October 18 – New research from leading Fintech analyst, Juniper Research, finds that over 2 billion mobile users will have used their devices for banking purposes by the end of 2021, compared to 1.2 billion this year globally. Growth in mobile banking is being driven by consumer adoption of banking apps the changing way consumers manage their finances.
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September 21 – A new study from Juniper Research has found that the global value of contactless POS (point of sale) terminal transactions, conducted in-store via cards, mobile and wearables, will approach $500 billion annually by 2017; this is up from an estimated $321 billion this year.
August 16 – A new study from Juniper Research has found that the total value of Venture Capital (VC) investment into blockchain technologies and Bitcoin companies totalled $290 million in the first 6 months of the year, with more than 30 startups receiving funding in that time.
Annual Survey of Consumers Shows What’s on Their Minds
By Matt Herren
If you could take a peek into the opinions of consumers and use that insight to better serve your bank’s customers, wouldn’t you?
CSI’s second annual Consumer Survey, conducted in partnership with Harris Poll, recently asked more than 2,000 U.S. consumers ages 18 and older about their banking habits and preferences. The randomly selected respondents answered six questions that shined a light on their main reasons for selecting and retaining their financial institution.
While the survey garnered a wealth of useful information for banks, one of the most interesting aspects of the results was the difference of opinion from three major generational groups: those ages 18-34 (generally considered millennials), ages 35 to 54 (Gen Xers) and ages 55 to 65+. While some of the results were expected, others were pretty surprising.
The following sampling of survey questions and answers gives a glimpse into each group’s general mindset—namely, the percentage who strongly/somewhat agree with the statement posed—pertaining to financial institutions as well as financial services and technology.
Q: I plan to use a mobile wallet application (e.g., Apple Pay, Android Pay, Samsung Pay) within the next six months.
A: According to the results, two in five millennials—or 43%—plan to purchase items using a mobile wallet application within the next six months. That makes them nearly twice as likely to do so than respondents ages 55 to 65+, at 17.5%. And, 33% of those ages 35 to 54 plan to use a mobile wallet in the coming months. That’s no small amount of potential debit card transactions; millennials, for one, now number more than 75 million.
Financial institutions should take notice, and if not already doing so, consider partnering with such alternative payment options as Apple Pay. An eMarketer forecast report on mobile proximity payments shows that mobile wallet transactions are expected to reach $27.05 billion in 2016—and $210.45 billion by 2019. The report’s explanation for those booming numbers is three-fold: a continuously growing user base, an increase in merchant terminal capability and a rise in the purchase of higher-priced products through mobile wallets at point-of-sale terminals.
If your card can’t be added to a digital wallet, your customers will be forced to use another bank’s card. That means potential losses of not only customers, but also interchange income. And with millennials heading into their peak earning years, that loss could be significant.
Q: I feel confident that my financial institution can protect my confidential personal information from identity theft/hackers.
A: Overall, 78% of consumers trust their bank to protect their financial and personal data. But in separating responses by age group, it’s interesting to note that millennials have more confidence in their financial information’s security (79%) than Gen Xers (74%), and only slightly less than respondents ages 55 to 65+ (82%).
This could signal that younger adults, who once were notoriously impassive about financial institutions, are coming around in their trust—and willingness to embrace—traditional banks.
Still, financial institutions must continue to strengthen their cybersecurity framework, to protect not only customer data, but also their own confidential information, networks and reputation. According to Ponemon Institute’s 2015 Cost of Data Breach Study, the average cost of a data breach was $3.8 million, a 23% increase over 2013, and that number stands to continue its upward trajectory.
Institutions can elevate their cybersecurity preparedness by following the elements of the FFIEC’s recommended approach:
- Cyber Risk Management and Oversight
- Threat Intelligence and Collaboration
- Cybersecurity Controls
- External Dependency Management
- Incident Management and Resilience
Q: I believe that chip-enabled debit and credit cards offer a more secure payment method than mag-stripe cards for in-store transactions.
A: Here, more surprises. Of all the age groups surveyed, millennials are the least confident in the security of chip cards, or EMV, at 75%. This is unexpected, since millennials have traditionally signed on as first adopters of new technologies, but it could also be indicative of younger consumers’ desire to move toward the more innovative digital wallet space. As respondents’ ages increase, so does their trust for chip-enabled cards: those ages 35 to 54 weighed in at 80% and respondents ages 55 to 65+, 88%.
Regardless, EMV is here to stay. The fraud liability shift that began last October and places liability with either the merchant or issuer—whichever did not enable EMV—is driving industry adoption.
Plus, thanks to the EMV cryptogram, chip-enabled cards are indeed very secure. The chip serves as a microprocessor that uses dynamic data to securely facilitate the transaction processing of a static card credential—thereby better protecting consumer data for card-present transactions. Financial institutions should work to convey this message to their customers and quell their security concerns.
So, as you work to market products and services to customers of different ages and different stages of life, take note of their feedback—it might just surprise you. To get the full results of this year’s consumer poll, download CSI’s 2016 CSI Consumer Survey Report.
In his role, Matt Herren has employed advanced analytics and data analysis to not only react to fraud, but also to prevent it. As the product manager for Payment Analytics, Matt has expanded CSI’s ability to address fraud through early identification of merchant breaches and fraudulent testing techniques. His work helps to increase bank profitability through fraud mitigation and card portfolio analysis, allowing customers to realize industry-leading results and maximize program performance.
June 13 – A new study from Juniper Research has found that eCommerce merchants and financial institutions will be investing heavily in online fraud detection solutions over the next five years, with annual spending reaching $9.2 billion by 2020, up by 30% on current levels.
June 6 – A new study from Juniper Research has found that smartphone and tablet-based mobile point-of sale terminals will take on a significant role in businesses, handling 40% of all retail transaction value by 2021, up from an expected 12% in 2016.
May 31 – Businesses that want to win, serve and retain customers on digital platforms are increasingly turning to American IT firms who can get them to market faster with more effective customer engagement solutions than offshore providers, according to a new CapTech.
May 3 – A new study from Juniper Research has found that the value of online fraudulent transactions is expected to reach $25.6 billion by 2020, up from $10.7 billion last year. This means that by the end of the decade, $4 in every $1,000 of online payments will be fraudulent.
April 29 – DH Corporation (“D+H”), a leading provider of technology solutions to financial institutions globally, has published a white paper that discusses how the United States is moving towards faster payments. The paper, which was co-authored by PNC and The Clearing House, includes lessons learned from schemes in other parts of the world and shares insights on how U.S. financial institutions can improve their competitive position by preparing for faster payments. The paper also provides real-life examples of how faster payments can be used in business-to-business, person-to-person, consumer-to-business and business-to-consumer settings.
By Steve DuPerrieu
It’s an exciting time in the world of fintech. Technologies and strategies that we’ve explored for years—EMV, branch transformation, omnichannel delivery and mobile payments—are no longer just concepts. These ideas are now very much achievable, making 2016 the year of implementation.