind the accessibility of mobile banking – with a smartphone and internet access you can be part of the financial system without a bank account. More people than ever can contribute to the movement of money around the world, resulting in more opportunities for individuals to improve their financial situations, and for business to leverage credit for growth.

In 2019, fintech companies will recognize the massive markets that await outside of the traditional financial ecosystem.

3. Open Banking matures

Open Banking has won over its early sceptics and now has a strong place in the market, driven by the adoption of PSD2 regulation, new strategic partnerships, and increased customer expectations. 2019 will see open API reach maturity, with new products, customer experiences, business models, and opportunities created along the way.

Stripe, Mint, N26 – these are just some of the players using open API to offer products to both banked and unbanked segments. Meanwhile companies like Alipay and WeChat are building exciting new infrastructure which could drive the financial services revolution globally.

4. Applying artificial intelligence

The rapid advances in AI-enabled customer intelligence will drive the great leap forward in the 2019 financial industry, notably consumer lending. Chatbots and virtual assistants grew in popularity over the last two years, and consumers are increasingly comfortable using them to request information. Advances in voice tech mean that virtual assistants could soon submit loan applications on your behalf with a vocal signature.

Meanwhile, digital devices and pay for each other, to each other. Lending will become ‘real-time’ and AI learning will allow credit products to be personalized to each customer’s behavior.

For example, AI technology could analyse customer spending, and then suggest saving plans, helping consumers budget and borrow more sustainably. AI would then remind customers when they might need to borrow, how much to borrow and the schedule they should follow for repayments.

5. Securing data with biometrics

In developed global markets with high levels of smartphone use, biometrics are the next big step for financial services, in 2019 and the medium term as well. Biometrics will soon be integral to verification processes and payments - mobile banking apps already allow users to log in and pay with facial recognition, voice recognition and fingerprints.

The more financial institutions rely on digital, the more data security becomes a concern. Biometric technology one solution, maintaining the transactional security crucial to any sound financial environment.

Here Stan Swearingen, CEO of IDEX Biometrics, discusses the potential trends for 2019’s biometrics sector.

Following a number of successful trials using fingerprint sensor technology within smart cards across multiple markets, (including Bulgaria, the US, Mexico, Cyprus, Japan, the Middle East and South Africa) the biometric smart card is reaching its inflection point. Key players within the banking industry, including Visa and Mastercard, are already heavily invested in this new payment technology and anticipate that biometrics will play a key role in the revolution of the payments industry.

With mass market rollout on the horizon, here are five key predictions for the biometric payment industry in 2019.

2019: The year of dual interface

The first half of 2017 reported 937,518 cases of financial fraud, resulting in losses of an astonishing £366.4 million^[1], a clear demonstration that the PIN is no longer fit for purpose. Recent research from IDEX Biometrics supports this claim and found that 29% of consumers surveyed felt concerned about the use of PINs to keep their money secure, and as many as 70% believed that contactless payment cards left them exposed to theft and fraud. As consumer concerns continue to grow around the security of payments, so too does the need for a personalised, secure and convenient payment solution.

Enter the biometric dual interface payment card. 2019 will see biometric fingerprint sensors integrated into cards with both a micro-processor and contactless interface, removing the need for PINs. This will provide consumers with the reassurance that their money is safe as any transactions will require their finger print to authenticate it. 2019 will be the year of the dual interface where biometric authentication will be available for both contact and contactless payments!

These advances in technology and those within the payments market have meant that the concept of biometric authenticated payments is no longer a novelty. In fact, according to forecasts by Goode Intelligence, nearly 579 million biometric payment cards will be used globally by 2023^[2]. The integration of the biometric sensors in the payment card will be one of the next-generation transformative innovations to breathe new life into the payment industry next year and assist in the fight against payment fraud.

The integration of the biometric sensors in the payment card will be one of the next-generation transformative innovations to breathe new life into the payment industry next year and assist in the fight against payment fraud.

