New payment methodologies and technologies are being unveiled with head-spinning velocity these days. For those of us in the financial services industry, these are exciting times as each new development in the evolving mobile payment “story” presents new opportunities. However, with each new technological payment benchmark we see, there are issues that have not been addressed, which has impeded my industry from fully embracing the complete potential of the growing digital channel.
I have been working on the front lines of digital banking for many years and the requirements that most financial services industry executives seek in a successful mobile payment solution is one that delivers in three key areas: First, it must improve the customer experience. Second, it must keep fraudsters out of the system. Finally, it must help mitigate the operational costs imposed on financial institutions (FIs) as they manage the exception process of provisioning cards in the mobile payment platform (i.e. adding payment card authorizations to mobile wallets).
The first two components I mention require little explanation.
First, FIs want their customers’ mobile payment experience to be seamless. When a customer adds a payment card to their wallet or initiates a mobile payment, bankers want it to be a frustration-free customer interaction.
The second, the importance of controlling fraud is equally obvious. Although the latest research from the American Bankers Association shows mobile banking fraud is relatively benign for the time being, the organization also found that bank risk-managers perceive mobile bank fraud to be the number one threat looming on the horizon.
The third component – provisioning cards – might not be so obvious to those outside of the financial services industry, but it is just as important as the previous two.
Card provisioning – adding a customer’s payment information to the mobile platform – can be costly and cumbersome to FIs regardless of the device that is used. Different FIs employ different methods to provision cards, but most traditional paths are resource-intensive. One top-five bank, for instance, requires phone calls from about 40 percent of their customers to finalize loading card data onto their mobile wallets. Each phone call costs the institution nearly $6.00, which may not sound exorbitant until one considers that just one recently released payment technology resulting in 1 million new subscribers in 72 hours of being released. Another FI currently processes “exceptions” to card-loading authorizations on behalf of approximately half of all of their mobile-wallet transactions.
These volumes have forced FIs to explore new methodologies. One institution is in process of launching an interactive voice response (IVR) system to authorize mobile transactions while others are augmenting existing apps or creating new ones to expedite the process. Still others are moving to implement one-time passcode solutions, which may bring additional risks.
In order for any competing mobile payment system to be a full-fledged success, the technology must address all three of the issues: customer convenience, safe transactions and easing the burden FIs face in helping customers add payment card information to their digital device.
That is why the company I work for—Early Warning—has introduced a truly-reliable and deterministic mobile authentication method. We have accomplished this through real-time access to the Mobile Network Operators, providing visibility of approximately 94 percent of the country’s wireless coverage (including nearly 300 million wireless customers). This alignment helped fuel the launch of our Mobile Identifier, an unprecedented solution that enables FIs to recognize their customers regardless of mobile changes, because it provides a way to authenticate the consumer throughout their mobile transactional lifecycle.
This means FIs can deliver on the first two components mentioned above – a seamless customer experience and a method of keeping the fraud out – while addressing the third component – operational costs, a burden that FIs shoulder and is often times overlooked in the ongoing payment revolution.
To learn more about this exciting technology, visit Early Warning
About the Author: Michael Toth is Vice President of Product Management Mobile Solutions Team at Early Warning. Prior to joining Early Warning, he spent nearly 20 years in the financial services industry, most recently at Bank of America where as a Senior Vice President he lead the Customer Protection Strategy for the Digital Channels. . Prior to that, he was with First Union National Bank, Wachovia Bank and technology solution provider, The 41st Parameter.
Edited by Maurice Nagle
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