Contactless cards: hype vs reality

Visa Europe contactless cards will be issued to two million plus RBS and NatWest UK customers over the next year By the end of 2013, there will be more than 70 million Visa contactless cards in use across Europe.

Mark Austin, vice president - contactless at Visa Europe, says: “Many major merchants like M&S, the Post Office and London’s buses are now accepting contactless payment as the service becomes a High Street reality."

Whilst progress is undoubtedly being made, I'd say the High Street reality is more in line with the following recent exchange between yours truly and a member of staff at my local Boots...

Me: Can I pay by contactless?

Staff member: Yeah.

Me: The terminal looks like it only accepts debit and credit cards.

Staff member (sighing, tapping away at till): There you go, you can use your card now.

Me: Erm, thanks.

Break open the champagne!

Some good news at long, long last.

Retail banks across the globe will see IT spending grow 3.4 per cent, reaching $118.6 billion in 2013. The increase will come as CIOs focus on customer satisfaction and revenue growth, according to Ovum’s latest Business Trends report.

Among the digital channels, mobile banking is the clear IT investment priority in 2013, as retail banks attempt to capitalise on the features unique to mobile, such as location-based services. Mobile services will grow four per cent in Europe in 2013, and rise at a compound annual growth rate of six per cent between 2013 and 2017.

It's good to see banks putting a stronger focus on customer centric technologies and not slashing budgets and laying off staff, which has been so commonplace in recent times. Regulatory compliance is fuelling a significant amount of the investment predicted in Ovum's forecasts, but at the same time there seems to be a definite appetite for investment in digital channels as banks step up their multi-channel strategies.

2013 FStech Awards: shortlist announced

Barclays, RBS, Lloyds Banking Group, Credit Suisse, Temenos, Monitise and BT are among the companies in the running for the 2013 FStech Awards.

Congratulations to all the shortlisted companies. It's a really strong shortlist. As always, there are many great examples of cutting edge technology suppliers and financial institutions making innovative and effective use of technology in such areas as social media, mobile banking, payments, retail banking and data governance.

Next up, the judging day and then the big night on Thursday, 17 April at the London Lancaster Hotel.

You can view the shortlist here.

The Bank of Facebook and the future of payments

Guest blog post by Sascha Breite, managing director, SIX Payment Services

As the way consumers interact with one another is changing, so too are the rules of commerce. Social networking is becoming the prevalent form of communication and, consequently, the likes of Facebook and Pinterest are becoming primary outlets for businesses to reach their customers.

Increasingly, however, these social platforms with large networks are also enabling members to make purchases for a wide variety of goods from games to clothing.  By facilitating compelling shopping experiences and transaction capabilities, social networking sites could have the potential to overthrow the existing market power houses and transform the payments industry as we know it. Just how real is the possibility of a Bank of Facebook and what does this mean for traditional payment players?

Social networking sites typically boast networks consisting of millions of people and so the advantage of doing commerce through these platforms is the reach to a much wider and willing customer base; businesses can easily, and at a relatively low cost, reach their target audience. It is unsurprising then that we are witnessing a move to social commerce. However, as social networks gain users, who spend increasing amounts of their time on these sites, inevitably consumer confidence and trust in these channels is growing. Whilst to date this has opened opportunities for businesses looking to procure their goods via this platform, this also opens the gate for social networking sites to shake up the traditional payments model.

Traditional card schemes currently cannot offer an affordable solution for low value payment acceptance and so allow social platforms - Facebook in particular - to exploit this gap in the market by providing merchants with an alternative and more viable micropayments system through its virtual currency, Facebook credits. In an interesting turn Facebook recently announced that they are abandoning Facebook Credits in favour of local currency pricing. Unsurprisingly, this has caused many to suggest that Facebook payments could be the future of micropayments.

However, before we get ahead of ourselves, it is worth mentioning that Facebook and its counterparts do not have the security credentials that the traditional card schemes can claim. Even one of the most eager adopters of F-commerce, the online fashion retailer Asos, handles payments by redirecting users to an Asos site within Facebook – and reiterates that fact that the company does not then share details with Facebook, clearly illustrating their belief that any issues around security and trust could slow consumer adoption rates.  

The fact remains that Facebook and its kind have yet to suggest that payments servicing is an area they are interested in moving into. At the moment, especially for Facebook, the bulk of revenue comes from advertising space and payments is not a core competency in which they have years of experience. Nevertheless, Facebook has proven it has the capability to move into the payments space. The likes of Facebook are a force to be reckoned with and the payments industry needs to innovate to ensure its future existence.

Same old, same old in 2013?

Happy New Year to one and all! Hope you all had a great festive break.

Just in case you missed them, here are some FS-related stories that broke over the Christmas/New Year period... 

Former FSA chief executive Hector Sants was knighted in the New Year Honours list. Yes, they gave a knighthood to the guy who was part of a system that failed spectacularly. Words. Fail. Me.