Remote enrolment will be the key to mass market adoption

For mass market deployment of biometric smart payment cards to be possible in 2019, banking infrastructures must look at the implementation of biometric technology and ensure that this method of enrolment is accessible and convenient to all. The elderly or those with physical health limitations may struggle leaving the house to enrol within bank branches and even those who work a 9-5 day can often find making it to the bank within opening hours a challenge.

The latest advancements in remote enrolment of biometric payment cards will mean that enrolment for biometric payment cards can take place in the comfort of your own home. Card users will be able to enrol straight onto the card by simply placing their finger on the sensor (with the aid of a small device that comes with the card) to upload their print to the card’s highly secure EMV chip. There is no need for an external computer, smartphone or internet connection. Once loaded, the fingerprint never leaves the card, thus eliminating multiple attack points.

Biometric payments will bridge the gap to financial inclusion

In 2019 advances in biometric fingerprint authentication will be a vital ingredient when bridging the gap to financial inclusion. Currently, 1.7 billion adults remain unbanked across the globe today^[3]. This is for many reasons, from immigration issues, to illiteracy as well as mental health. Those living with dementia are also at risk of losing their financial independence as their short-term memories decline. A fingerprint sensor on the card can take the place of a PIN or even signature, meaning sufferers are able to stay financially independent for longer.

Currently those who lack access to financial services are missing out on the many benefits financial inclusion has to offer. Fingerprint authentication will remove the barriers that face those with literacy challenges, or face difficulty with memory, as card payments will no longer be about what you know, or what you can remember, but who you are.

Currently those who lack access to financial services are missing out on the many benefits financial inclusion has to offer.

Biometric authentication will be a simple, secure and convenient solution eradicating the need for passwords and PINs as a form of authentication. For this to work as a solution to financial inclusion, banking infrastructures and card manufacturers must work together to reach a price point that enables this technology to be available to all.

The possibilities for biometrics are endless…

While biometric authentication technology is already being used with smartphones and passport identification in the UK, 2019 and beyond will see endless possibilities for the use of biometric smart cards into payments and beyond. We can even expect to see biometrics branch into the Government issued identification and IoT enabled devices arenas.

In fact, a whole host of public services is set to benefit from this secure means of authentication. The use of biometric smart cards within the NHS, for example, could see access to sensitive patient records limited only to the patient themselves. Biometric social benefits cards could control how the money is spent and that it is spent by the right person. According to IDEX research, 38% of consumers surveyed would like to see biometric methods of authentication introduced to wider government identification including driving licenses, National Insurance numbers and even passports.

The future of the biometrics – 2019 and beyond!

In 2019, authentication will get even smarter, and further technological advances such as multi-modal or multi-factor authentication will further enhance security within the payments landscape. This refers to technology that combines a variety of different types of biometrics in order to add an additional layer of security, including persistent authentication. For example, instead of having one single authentication, smartphones could continuously scan features to ensure the correct person is using the device.

Whilst the biometric dual interface smart payment card is set to hit the mass market next year – this is just the beginning. The payment card of tomorrow will go beyond just transactions. Biometric smart cards will serve multiple purposes – a payment card, a form of ID for restricted goods and even a loyalty card!

The early days of biometrics where it was felt to be invasive and a privacy concern are long gone. In fact, according to recent research from IDEX, 56% of consumers surveyed state they would trust the use of their fingerprint to authenticate payments more than the traditional PIN. Further to this, 52% would feel more confident if their fingerprint biometric data was stored on their payment card, rather than a bank’s central database.

Consumers are ready for the use of biometric fingerprint methods of authentication for card payments and 66% expect their roll out to authenticate in-store transactions in 2019. We predict that by 2019 biometric smart payment card adoption will go into many millions!

