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Biometrics - The Future of Payments And Customer Experience?

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What if you could authenticate your payments with a scan of your finger or your iris? What if you could take a selfie to authorize a banking transaction? Would you do it? Set aside all fears, the future of payment authentication is strictly connected to our body.

Biometrics are already considered the most important technology to transform how we make purchases, online and offline. An advancement that will improve security, but also shape a completely different customer experience.

If you take a look at the news of the past months, you will see a pretty obvious red thread: today, the traditional passwords are not sure, if they ever were.

Yahoo has reported three attacks in less than one year, with million accounts hacked using a forged cookie to bypass the user password. The same has happened recently to millions of Xbox and PlayStation accounts.

If your account has been compromised, you not only feel exposed; you are also in danger of losing all your personal data. That usually means other passwords, banking accounts, all sorts of sensitive information.

Traditional passwords are faulty in so many ways. First, they are based on the assumption that people will act smart for his own safety, creating a complex string. The reality is, most of the times the passwords we choose are simply lame (who said birth date?).

Second, they are easy to steal or hack. At the end of the day, they are just a sequence of numbers, letters, and keyboard patterns. Of course, a longer sequence will make a better shield but, then, it becomes harder to remember.

Third, they are inconvenient and somehow awkward. When you have to authorize a payment you do not want to waste your time typing a password made of more than twenty characters and containing upper cases and special symbols. This is customer experience at its worst. 

So, with their illegal behaviors, the hackers have fulfilled a role of public utility: they have shown to the world that we need other means of authentication. Especially when it comes to making a payment. That is why biometrics has become so popular in the last few years.

Philip K. Dick, one of the greatest readers of the future in Science Fiction, in the Mid Sixties wrote a story about a world where all activities would be managed by scanning one’s fingers or iris. You had to guarantee your actions with your own body.

At one point, the main character was not able to exit his apartment, because he had months of unpaid rent, and every single door scanning resulted in a failed attempt. In his dystopian perspective, the author had foreseen what is happening right now with biometric authentication.

Biometric verification is any means by which a person can be uniquely identified by evaluating one or more distinguishing biological traits. Unique identifiers include fingerprints, hand geometry, earlobe geometry, retina and iris patterns, voice waves, DNA, and signatures.” (TechTarget)

Fingerprinting is the oldest example of this type of authentication, and it is still today the most popular form of biometric. According to a 2016 research by Visa, two-thirds of customers want to use biometrics when making payments, because they think payments will be faster and easier.

Biometric identification and verification has created a great deal of excitement in the payments space because it offers an opportunity to streamline and improve the customer experience. Our research shows that biometrics is increasingly recognized as a trusted form of authentication as people become more familiar with using these capabilities on their devices.” (Jonathan Vaux, Executive Director of Innovation Partnerships at Visa Europe)

From the customer's point of view, today biometric measures have two major applications:

  • They can be utilized to log into the mobile app, adding an extra layer of security (i.e. banking apps that use voice authentication).
  • They can be utilized to authorize a single transaction, online via the app or in the physical retail store (i.e. Apple Pay and Android Pay that use fingerprints).

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We see a growing interest, and it is not by chance that Juniper Research has listed it as the most disruptive technology in Fintech for the upcoming years. Today, its success is due in large part to the proliferation of fingerprint readers in smartphones. In the future, though, other factors will get into the game.

One brilliant example comes from MasterCard Identity Check, a new mobile app to allow customers to authenticate and authorize a transaction taking a selfie. The ‘selfie pay’ enable app users to confirm a payment not only via finger scan but also via selfie recognition, showing their face to the smartphone camera.

To avoid any attempt to deceive the authentication process, the system requires the customers to blink, instead of just staring at the camera, to confirm that it is really their face.

We have long said that the passwords we use today are dangerous because they can be hacked and used against our will. What about biometric tech? One constant issue is that, unlike passwords, they cannot be changed. So, they have to be stored somewhere by the financial company to be used and reused without problems or delays.

This poses various questions about the privacy of the process and the security of the data. Regarding the first issue, let’s get back to Jonathan Vaux:

One of the challenges for biometrics is scenarios in which it is the only form of authentication. It could result in a false positive or false negative because, unlike a PIN which is entered either correctly or incorrectly, they are not a binary measurement but are based on the probability of a match. Biometrics work best when linked to other factors, such as the device, geolocation technologies or with an additional authentication method.

That is the reason why biometric payments mostly use a two-factor authentication, a security process in which the customer provides two authentication factors to verify their identity.

Three-quarters of customers see the two-step verification as the most secure means of payments available today. Customers, in fact, are not yet confident that a fully biometric process will be able to defend them against malicious attempts of hacking.

Then, there is the data security concern. Where is all this personal information going? Who is storing it? Are the data protected from hacking? Are there limits on the data usage?

The answers will decide the future of these technologies. Biometric factors are the most personal and sensitive. They can be used to streamline and improve the customer experience but they also lay open to abuse. It is our duty to avoid the worst ‘cyberpunk’ case scenario.

