6 minute read
Four innovations financial institutions in the Middle East should expect to implement
from #229 - April 2020
By Nassir Ghrous, SVP Banking & Payment Services for Middle East, Africa & Eurasia region at Thales
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Technological advances and changes in customer expectations over recent years have made a huge impact on the banking and financial services sectors. In many cases, the transformation has been dramatic, with digital technologies enabling new services and totally resetting consumer expectations.
The pace of disruption and innovation in finance is unlike anything we’ve seen before, but the industry has shown that it’s become much more comfortable with the shift to digital processes, whether internal or customer-facing.
With further innovation arriving almost daily—from opening an account with a selfie to social-media led cryptocurrencies—there are several developments that have had a real impact on businesses and consumers alike. Here are four innovations that financial innovations in the Middle East should expect to implement if they have not already.
MAKING BANKING, MOBILE, DIGITAL AND SECURE WITH BIOMETRICS
Digital banking is fast becoming the preferred method for customers to manage their financial needs, with data from McKinsey showing that over 80 per cent of urban consumers in the UAE and Saudi Arabia plan to use their phones or other devices to fulfil their banking needs.
But imagine a digital banking experience where we can identify ourselves with absolute certainty, simply by being… ourselves.
While the smartphone industry kick-started the mainstream use of fingerprint authentication a few years ago, we are now seeing other biometric factors become part of our everyday lives, especially in payments. From fingerprints, facial and voice recognition or even by analysing the way you type or walk—what we call behavioural biometrics. These technologies are offering new and exciting ways to ensure secure and innovative services, while also providing a personalised, secure and convenient experience for customers.
In fact, our digital banking survey revealed that over half of UAE consumers are willing to use biometric measures for mobile banking, of which 75 per cent believe they are more secure. Almost half also believe that they are more convenient than traditional methods—after all, your unique biometric data is an intrinsic part of who you are, not something you have to remember like a password.
As digital banking starts to completely replace physical branches in the UAE, as already seen with the introduction of digital only propositions such as Liv, biometrics will become key for the future of financial institutions in the country.
ROLLING-OUT INTELLIGENT AND ADAPTIVE FRAUD PREVENTION
Authenticating users in any number of given scenarios is a challenge for every bank. But as the number of services that require authentication gets larger, managing them has become an increasing burden.
Support in this endeavour is here in the form of cloud-based solutions for user authentication management. These systems use multiple layers of real-time risk management algorithms to set an appropriate level of authentication for any use case, by leveraging contextual analysis and historical data.
For example, it could determine how much authentication is required by analysing things like time, location, device type and even biometrical behavioural factors such as the user’s typing pace. This invisible contextual verification results in a secure and frictionless user experience for consumers, as well as reductions in operational and fraud management costs for the bank.
With banks adding new services frequently, a cloudbased management platform can allow them to flexibly
integrate their own risk assessment solutions, or best-inclass solutions from third parties. This means they can try several solutions quickly to find out which suits their needs best or change their solutions as new types of fraud emerge. This way banks can maintain the best possible user experience, combined with low fraud rates, over time.
ACCELERATING USAGE OF DIGITAL PAYMENTS AND MOBILE WALLETS
According to a report by ResearchAndMarkets.com, the mobile wallet market in the UAE is projected to surpass $2.3 billion by 2022. This is hardly surprising given the increasing youth and tech-savvy population that supports the natural progression of creating a cashless society and more digitalised economy.
Following the launch of Apple Pay, first in the UAE and most recently in the Kingdom of Saudi Arabia in 2019, it is expected that the number of retailers accepting mobile wallet payments will continue to grow as will the support of the financial industry which will boost the region’s mobile wallet market in this new decade.
This technology is widely deployed across the world, used every day by millions of customers. So, if you’re using a mobile wallet for ecommerce and contactless payments, it’s likely that it’s based on this technology.
Worldwide, more than 500 million credit and debit cards in close to 50 countries have now been converted to digital format in payment apps. To ensure robust security and privacy, physical card details are converted by our tokenisation solution (TSH) into a digital token that is embedded in the customer’s smartphone, wearable or other connected device. This token facilitates seamless interaction with the user’s chosen merchants yet contains nothing of value to a fraudster. As a result, strong protection against threats such as card skimming is assured.
However, in the Middle East there is still a reluctance to rely on digital wallets, and this is where biometric cards, which allow the user to benefit from unlimited spend per transaction, are becoming increasingly popular.
INTRODUCING BIOMETRIC CARDS
Financial Institutions in the region are increasingly investing in innovative card bodies to position their services as a cut above the rest. More often than not, metal cards come with a whole host of services and benefits that add more value than simply a customised look and feel. Card and personalisation products and services are just a few ways payment service providers are striving to deliver not only an eye-catching payment offering, but a robust one, for today’s demanding consumer.
With metal cards strongly associated with top-of-the-line, high-value services and perceived as a reflection of financial and even social success, it is no surprise that they have exploded in popularity even amongst millennials.
The biometric EMV payment card, for example, combines the convenience of contactless with the trust that is associated with biometrics, and with no spending limit. These cards have proved highly popular among consumers in the Middle East region, with the number of EMV cards in circulation expected to grow by 20 per cent to reach 502 million in 2020, according to an ABI Research report.
The financial technology company, areeba, was in fact the first to introduce the Visa biometric contactless EMV bank card in the Middle East or Africa, allowing cardholders to authorise transactions by using its built-in fingerprint scanner rather than entering a PIN.
The enrolment process for the card is very simple, secure and mindful of data privacy. Whether you’re activating your card at home via a secure sleeve or at the bank branch, there is no biometric data handling outside of these premises. Your fingerprint is only stored on the card, and your bank has no access to this information.
It’s a hugely exciting time to be part of the financial industry due to the sheer pace and scale of technological innovation taking place. These shifts have brought countless benefits with regards to streamlining services and operations, fraud management, customer experience and satisfaction—and in many cases it’s already hard to imagine life without them. Nassir Ghrous
