In A Decade of Digital Transformation in 12 Months, 46 C-suite executives spoke with PYMNTS for its Q2 eBook on what the world will look like as recovery rolls on and the next iteration of normal rolls out. In this excerpt, Matt Cole, CEO of IDEMIA, explores how the new era of “digital-first” customer experiences will trigger an evolution in the relationship between identity and payments.
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The year 2020 is one of those years with a clearly defined “before” and “after.” For the last 18 months, we have all had to adapt to a new way of life, where we respect new rules of social distancing, adjust to remote work and adopt new ways to shop and pay. These new habits are not a temporal change, where people will revert to the old ways once the dust settles. On the contrary, these new habits have accelerated the digital transformation trends that were already in play — and they come with new expectations for seamless, contactless and digital-first experiences.
The global pandemic has affected each sector differently, but one effect that is shared across the board is the need for contactless solutions. If we look toward the banking and payment world, the shift toward “contactless” options was a natural way for consumers to protect themselves.
Virtual cards, QR codes and tap-to-pay options allow consumers to avoid handling bills and touching card readers. In addition, such payment options increase the speed of transactions, while improving user experience, security and the quality of services. Today, “contactless” has gone from being a “nice-to-have” to being a critical and essential “must-have” service.
In the future, it’s even possible that the in-store payment experience will be not only contact-free, but even invisible. Cashierless retail experimentations have already started, where people can walk into a store, pick up the things they want to buy and walk out without ever going through checkout or presenting a payment card.
This convergence of physical interactions with digital services will define a new era of “digital-first” customer experiences.
It is important to note that this “digital-first” era will not see the disappearance of physical cards or in-person interactions, but rather the co-existence and continued convergence of physical and digital experiences throughout the entire customer lifecycle. One example of this would be the instant issuance of digital payment cards that enable customers to pay in-store or online while they wait for a physical card to be shipped.
An Evolution in the Relationship Between Identity and Payments
As we see the emergence of more digital-first features, we will also see an evolution in the relationship between identity and payment. The use of biometrics as an authentication factor is increasingly present our daily lives, from logging into phones or computers to accessing sensitive data and even paying for groceries. This type of authentication can be applied when accessing online and mobile applications, during digital onboarding journeys or when performing higher-security banking transactions, such as making wire transfers or applying for a loan. In each of these cases, biometrics provide a trusted means of authentication that is frictionless for the consumer.
In banking and eCommerce sectors, the user experience can be even smoother. In this scenario, users can be asked to prove their identity only when the transaction presents a real risk — for instance, requesting delivery to an unusual address or making a particularly expensive purchase. In these cases, selfie verification via a cell phone or PC could be a very natural and intuitive means of authenticating customers and validating transactions.
It is certainly too early to tell what payments will look like post-pandemic, but one thing is certain: The new habits that have formed around how we shop, pay, consume and interact are here to stay. The businesses and service providers best-positioned to meet these consumer expectations will be the ones that are successful in seamlessly combining contactless identification, authentication and payment options across the consumer journey.