 

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Topics: Innovation Digital Customer Experience Payment Mobile

How Artificial Intelligence Is Disrupting Your Organization

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Whoever reads a science fiction novel ends up thinking about smart machines that can sense, learn, communicate and interact with human beings. The idea of Artificial Intelligence is not new, but there is a reason if big players like Google, Microsoft or Amazon are betting precisely on this technology right now.

After decades of broken promises, the AI is finally reaching its full potential. It has the power to disrupt your entire business. The question is: How can you harness this technology to shape the future of your organization?

Ever since the human has learned to dream, he has dreamed about ‘automata’, objects able to carry out complex actions automatically. The mythologies of many cultures - Ancient China and Greece, for example - are full of examples of mechanical servants.

Engineers and inventors in different ages attempted to build self-operating machines, resembling animals and humans. Then, in 1920, the Czech writer Karel Čapek used for the first time the term ‘Robot’ to indicate artificial automata.

The rest is history, with the continuing effort to take the final step from mechanical robots to intelligent machines. And here we are, talking about a market expected to reach over five billion dollars by 2020 (Markets & Markets).

The stream of news about the driverless cars, the Internet of Things, and the conversational agents is a clear evidence of the growing interest. Behind the obvious, though, we can find more profitable developments and implications for the Artificial Intelligence.  

Back in 2015, while reporting our annual trip at the SXSW, we said that the future of the customer experience goes inevitably through the interconnection of smart objects.

The AI is a top choice when talking about the technologies that will revolutionize the retail store and the physical experience we have with places, products, and people.

The hyperconnected world we live in has a beating heart of chips, wires, and bytes. This is not a science fiction scenario anymore; this is what is happening, here and now, even when you do not see it.

The future of products and services appears more and more linked to the development of intelligent functions and features. Take a look at what has been done already with the embedded AI, that can enable your product to:

  • Communicate with the mobile connected ecosystem - Just think about what we can already do using Google Assistant on the smartphone, or the Amazon Alexa device.
  • Interact with other smart objects that surround us - The Internet of Things has completely changed the way we experience the retail store (and our home, with the domotics).
  • Assist the customer, handling a wider range of requests - The conversational interfaces, like Siri and the chatbots, act as a personal tutor embedded in the device.

As the years pass by, the gap between weak and strong AI widens increasingly. A theory revived by a recent report by Altimeter, not by chance titled “The Age of AI - How Artificial Intelligence Is Transforming Organizations”.

The difference can be defined in terms of the ability to take advantage of the data to learn and improve. Big data and machine learning, in fact, are the two prerequisites of the modern smart technology.

So, on the one hand, we have smart objects that can replace the humans on a specific use case - i.e. to free us from heavy and exhausting duties - but do not learn or evolve in time.

On the other hand, we have the strong AI, the most promising outlook: An intelligence so broad and strong that is able to replicate the general intelligence of human beings. It can mimic the way we think, act and communicate.

The “pure AI” is aspirational but - apart from the Blade Runner charm - this is the field where all the tech giants are willing to bet heavily. The development and implementation of intelligent machines will define the competitive advantage in the age of AI.

According to BCG, “structural flexibility and agility - for both man and machine - become imperative to address the rate and degree of change.” As you can see in the following graph, you should look at the AI through four lenses:

  • Customer needs
  • Technological advances
  • Data sources
  • Decomposition of processes

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First things first. It is important to incorporate the technological advances, gather the different data sources, and map the different processes involved. However, it is way more important to start from the basics, the customers.

Many types of research tend to focus on the tech-side of the moon but there is something you should never forget: everything starts with the customer. This is the pillar of every organization, and it is not going to change because of smart machines.

Know your customer” means that you must to understand their needs, desires, pain points, and behaviors. Your business potential lies in the acknowledgment of the centrality of people.

The AI is a tool, not the purpose. The ultimate purpose is to create the best customer experience, blending technology and emotions so that you can engage your customers, monetize the opportunities, and increase the relevance of your brand.

Everything is connected to the customer:

The opportunity (and risk) of AI is not just in a device that will play a song or order tickets to a concert. The value of systems based on machine learning is based on their ability to sense, communicate, learn, act, and adapt over time and to connect with other systems that do the same so that they can anticipate and act on a range of needs - be they related to medicine commerce, service and support, or customer experience.” (Altimeter - The Age of AI)

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Now that the boundaries between what is human and what is artificial blur, there is one last element that you should never forget. The relationship with your customers is grounded in trust.

Transparency (in the use of data, in the management of the real-time interactions) is essential to win the distrust when the distinctions between human, AI-assisted, and AI interactions could very well disappear.

As Pedro Domingos, the author of The Master Algorithm, once said that the “Artificial Intelligence is not so scary as it seems when it translates into artificial smartness.” 

 

Download The Mobile Engagement Playbook, a collection of relevant insights based on many years of Neosperience's expertise that'll help you to overcome the challenges of the digital transformation and grow your business exponentially.

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Topics: Artificial Intelligence Machine Learning Innovation Digital Customer Experience customer engagement