A computer systems crash at Lloyds Banking Group left New Year revellers unable to withdraw cash. Customers took to Twitter to vent spleen at being unable to make cash machine withdrawals and use their debit cards. Some also claimed that credit in their accounts had been wiped out. You can read The Daily Mail's typically understated report here.

Wonga (the payday lender behind those comedy OAP puppet ads we all know and hate) ran into further controversy when it launched a new “buy now, pay later” service via retailers’ websites. In November, the company got into a spot of bother when it was accused of “legal loan sharking” by MP Stella Creasy. It was forced to apologise to Creasy after one of its employees used an anonymous Twitter account to attack her, calling her mentally unstable.

Of its new offering, Michael Ossei, personal finance expert at uSwitch.com, comments: "Short-term lending at rates of seven per cent may seem like a great way to ease the burden of a purchase, but there are cheaper ways to fund your shopping. And as well as the overall cost of using Wonga’s new service being relatively uncompetitive compared to some credit card deals on the market, there is a bigger cause for concern  - what happens if consumers can’t pay off their bills in time? Unfortunately, there have been a number of worrying incidents in the past where vulnerable customers have been subject to heavy-handed debt chasing practices. The worry is that this could become more widespread as Wonga expands its offering and becomes more readily available, especially if customers aren’t fully aware that it’s Wonga who they are borrowing from in the first place."

"Although some retailers might believe the service helps their customers – by giving them another way to help pay for things – it could lead to confusion if Wonga’s terms and conditions aren’t clearly stated upfront. Consumers need to make sure they know exactly what they’re signing up to. There is a real risk of mis-selling and unless retailers are careful, they could end up attracting the attention of the OFT," he added.

Merry Christmas one and all!

So here it is, dear readers, my last blog post of 2012 (please, no tears, I know it's tough but we will get through this temporary separation)...I took the November/December issue of FStech to press earlier this month and my last day in the office is today. It just remains for me to tie up some loose ends and attend one last work-related Yuletide party and then I'm done for the year.

It's been an eventful 2012 for yours truly. This has been my first full year at the helm of FStech, after joining from sister publication Retail Systems in June 2011. I've thoroughly enjoyed it and am looking forward to hitting the ground running in 2013 with the FStech Awards (shortlist to be sorted when I get back from Christmas break, followed by the judging day in early February and the big night in April...lots to get through). Thanks to all who have supported and worked with the title this year, including Vendorcom's Paul Rodgers for doing a great job of chairing our Payments Technology Conference in November; and those who have agreed to be on the judging panel for the aforementioned awards: Ian Alderton, Chief Information Officer, formerly Corporate Banking, RBS; Simon Barrows, Head of Financial Services, Glue Reply; Simon Burrows, Director, PwC; Glenn Murphy, Head of IT, London & Capital; Richard Norris, IT Director, Cullum Capital Ventures; and Aksana Pekun, Managing Director and Technology Specialist, Altium.

I'm off to eat, drink and be merry. Happy Christmas and here’s to a prosperous 2013!

FIMA 2012 review

Guest blog post by Chris Bradley, Chief Development Officer, IPL

Unsurprisingly, the principle point of discussion at FIMA 2012 was the area of information management and the rise of its importance within the finance sector. With regulatory pressure driving interest – hardly something the finance industry is not used to! – along with the proposed legal entity identifier which is pushing all businesses to have a growing and willing demand for detailed, even real-time, knowledge, information management was a topic that permeated almost every discussion at the three day event in London.

Of course, increasing awareness and debate around this topic can surely only be good news for the industry. There is clear benefit in those in the finance sector now realising that failure to manage data effectively – and therefore conform to legislative and regulatory requirements – can have catastrophic effects, resulting in imprisonment as well as businesses being shut down. After all, where other sectors, such as pharmaceuticals, have been deploying information management systems for some time, in the finance arena it is a surprisingly relatively new concept.

Therefore, the interesting workshops dedicated to information management at FIMA 2012 were very welcome and apt, however these could have held more relevance through cross-industry comparisons. Had these presentations and workshops shown delegates examples of successful deployments of information management systems and processes in a relatively comparative industry, than those who were slightly on the fence about the need for information management would have left with a solid understanding of how such a system can really benefit a business.

On a related note, the drive for organisations to hire a Chief Data Officer was also highlighted at FIMA 2012. It is becoming glaringly apparent that the role of a CIO (largely though their typical experience) is solely to manage IT systems and infrastructure, and information management rarely therefore goes beyond its protection and storage. In order to instead manage data appropriately as a corporate asset, organisations must therefore hire or internally develop an individual to take responsibility and ensure this data governance – a trend I would actively encourage in the near future.

Overall, FIMA 2012 stoked the coals of a rising Information management emphasis within the finance sector. It is apparent that the industry is thankfully now seeing such activity as a necessity. Whether this is through fear of legislative backlash or a drive to improve efficiency and visibility is largely immaterial, provided there is a recognition that a failure to store, manage and use data appropriately is likely to lead to regulatory or customer service-related horror stories being unveiled at FIMA 2013.