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Archive for the ‘Crazy world of banking’ Category

Forget passwords. Pay with a selfie!

Wednesday, October 28th, 2015

From passwords to two-factor authentication, bio-authentication, and tokenization, both consumers and cybercriminals have forced the online and mobile banking industry to come up with innovative and convenient security technologies. The latest functionality announced to be available to US e-commerce consumers in the middle of 2016 is MasterCard’s new facial recognition-based identification method. Online retailers will be able to authorize a transaction by taking a snapshot of their face and blinking once (to prevent fraudsters from holding up a picture of the retailer and fooling the system).

Particularly popular with Millennials or the ‘selfie-generation’, using selfies to authorize transactions is a clear advantage to passwords/ PINs as it saves consumers from remembering complicated combinations of numbers or letters.

Just like other biometric authentication functionalities, ‘pay by selfie’ is surely on-trend but it remains uncertain how secure the new technology is. Biometrics that rely on static information like face recognition or fingerprints can be easily faked; the case of the German defense minister Ursula von der Leyen’s fingerprint cloned just from photos is a solid proof in this sense.

The retail banking industry is rushing its way in offering consumers innovative mobile technology functionalities but the next generation of mobile banking apps needs to include stronger security features to make cyberattacks impossible.


Finally the Google (Payment) Empire strikes back

Friday, September 11th, 2015

Google’s payment platform using NFC technology, Android Pay, announced earlier this year, has started to roll out in the U.S. today. Google seems to be back in the game of mobile payments with a promising start: over one million points of acceptance and gradually more announced to be joining. Like Apple Pay, the mobile payment solution loads automatically without having to launch an app, by simply unlocking the device. In-app functionalities are to be implemented later this year.

Google Wallet, the digital wallet forerunner in the U.S., will be automatically converted by app-update to Android Pay. However, the app has not been closed down but given an overhaul to serve as a P2P app (send and receive money).

Google’s Android has an impressive 79% worldwide market share, in the global market for mobile operating systems. Therefore, Google’s alternative to Apple Pay and Samsung Pay, has good chances to see early mainstream adoption among others due to retailers’ fondness of rewards schemes announced to become part of Android Pay’s functionalities soon.

It is surprising that it took Google so long to respond to Apple’s challenge. But there is no doubt that on a global scale Google has the power to become the leading mobile payment provider at the POS.


Mobile banking: How a convenient user experience may threaten your clients

Friday, August 7th, 2015

The smartphone business is booming with breakout successes like the iPhone 6 and 6 Plus and the mobile usage is growing at a fast-pace to the detriment of laptops/ internet from home use. It should not be surprising that criminals have also adapted to the new trends and more than 1.3 million unique smartphone attacks have been reported from January to October 2014.

While one of the main causes is the increasing amount of mobile transactions and payments, the multitude of digital communication tools like the real-time apps helping advisers improve communication with their clients also keep clients engaged with their mobile devices. High-net worth clients are attractive targets for mobile security breaches as they mostly manage their wealth while on the way and use unsecured Internet access points (see our report on the mobile behavior of the affluent and HNWI).

But what are the main factors driving security breaches of mobile apps in the banking field? MyPrivateBanking’s recently released report on Mobile Apps for Wealth Management 2015 found that secure client authentication is still being neglected by many wealth managers. Few of the evaluated wealth managers /private banks are using the gold standard to protect clients’ data by making use of a full two-factor authentication procedure plus adding a multi-layered anti-fraud framework. Striving to provide their clients with a convenient, easy-to-access information, some wealth management apps even allow users to log-in with only their 5-digits passcode thus ignoring the fact that these weak security measures make their clients easy prey for hackers who illegally try to access personal data.

One of the main areas of risk, which is often being neglected by banks, is that criminals are targeting not only the secured spaces where transactions are being made by clients but also other apps/features where they are able to identify personal data (for instance address, birthdate or trivial things like shopping coupons). Putting together this information can easily lead to so called identity theft, enabling criminals to break into even better secured systems.

Wealth managers should think hard about an integrated and broad security strategy, even if they have to sacrifice a bit of convenience for their clients to gain gold standard security.


How Starbucks is winning the mobile payments war

Wednesday, April 29th, 2015

Technology giants, start-ups and retailers like Google, PayPal, Starbucks, Square, and Stripe have moved on from just threatening and competing against the traditional banks to dominating the mobile payments arena.

Starbucks is the new model of success in mobile payments with an impressive comeback after the unsuccessful partnership with Square in 2014. The Seattle-based coffee giant has made mobile payment strategy a top priority and continued to invest in its own in-house mobile payment systems. The result is remarkable: over 8 million mobile transactions per week, 16 million active users of its mobile app, which translates into nearly 19% of all mobile transactions in US stores.

