The speed with which banks are adopting consumer-facing technologies is nothing short of remarkable — and they've ramped into overdrive throughout the pandemic. Technological transformation has taken the banking world by storm both inside and outside the branch, and as much as these technologies have been incorporated (particularly lately), there's room to add more.
There is one technological concept that retail banking executives are moving to the front of the line: cardless transactions. Those that haven't already adopted it fully intend to leverage the next-generation technology soon — perhaps very soon.
Every year, ATM Marketplace releases a report on ATM and other self-service technology trends in the U.S. and around the world. In the 2020 version, cardless transactions raised tremendous interest in both industry and banking. Indeed, they were routinely cited as the key technological asset that financial institution executives either already offered or intended to soon.
Furthermore, the report found contactless transaction compatibility was deemed a priority for consideration by banks that didn't yet offer this technology, ahead of biometric authentication, e-receipts, cash recycling, and targeted marketing.
The question is: Why? What makes cardless transactions the next frontier in retail banking?
Convenience is one of the most important decision-drivers for consumers. As a result, businesses in general and banks specifically are constantly under pressure to streamline processes. Cardless transactions — and, by extension, contactless solutions — exemplify the kind of simplicity sought by many.
Manohar Bhoi, vice president of global payment and processing firm Electronic Payment & Services, Ltd., told ATM Marketplace that these kinds of capabilities are indeed in high demand.
"Features that enable contactless withdrawal are the immediate need of the hour," Bhoi explained. "There is a need for technologies that can deliver contextual and personalized experiences during customer interactions with the ATM."
"Banks are constantly under pressure to streamline processes."
To a certain extent, convenience is in the eye of the beholder and is subject to interpretation. As McKinsey & Company point out in their report "Transforming the U.S. Consumer Bank for the Next Normal," financial institutions have always aimed to incorporate convenience into their process and products, but consumers' definition of it can mean different things at different times. In the 1970s and 1980s, convenience meant having a branch in every neighborhood. While brick-and-mortar locations remain a core component of omnichannel banking today, convenience by 2020 standards is more synonymous with digital tools, such as online banking, mobile apps and contactless capabilities at the branch.
Consumer health and safety
Like convenience, health and well-being has always been a universal desire among consumers, but it's taken on added resonance in the context of the COVID-19 pandemic. As a result, Gallup reported that the use of low-contact or contactless capabilities among buyers has risen sharply this year. Restaurants, clothing retailers and health care providers have made these services available and consumer acceptance has been strong. For instance, a survey in May showed that 44% of respondents had used low-contact services with a restaurant "in recent weeks," up from 31% in mid-April and from 26% in late-March/mid-April.
Contactless services have the combined benefits of minimizing the risk of transmitting disease and enabling buyers to get what they need more quickly. Banking executives told ATM Marketplace that cardless transactions are gaining traction as a result.
As the old saying goes, you can never be too careful, and that is certainly the case when it comes to financial activities. Thanks to advancements in biometric technology, the security that was once available in physical cards, like debit cards, is now leverageable through people's physical features, such as their retinas, fingerprints and facial geometry.
For ATMs, ITMs and employee-only access doors that require PIN entry, cards are swapped out for smartphones to gain entry, made possible by placing the phone against the chip reader, near-field communication systems or some other type of scanning instrumentation.
"Cardless technology is a fraud deterrent."
As Bankrate points out, cardless technology is not impervious to data theft, but it makes certain types of fraud that have hit the industry hard – such as skimming and shimming — virtually impossible. Both attacks require physical cards to pull off.
Major financial institutions like Bank of America, Wells Fargo and Chase all offer some level of cardless capabilities to their customers. Will yours be the next to adopt it? As the above-mentioned survey illustrates, more banks and credit unions are investing in this technology, which means failure to do so could leave you playing catch up in implementing the amenities customers either want or expect.
Whether it's this technology or something similar, BranchServ has the experience and specialization to examine your needs and set you up with a solution that supports your customers and staff. Contact us today to learn more about what we do and how we can make your financial institution more capable.