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Banking For Future Is Frictionless And Secure

While banks have focused on additional security measures, fintechs have been experimenting on ways of treading the fine line between convenience and safety

With rapid digitisation, customers are looking for experiences that are as easy as shopping online. The lines between content and experience are dissolving constantly, and value is no longer just about service completion and fulfillment. While the content of the service, or the what continues to be important, digital has made how the service is experienced even more of a determinant of customer interest. Friction, in today's world is anything that comes in the way of instant gratification. As Monica Eaton-Cardone, CIO and founder of Global Risk Technologies and COO and founder of Chargebacks911, says, "Today, if you have to actually take your credit card out of your wallet, it feels like too much work".

Service providers face a challenge because customers expect delightful user experiences, and they are not ready to compromise on security either. Digital native users believe that security versus delight is a false choice. They demand newer, more natural, and convenient methods for authentication to protect online transactions. In a survey conducted by a provider of device intelligence-based customer authentication and fraud prevention solutions, 85 percent of the respondents thought that passwords were an archaic method of ensuring online security. The survey revealed that banking customers are frustrated with the age-old practice of passwords for authentication and are looking for modern alternatives such as facial recognition, voice recognition, touch ID etc.

While banks have focused on additional security measures, fintechs have been experimenting on ways of treading the fine line between convenience and safety. In a report by NTT Data, 22 percent of fintech customers described their offerings as "how banking should be". Frictionless experiences redefined by FinTechs that are offering secure transactions in a seamless manner are being rewarded with dramatic customer uptake. Take the case of India based payments bank, Paytm, for instance, which now has a user base of 150 million users post demonetization. Paytm enables customer onboarding with only a mobile number, and then provides additional services with progressive KYC information. By avoiding a one size fits all approach, Paytm, like many other fintechs has demonstrated that there is an opportunity to create more interesting experiences around security by embracing a more nuanced approach.

Banks must look even further and provide a hassle-free way to access and manage finances. The advent of disruptive technologies such as artificial intelligence (AI), cloud, open APIs, big data, automation etc., has opened new avenues for innovation for banks; and many progressive banks are already experimenting with newer methods of authentication. For example, ICICI Bank in India already has a voice recognition system in place for biometric authentication. Another implementation of secure and frictionless authentication is the Unified Payments Interface (UPI) by the National Payments Corporation of India (NPCI). This platform utilizes a unique ID, similar to an email ID, given by a provider of the customer's choice to facilitate transactions amongst different banks. Notably, with UPI, the customer has the ability to choose an interface with the best user experience, which will then enable them to manage all their financial transactions in one place.

Meanwhile, the global cost of cyber-crime is rising, and is expected to reach US$ 6.1 trillion annually by 2021. It has become next to impossible for manual and static security measures to stand up to the challenge of sophisticated hackers. The future will belong to intelligent machines that will augment human capabilities to detect cybercrime. Frictionless user experience in the coming years will be driven by self-learning systems that provide personalized, adaptive security measures for customers through machine-learning. These systems will be built on analytics - for example, systems will modify security measures based on departures from typical customer behavior. Models that predict user behavior will become the mainstay for frictionless banking. Banks will look to differentiate themselves based on making user experience increasingly simple even as security measures become more complex.

A Gartner report mentions that 89 per ent of companies will compete on customer experience and this is clearly evident from the customer behavior towards banking. Banks will have to innovate faster than ever to compete and stay relevant in this age of disruption. Progressive banks are already starting to leverage exciting new technologies to provide the most seamless user experiences without compromising security - and we can expect more banks to follow suit as the battle heats up to securely deliver delightful, frictionless customer experiences.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


Tags assigned to this article:
banking digitalisation e-wallet icici bank cyber crime

Arun Krishnan

The author is Vice President, EdgeVerve and Global Head of Engineering, Finacle

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