Digital security will be one of the biggest trends of 2017. The challenge at the heart of the dialogue? The pace of technology development – and cyber vulnerabilities – are increasing a rate much faster than protective measures can keep up.
The e-commerce sector, as one example, demonstrates the rapid proliferation of online transactions, with many happening across international borders. Customers may be making purchases from a store, from anywhere in the world. Meanwhile, Hackers are constantly on the hunt for new security exploits and opportunities to wreak havoc.
How can the banking sector stay ahead of the curve to ensure that consumers remain protected when engaging in commerce online – especially when they may be sharing sensitive information or likely to be caught with a phishing request off-guard.
The banking world increasingly revolves around being digital. Here’s how they can keep up with consumer demand, while creating a more secure shopping environment.
Create more personalized products
Mike Landau who leads Payments Research at PwC aims to understand the drivers of innovation and anticipate the impacts of these changes on consumers, payments providers, and retailers. One trend that Landau has observed is the rise of retailers needing to balance conflicting priorities in the creation of checkout experiences.
“Such considerations include collecting more user data through a mandatory site login prompt, paying higher fees to provide one-click checkout buttons from third parties, or storing card credentials to improve repeat-customer experience.”
Landau further elaborates that PwC is seeing a rise of fraud-related merchant activity.
“Merchants must balance the risk of losing e-commerce sales by categorizing legitimate transactions as fraudulent with the cost of accepting fraudulent transactions through online channels.”
Banks can offer advanced solutions that balance retailers’ needs for customized experiences with security.
“We are seeing the rise of new fraud solutions that offer merchants the ability to customize fraud screening to match their individual tolerance for risk,” says Landau.
“Banks need to invest in the advanced analytical capabilities necessary to deliver more personalized consumer experiences. With a stronger foundation to understand consumers, card issuing banks can then optimize mobile interactions with their customers, create more personalized and engaging reward programs, and create stronger brand loyalty.”
Acknowledge the need for evolution
How banks adapt and connect technologies directly impacts customers. By connecting already existing technologies to services that easy to use, helps banks introduce new products consumes will readily adopt.
“Where (fin)tech is on the forefront of these big changes, we would like to position ourselves as smart followers in this industry. Rather than introducing new technologies simply for the sake of saying we did, instead, we leverage new technologies and bring big changes to our customers.”
The banking establishments recently launched payment platform, Tikkie, was built on that exact premise.
“Having a user experience that stands out as a banking service really added great value in the success of the product,” states Mattijs Knol, Head of New Digital Business and Innovation for ABN AMRO.
Prioritize solutions for cross-border compliance and efficiency
E-commerce eradicates borders, with merchants being able to reach shoppers – and work with vendors – around the world. But for some merchants, opportunities are unintentionally falling through the cracks:
“When it comes to retailers and global e-commerce, a main challenge lies in the ability to send and receive payments in one’s currency in a timely and efficient manner,” explains Richard Gilbert, director of SME partnerships and business development at Payoneer.
“Additionally, this year for banks, there will be more emphasis on compliance with the ongoing threat of money laundering and terrorism. The growing threat of terrorism has led to more emphasis on blocking illegal financing sources. Combined with the increase in international money flows, this will result in greater emphasis on compliance and transparency.
According to recent estimates, China’s consumer economy will expand by about half, to $6.5 trillion by 2020 and e-commerce in India will grow 67 percent, into a $38 billion market – a tenfold growth since 2009. As emerging markets continue to increase their access to digital resources and marketplaces, they will ultimately seek out easier and more cost efficient payments solutions as they progress.
When evaluating their product roadmaps, banks need to ensure that all regions are part of their payment solutions stories.
Recognize the power of social
As David Lester, managing director of Brightworks Interactive Marketing points out, payment solutions are evolving at a rapid rate, with banks being challenged to keep up with the pace of change. Meanwhile, social sharing payment companies like Venmo and Snapcash are taking off.
“Millennials have grown up being connected to each other through social media,” says Lester. “Being able to pay, split bills, and comment on what you’re buying through social payment tools is a natural extension for a new generation.”
Using social media to provide, product information, product sales, and customer service is crucial for banks knowing the new lifestyle choices that millennials make and how much time they spend online, emphasizes Lester.
“It makes sense to fish where the fish are. Make reaching out to your bank or retailer a socially fluid action. Make buying something as natural and seamless as clicking on what you like.”
To keep up with consumer preferences, banks will need to rethink their approaches to innovation:
“By the time new innovation is approved, planned and developed in a traditional banking process, it is not innovative anymore. Retailers are challenged by growing costs of having to implement and pay for new services or technology that their customers demand.”