IBS Journal April 2016
Building bridges to tomorrow: contactless and banking innovation
Contactless is being swiftly adopted across many industries around the globe and the financial services sector is no exception. IBS Journal sat down at a roundtable hosted by NCR to discuss the future of this emerging technology. Robert Johnston, Director of Software
Solutions in the UK and Ireland Financial Services Division of NCR, started pro- ceedings off by pointing to his phone. “It’s the consumer and this device that is accelerating the pace of change today,” he said. Contactless is an interaction method that is all about the experience and creates a greater ability for consumers to interact with their surroundings. “The future of all banking commerce will be done via a phone,” added Giles Suth- erland, Vice President of Strategic Alliances at Carta. “There’s been a lot of hype from 2008 to now but most people believe that it will happen” “We’re at an in-between stage where
backs have a lot of systems that need to be updated, in order to make contactless ubiquitous,” he continued. Brian Bailey, Vice President of Solution
Management at the Financial Services Division of NCR, opined that “sometimes making things easier happens in a way you wouldn’t expect. There’s usually been some trigger point that makes this [contactless adoption] happen across the world.” Bailey pointed towards Transport for
London’s adoption of contactless cards and the Oyster system as one major tipping point. The other is Apple Pay – although it doesn’t do everything, it’s so well publi-
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cised that it’s really driving change in the adoption of this technology. “One of the things we’ve seen across
the world is the loss of consumer loyalty,” Bailey stated. Consumers will go wherever the transaction is easiest. Banking has hit that aspect a lot later in life, but new legislation in the UK now makes it easy to occur in a short timeframe. Banks that offer a different tactic could
have an advantage in the future. Suther- land agreed, adding that consumers may start gravitating towards banks that offer better digital services. “There’s a lot of jock- eying between banks and telcos over who is going to be the one to own [contactless technology],” he said. When IBS Journal put it to the table
that banks have allowed Apple Pay to gain a monopoly in the market for contactless, heads nodded. “Just the fact you go to contactless PoS terminals and it says ‘Apple Pay’” is an indicator of their market position, said Sutherland. “People have been trying for so long to get [consumers] to understand [the technology] but now Apple Pay has come along. The time window for banks is definitely there. Apple came in as a first mover and capitalised on the failed attempts of everyone else and made it seem like it was brand new.” Johnston agreed: “Apple is a great fast
follower, capitalising on someone else’s blazed trail.” Not all is lost, however. In terms of adoption, Apple Pay has stalled in some markets – namely China and Australia – where banks have been first to the punch on the technology. There are
© IBS Intelligence 2016
www.ibsintelligence.com
also more opportunities for contactless than just in the payments sphere. “What banks do have but others don’t
is their data on what consumers like to do. This will create the next level of com- petitive advantage [for banks]. The next frontier will be based around who can use their data the best.” Bailey brought up the issue of legacy
technology – banks have the disadvantage of being very tightly regulated, he says, and their legacy systems hold them back. IBS Journal asked whether the fact that established banks have layers of core systems intertwined like a house of cards is a hindrance. “It’s a real challenge,” replied Bailey. “75% or more of banks’ IT spend is on maintenance and meeting regulations, which leaves them very little room to manoeuvre.” Most banks have contactless-enabled
cards and this is a first point of innovation, said Johnston. Contactless ATM authen- tication allows banks and consumers to gracefully move from the physical to the digital. Especially as the ATM is still the most used banking channel in the world. From NCR’s perspective, the consumer is what drives the company, as they are the common denominator that is pushing regulation and technology. “We’re trying to build bridges from
yesterday to tomorrow for banks,” said Johnston. Whether contactless technology is a firm enough foundation for those bridges to be built upon, though, is yet to be seen.
Alex Hamilton
news
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