The brilliant idea behind Starbucks’ “Mobile Order & Pay” system combines the convenience of a simple payment tool, which works on the majority of smartphones, with the benefit of a well-thought loyalty program. The app’s success is not only driven by the ease of payment (“shake to pay” and give a digital tip to the barista) but also by the remarkable set of supplementary features (loyalty program, manage Starbucks card, send Starbucks gifts to friends etc.).

There is yet no confirmation about a possible white-labelling solution of the mobile payment app. However, ‘Mobile order& pay’ will surely trigger a wave of similar solutions either brought up by tech giants or by other consumer companies willing to pay the price for a bespoke solution. Either way, given the rapid acceleration in mobile device purchases and millennials’ hunger for convenient mobile payment solutions like digital wallets, credit card companies and banks are vulnerable to lose a substantial number of mobile customers.

At MyPrivateBanking we believe that customers will choose a non-bank mobile app over a bank’s mobile solution if it offers more convenience and interesting add-on features. It is not enough for banks to launch their own mobile wallets. To gain market share and penetration banks need to think hard about the smart add-ons for their payment solutions: Loyalty programs, preferential treatment when ordering or buying things in high-profile store chains, and many other innovative features will require banks to think like FMCGs (fast moving consumer good companies) rather than old fashioned retail banks. This will be the hardest challenge.


Latest trend in authentication works with a heartbeat

Wednesday, March 18th, 2015

Well publicized, recent security breaches at giant retailers (Home Depot) and financial institutions (JP Morgan Chase and the European Central Bank (ECB)), have caused waves of panic about the security and privacy of sensitive (financial) data. As this threat seems to be ever expanding and detection of security attacks gets more and more problematic, the Canadian startup Bionym has developed a biometric alternative to passwords, PINs, or other time-consuming security details. The Nymi wristband leaves other biometric authentication methods like Apple Pay’s touch ID fingerprint technology for contactless payment behind. It could be used for numerous applications like unlocking devices, remembering passwords, authorizing transactions, or controlling connected devices. The bracelet has an integrated electrocardiogram (ECG) sensor that enables measuring a user’s heartbeats (the electrical activity one’s heart generates), which is unique to every person. Nymi uses the heartbeat signature to authenticate and confirm the user’s identity. There are three levels of security involved: the heart ID, the armband itself and an authorized authentication device like a smartphone (via Bluetooth and a matching app for Windows, Mac, iOS and Android). The user must wear the bracelet on the wrist and touch its top sensor with the opposite hand for it to work.

UK’s Halifax bank’s decision to test Bionym’s technology to allow its clients to make online banking operations in an easy and secure manner is an exemplary initiative. It shows that biometric identification is the future for online banking security. Over the next three years, we expect many innovations in this space – just like Nymi.


The changing role of wealth advisors

Friday, January 16th, 2015

Remember Inspector Gadget, the detective who solves cases with the help of high-tech devices? Totally futuristic in early 80s, the concept is easily applicable to today’s financial advisors. While particularly the advisory services for the mass-affluent experience a severe threat from the booming robo-advisor industry, we forecast a pressing need for HNW clients’ advisors to redefine their role, too.

In Private Banking, advisors or relationship managers as they are called there, will not disappear as the main interface to the high-net-worth client. Digital innovations like robo-advisory tools, mobile apps, video conferencing, or social media dashboards will support and improve the advisor’s work. Just like her cartoon sibling, the new advisor is combining her human benefits (the emotional intelligence) with the technological benefits (the data, analytical and visualizing part). The new advisor will be – like Inspector Gadget - inspired by Cyborgs, bringing together the best of human capabilities and machine intelligence.

The new advisor offers to her clients support and coaching across all channels in real time in an increasing personalized way. Big data tools help her to identify relevant information to recommend the right products at the right time. Social media compliance tools deliver the compliant framework for advanced client communication, and sophisticated video conferencing tools allow for flexible advice anywhere and anytime. Thanks to dedicated mobile apps, client meetings improve in terms of quality, engagement and efficiency.

Watch out for our upcoming report on digital interfaces for financial advisors this spring!


Top-10 Tech Trends in Wealth Management for 2015

Tuesday, December 23rd, 2014

2014 - what a year! Digitization has only started to disrupt the financial industry through innovations like robo-advisors. Mobile apps for various financial areas have really taken off in 2014: wealth management, financial advisors, and fund management, are catching up fast on the mobile battle field. And social media is quickly becoming the most important customer support channel for banks.

But digital change in the wealth management industry is not slowing down. Here are our top-10 trends for 2015:

10.) Personalized marketing based on big data: Social content mining tools deliver a clear client profile, making it easy and convenient to address wealthy clients’ dedicated needs.

9.) Margins under pressure: Wealth managers must be prepared for an increasing pressure on their margins due to the emergence of automated investment/advisory services and the emergence of commission free brokerage.

8.) Messaging becomes ever more important: Particularly the high-net-worth clients expect to be able to reach their advisors anytime and everywhere they are. Instant messaging services, video chat, social media, and co-browsing are gaining momentum.