[1] https://www.financialfraudaction.org.uk/news/2017/09/28/latest-industry-data-shows-fall-in-financial-fraud/

[3] https://globalfindex.worldbank.org/

The study, which looks at cash and cashless technology usage in four markets—the UK, Australia, Brazil, and South Africa—shows that a cashless society may not be a realistic ambition. In fact, the survey revealed an “immovable” 24% of consumers who will never abandon cash—no matter what technological advance or leap forward is available to them.

In Brazil and South Africa, where cash use is more common, there is a strong desire for wider acceptance of cashless technologies such as payment cards and digital wallets. In both markets, 60% say that they are worried about having cash stolen from them which suggests fear of theft is a key driver rather than convenience.

In the UK and Australia, however, where the use of cashless technologies is more widespread, people are happier with their use of cash. Around 80% of people in both markets say that they are comfortable using cash.

Respondents across all countries saw cash as part of their day-to-day lives. They carry cash at all times, replenishing their wallets and purses regularly at ATMs, and are unwilling to go that last extra mile and never use cash again.

The findings suggest that cashless technologies will not replace cash completely; instead people are happier with an equilibrium between the two.

“While the proliferation of cashless payment technologies has generally led to a reduction in cash usage across developed economies, banknotes have unique properties that consumers value, such as security against fraud,” said Michael Batley, Head of Strategy, Travelex. “As long as this is the case it’s unlikely that any attempts to abandon cash completely will succeed. Even Sweden’s bid to go cashless, touted as a successful model, has seen pushback. Ultimately, only consumer demand will drive the change towards a truly cashless society and our research indicates this is further away than many realise.”

As well as revealing a lack of appetite for a cashless society, the study also reveals that opinion is split on whether it is even possible. The UK, the most ‘cashless’ country surveyed, represented the highest proportion (47%) of respondents that do not see an end to cash, closely followed by Australia (42%).

Travelex commissioned Sapio Research to survey 1,000 consumers regarding their attitudes to cash and cashless technology across four markets: the UK, Australia, Brazil and South Africa. These four countries are at different points in the “journey towards cashlessness”, as defined by Mastercard’s Measuring progress toward a cashless society report, and together give a representative overview.

(Source: Travelex)

In Africa, the want for cryptocurrency is growing, and according to Iggi Vargas at Paxful, this could affect the wider markets.

The interest in bitcoin has continued to grow at a rapid pace. Exchanges are reporting that a lot of Africans, especially millennials, are taking over the platforms.

The “Cheetah generation”

The term “Cheetah generation” was coined by Ghanaian economist and author George Ayittey. It refers to the young and hungry generation of African graduates and professionals. This is the generation that is trying to change the status quo for the better.

“The Cheetahs do not look for excuses for government failure by wailing over the legacies of the slave trade, Western colonialism, imperialism, the World Bank or an unjust international economic system… To the Cheetahs, this ‘colonialism-imperialism” paradigm, in which every African problem is analyzed, is obsolete and kaput. Unencumbered by the old shibboleths, Cheetahs can analyze issues with remarkable clarity and objectivity.” (Ayittey, 2010)

The Cheetahs offer the people of Africa a new way of thinking. Ayittey says that their outlooks and perspectives are “refreshingly different” from past African leaders, intellectuals, and/or elites.

Ayittey compares them to what he calls the “Hippo generation”. This refers to the generation before the Cheetahs.

“ [The Hippo generation] lacks vision - hippos are near-sighted - and sit tight in their air-conditioned government offices, comfortable in their belief that the state can solve all of Africa’s problems.” (Ayittey, 2010)

According to Ayittey, the Hippos are the ones that “are lazily stuck complaining about colonialism, yet not doing anything to change the status quo.”

With that being said, how does the Cheetah generation translate to the Africans’ new-found passion for crypto?

Hunger for crypto

When it comes to cryptocurrency, Africa is a shining star. This is because of one major factor: peer-to-peer finance. Africans have joined the peer-to-peer revolution. It is doing wonders not only for their economy but also their culture. The Cheetahs seem to be embracing this as a good number of African millennials have been joining peer-to-peer marketplaces. This is important for many reasons.

