Balancing Security & Convenience in Payment Technologies
In the fintech space – and across the tech industry – we are always driven to find what’s next and what’s better. When it comes to the ever-changing world of payment technology, a natural tension exists between the need for an increasingly seamless customer experience and the need for increasingly reliable data protection. As entrepreneurs and innovators seek to find the right balance of these two priorities, they are developing new and improved technologies that could lead to the solution we’ve been waiting for.
The range of ideas and the sheer volume of innovation we’re seeing in fintech startups today is exciting, but a bit head-spinning. It is an open playing field. Everywhere I look, I see entrepreneurs and startups pushing the envelope and envisioning new ways to engage in in-store, online and mobile commerce.
Mobile payments have the potential to reshape the landscape and I think that when we can use our phones everywhere we use a card or cash today, mobile will become the payment option of choice for more and more consumers. But beyond accessibility, there is clearly something we still need to learn and solve for in order to get more consumers to embrace, trust and use mobile payments.
In my opinion, some parts of the payments eco-system are already close to frictionless, so driving adoption for new technology will take time and potentially incentives to change behavior. It begs the questions of a) ‘What are the key problems really need to be solved?’ and b) ‘How can we encourage adoption of safer ways to pay?’
Two important forces are driving much of the change in payments we see today:
1) the constant push for customer-focused innovation that centers on consumers’ desire for greater convenience; and
2) the simultaneous push for bank- and merchant-focused innovation that centers on greater security.
Digital and mobile experiences have, rightfully, have raised customer expectations. And, while customer satisfaction is of paramount importance to any business – particularly banks – safety and security can’t be ignored. Of course, everyone can agree that they want and need both convenience and security. Unfortunately, these two key forces of change are often moving in opposing directions, leading banks and retailers to ask some critical questions and push their thinking to find the right balance.
When we look at digital banking and e-commerce offerings today, we find numerous security measures that can be highly effective, but also create friction for customers. We are frequently forced to come up with new, lengthy and complex passwords that we’re asked to enter time and time again. We are quizzed about our mother’s maiden name, the model of our first car, and our favorite teacher in the 3rd grade for identity verification. While I fully recognize and appreciate that these ‘inconveniences’ exist to protect my hard-earned money, it does leave me thinking there’s got to be a better way.
Payment options are constantly evolving, from dynamic mobile wallets and payment options from Apple, Google and Samsung, to Venmo, Stripe and wearables. The effort to develop creative and intuitive payment options and a more seamless purchase experiences is exciting, but also creates new vulnerabilities for hackers and fraud.
Looking ahead at the future of payments, it’s clear that the winning solutions will be innovative technologies that simultaneously improve convenience and guarantee the security of personal data. While the playing field is still wide open, we are seeing advancements that make us hopeful we are nearing ever closer to the goal. Exciting innovations in fingerprint technologies, tokenization and even voice and facial recognition software – when implemented correctly – could both increase security and create seamless ways for consumers to confirm their identity.
While we may not see this technology at the local grocery store in the near term, these ‘futuristic’ technologies could become standard practice in a matter of years. Or, true to form in the ever-changing fintech industry, the ‘next big thing’ in payments could be something we haven’t even seen coming. Only time will tell but, until then, companies should continue innovating for solutions that help you easily prove that you’re you without making it harder to spend your money.