7.) Advisors become client communication managers: Thanks to client portals and social media dashboards, financial advisors are now able to manage and monitor their client communication through one single tool, thereby increasing efficiency and productivity.

6.) Security remains crucial: Comprehensive security and privacy protection stay on top of wealthy clients’ wish list with regard to banks’ and wealth managers’ digital offerings.

5.) Advisors become coaches: Through content collaboration tools, financial advisors are able to add value to their clients as real sources of expertise and deliver high quality educational material.

4.) Social finance as a new definition of charity: Banks are increasingly recognizing the benefits – social as well as financial – of social finance as opposed to donating to charities by highlighting the investment character of social finance projects.

3.) Social media become most important channel for customer support: Mainly Twitter and Facebook serve increasingly as a public interface to deliver support to clients – first in the mass affluent and retail segments but later also for the HNWI.

2.) Mobile touch-points will start to see, feel, and navigate for the client: As more and more sensors are added to mobile phones plus new devices are getting ready for apps like smart watches or glasses, mobile apps will use contextual data to deliver value to the client.

1.) Automated investment advice is becoming part of traditional wealth managers: Robo advisor start-ups have made a splash in 2014. But 2015 will be the year of established wealth management firms implementing automated investment advice as part of their own business model.

The whole MyPrivateBanking team wishes our clients and readers wonderful holidays and a happy, successful new year 2015!


Why falling stocks might make your ears ring

Thursday, December 4th, 2014

The question is not if there will be wearable banking but rather when it will arrive in the mass market. While wearable activity trackers already observe every step of an increasing number of people, the use of wearable mobile devices (other than smart phones or tablets) for financial matters is still in its early stages. But there are a few financial services apps already out there for Google Glass and smart watches. Just check here, here and here. These are the early movers but there is no doubt that others will follow soon.

It’s not clear yet which apps and which devices will ultimately be successful: It could be devices like Google Glass, smart watches, or even bracelets for taking the role of contactless payment tools. Even more far-fetched ideas might ultimately come to the market. Why not a partnership between a big fashion house and a stock broker. Earrings, which discretely start to vibrate when stocks fall below a certain level certainly could find their buyers. Therefore, continuous research among its client base, rapid prototyping and closely watching its competition should be on every bank’s critical path to their next breakthrough mobile app.


Social networks offering payment solution: What will banks do?

Wednesday, November 19th, 2014

News about the release of Snapcash surely came as no surprise to us at Myprivatebanking Research. The integration of social media and payment systems is successfully growing and clearly challenging traditional payment players like banks, credit card providers, and older online providers like PayPal. Whereas rumors have made rounds for the last months about Facebook’s plans for a mobile payments system using its Facebook Messenger iPhone app, another popular social messenger provider has stolen the thunder: Snapcash, the product of the recent collaboration between Snapchat and Square Cash (a mobile payments company headed by Twitter co-founder Jack Dorsey), is the latest mobile payment option that allows users to send money to friends via the app by simply typing dollar amounts into new “Snapcash” messages. For now, Snapcash is available to Snapchatters in the United States who have a debit card and are 18 or older.

Trying to keep up the pace with consumers’ increasing demand for highly innovative and convenient products, successful offers like Snapcash or Applepay challenge the banking industry to come up with similar or better solutions. It is true that banks must deal with stricter regulatory guidelines but they should also be aware that consumers have more choices than ever and won’t wait for banks to catch up. But banks – across the globe – seem not to have a strategic response. Will they get frozen out of the online payments markets like music labels have failed to conquer the online music business and traditional book stores never were able to challenge Amazon in online book selling?

Very few banks have already invested in convenient mobile payment solutions aimed at improving the customer experience. Barclays’ Pingit app is one exception. Users can send and receive money via the app without sharing bank account details and even send gifts to friends. But Barclays is the exception and not the rule in the banking industry. Will they finally give up this market to the tech players?


How Spielberg’s AI is becoming real already

Friday, August 29th, 2014

What began as a lunatic idea years ago is entering our pockets today. Cyborgs, intelligent assistants, robots – they have many names but research labs and start-ups all over the world are working on the same idea: combining human and artificial components to end up with efficiency.

These days you cannot surf the internet without coming across several articles on artificial intelligence. This one really caught my attention as it reveals what is going on behind the doors of the labs of Viv, a start-up led by the inventors of Siri.

The crux on which they are currently working is the linking of multiple queries based on a cloud system working like a ‘global brain’. The objective of this kind of knowledge net is that the intelligent assistant should be able to actively learn from the incoming queries and even become able to predict what its user needs next.

Just try to imagine the impact this revolution will have on the finance industry – for instance, an investor could ask his smartphone “How can I build a portfolio with lowest possible fees limiting my expected maximum loss to 10% per year?” instead of meeting with his advisor. Along with an increasingly self-determined client, these changes draw a dire picture of the industry’s future and it will be up to the wealth managers and banks to find new ways for becoming indispensable.