First, it shows that peer-to-peer platforms have an amazing reach. Africa does not have, by any means, cutting-edge technology but they find a way to make a living off of cryptocurrency. Being able to send money around the world without the bank’s high fees are a big deal. Whether it be to a sibling halfway around the world or to your neighbor, being able to send money anywhere is an advantage for Africans.

Second, it shows that peer-to-peer platforms are easy to use. Many non-users will find bitcoin intimidating at first and give up on learning. This shows not only that everyone can use peer-to-peer platforms, but also that it's easy to learn if you’re willing.

Third, it shows that the underbanked aren’t a lost cause. With Africa being so underbanked, bitcoin serves multiple purposes for them. It serves as both a way to hold your money and a way to send out money.

Fourth, it shows that everyone has the power to take control of their own finances. Some Africans actually make a living by trading cryptocurrency, and you can too.

Lastly, it shows that a revolution is in the works; a peer-to-peer revolution. The benefits of peer-to-peer exchanges are being seen all over Africa. The idea of fast transactions and innovation flawlessly aligns with the Cheetah Generation. Clearly cryptocurrency and peer-to-peer finance are the right tools for the new generation of Africans to get ahead and prosper. But it doesn’t just have to be Africa. All over the world, peer-to-peer platforms are showing significant amounts of growth. They are also becoming a popular method to buy bitcoin.

The time is now

It seems like we can learn a lot from the Cheetah generation, including how to make money with bitcoin. If they can have the right set of mind, the world can follow suit. The drive of these young prodigies is something to look up to. They have the attitude that can conquer and inspire the world. Taking control over your own finances is a big deal, and it seems the Cheetahs have figured it out. The peer-to-peer revolution is here and it’s time to get in on it.

According to recent research by IDEX Biometrics, more than half (53%) of cardholders would trust the use of their fingerprint to authenticate payments more than their PIN.

A further 56% of research respondents stated that they would feel more secure conducting purchases with their card, if they were authenticated with their fingerprint. It seems that payment card users are very aware of the limitations of their PIN with almost half (45%) admitting that they never change them. And a third (29%) expressing concerns that PINs cannot be relied on to keep their money secure.

This scepticism around current card security measures also extends to contactless payments with 63% questioning their security and 70% believing that they actually leave them exposed to theft and fraud when used.

It is evident, that as a nation, we are ready for the introduction of biometric fingerprint card authentication. The only area of concern users admitted to, was how their fingerprints would be stored. 45% were worried that criminals could mimic their fingerprint biometric data and a further 51% was concerned about the possibility of it being stored in a bank’s central database - leaving them exposed to identity theft or their personal information being used without their knowledge.

These findings highlight that banks need to provide reassurance that biometric fingerprint authentication can be used in a user-friendly manner. There is no need for this information to be retained centrally and that any fingerprint data is kept with the user on their own cards. Providing customers with the confidence that they can embrace fingerprint biometrics as a more secure and personal method of authentication for their payments.

“Consumers are ready for the use of biometric fingerprint methods of authentication for card payments and it is set to be a reality in 2019, but banks have a responsibility to address security concerns, particularly in relation to how and such data is held. It is ultimately up to the banks and the financial services sector to reassure consumers to drive adoption and ultimately tackle fraud head-on,” comments Dave Orme, SVP at IDEX Biometrics.

“With a resounding 53% of consumers stating they would trust the use of their fingerprint to authenticate payments more than the traditional PIN, this must be where the UK banking industry focuses its attention. Chip and PIN is now 12 years old, and has seen its course. The consumer demand for fingerprint methods of authentication is a reality, with two-thirds (66%) of UK consumers expecting their roll out to authenticate in-store card transactions by 2019,” added Orme.

(Source: IDEX Biometrics)