The CEO of INETCO and the head of Barclaycard Payment Solutions share with Mohamed Dabo some key securities issues that are likely to dominate in 2020.
Bijan Sanii, CEO, INETCO
Customer engagement and fraud mitigation will be drivers behind real-time payments
Prime time for real-time. Over the past year, there has been notably more business systems incorporating continuous intelligence that uses real-time context data to improve decisions.
When it comes to banking and real-time payments, there is no doubt that data is most valuable at the moment of creation. There are many real-time levers in play for 2020, but INETCO predicts the main drivers to be:
- Customer engagement – Customers expect instant gratification, immediate response and undisrupted service;
- Revenue uplift – Banks who do not align cards and service offerings, at the right time and through the right channel, risk customer dissatisfaction;
- Fraud and risk mitigation – The more time it takes to identify or prevent fraud, the greater hit on financial loss, customer loyalty and reputation.
In 2020, many banks will be under increasing pressure to protect susceptible customers by identifying payment fraud threats faster and proactively protecting against fraudsters responsible for the rise of sophisticated attacks such as card-not-present fraud, man-in-the-middle malware attacks, application fraud, transaction reversal fraud and multi-vector (rapid succession) cash-out attacks.
We see the following priorities continuing to dominate the mindshare of CISO’s, channel management and fraud prevention teams:
Increasing both speed and accuracy when it comes to payment fraud detection and prevention
The authentication or the decline of a payment transaction is often the defining factor of end customer experience. Yet risk scoring for card present and card-not-present (CNP) transactions is still notoriously inaccurate, often failing to detect high-risk customers while generating thousands of false positives.
INETCO predicts that there will be continued interest in improving data quality and conquering the real-time data acquisition challenges associated with disparate data stores, multiple payment schemas and different update frequencies. Easy access to all transaction message fields will greatly improve the precision of both rules-based alerting and real-time risk scoring models.
Conducting continuous assessment of real-time payments and customer interactions
INETCO also predicts an increased dependency on adaptive behavioural analytics and machine learning models to effectively manage the service and fraud security aspects of every real-time payment. The trend will be towards easier configuration and building of models and scoring so that teams can be equipped to address their specific payment eco-system threats and quickly show the ROI.
The ability to examine transaction performance in milliseconds, rebuild individual customer risk models on the fly and extract anomalous behavioral patterns based on past card transactions will have a huge impact on customer experience, operational efficiency, fraud loss and organisational reputation.
Supporting collaboration both internally and externally
Aristotle once said, “The whole is greater than the sum of its parts.” When it comes to guaranteeing that every payment transaction completes as expected, this statement could not be more accurate.
This is why more financial organisations are looking to adopt cross-functional software platforms that help to break down the barriers of operational and infrastructure silos.
In an effort to combat increasing complexity in payment ecosystems, there is a major trend towards network operations, application support, channel systems management, fraud and security teams collaborating on everything from infrastructure design to incident response.
2020 will continue to see these teams exploring new ways of working together to drive efficiency, reduce operational costs, speed up fraud detection and support the unified goal of delivering the best end-to-end customer experience possible.
In addition to cross-team collaboration, 2020 may also be the year where we see more cross-industry collaboration and intelligence sharing – a banding together against fraudulent activity.
Kirsty Morris, Director, Barclaycard Payment Solutions
The payments landscape in 2019 was defined by an increased focus on customer safety, sustainable shopping habits and on maximising value.
While the demand for a completely frictionless, seamless payments experience remained strong, we saw push back from regulators trying to protect customers from cybercrime – a tussle that will gain momentum in 2020.
Likewise, we saw the beginning of a move towards more mindful shopping practices and a focus on seeking out value from purchases, two trends that we expect to take centre stage in 2020 and beyond.
A push on customer safety
The introduction of Strong Customer Authentication (SCA) legislation was expected to have a huge impact on merchants when it came into force this year. However, the granting of an 18-month implementation extension has meant that becoming SCA compliant will remain a focus for retailers throughout 2020.
Focused on mitigating fraud and cyber threats, SCA requires all EEA transactions to go through a two-factor authentication process, unless they qualify for an exemption. On the spectrum of speed and customer safety, the legislation clearly sits close to the latter.
The challenge for merchants in 2020 will be to get compliant while still maintaining the ability to provide a great customer experience. This will be a delicate balance, requiring significant planning and testing. It’s essential that steps are taken now if the March 2021 legislative deadline is to be met without any adverse effects – to merchants or their customers.
2020 will also see a continued rise in the use of biometrics in payments, as consumers become more willing to provide a fingerprint or eye scan as verification. While it’s important not to consider the use of biometrics as a ‘silver bullet’ when it comes to customer authentication, it could have an important role to play in the roll out of SCA.
A focus on sustainable shopping
We know that the majority of UK consumers want to reduce their environmental footprint with their shopping habits, with just under half concerned about the impact of over-ordering and returning goods bought online.
Our research also tells us that one in ten customers has actively reduced the amount they order and return because of this.
As customers pay more attention to sustainability issues when it comes to how they shop, we are seeing a rise in their calls for retailers to do the same. Businesses that listen to their customers and make changes to reduce their environment impact in 2020 and beyond will undoubtedly increase their appeal.
A move towards maximising value
Another key trend to shape the 2020 landscape will be an increased customer focus on value. We know this from our recent research, which found that 61 per cent of UK adults state they are seeking value for money from their purchases.
For everyday items, such as washing up liquid or laundry powder, we’re expecting to see more people seek out value by turning to discount stores and supermarkets. However, on the other hand, we will see a growth in in areas where consumers are willing to spend more money, such as experiences.