The UK is at the forefront of the financial services revolution. With one of the world’s highest contactless card adoption rates, a thriving challenger bank community and successful open banking initiatives, it’s no surprise the nation’s fintech industry generates around £20 billion in annual returns.
Championing a consumer-centric approach to innovation, there’s a lot to be learned from UK fintech. Fresh from this year’s Innovate Finance Global Summit 2019 in London, let’s reflect on some of the key trends and conversations shaping the future of fintech, banking and payments from the Brits.
Opening banking to biometrics
Open banking dominated a number of conversations at Innovate Finance, with delivering better, more valuable consumer services at the heart of initiatives. While an increasingly global phenomena, the UK is widely considered to be leading the way globally in delivering true open banking, with nine of the nation’s leading banks already live with open services.
But despite the nation’s relationship with Europe (don’t mention Brexit!), it’s still liable to comply with European Payments Directive, PSD2. Under the regulation, banks must implement multi-factor secure customer authentication (SCA) solutions to secure transactions and other financial services. To avoid yet more PINs and passwords, its unsurprising many UK banks are placing biometrics at the heart of their open banking projects.
Sitting in the sweet spot of security and convenience, biometrics can add an extra layer of security without compromising UX and delivery of the true goal of open banking.
The UK cemented its ‘early adopter’ status over a decade ago, becoming one of the first nations to adopt contactless cards. Now, almost 83% of consumer debit cards are contactless, with nearly 50% of all face-to-face payments made with just a ‘tap’.
However, despite the form factor’s popularity, consumers remain frustrated by two things: fear of fraud should their card be lost or stolen, and the £30 payment cap. The introduction of the biometric payment card is a natural evolution: bringing security to the beloved contactless card while empowering banks to finally scrap that pesky payment cap!
Royal Bank of Scotland (RBS) and NatWest’s recent trial announcements of biometric contactless cards were a testament to this, citing removing the payment cap as the major motivation behind the trial. The first of many in the UK? We think so.
Challenger banks, the tech-loving innovators muscling into the traditional banking ecosystem, have had real success in the UK. Players such as Monzo and Starling Bank have gathered real momentum in recent years and are driving forward a new consumer-centric, digital age of banking.
As a result, consumer expectations are at an all-time high; traditional banks are under pressure to deliver greater value and convenience with their financial management services.
Who will ‘win’ between the new Fintechs, ‘TechFins’ (historically ‘tech’ players now entering the financial world, such as Apple), and traditional banks was a central discussion point during our panel session at Innovate Finance.
Certainly in the UK, there’ll likely be no single ‘winner’. Consumers have an appetite for new financial services technologies, but trust remains key. And, as our consumer research proved, this trust still sits with traditional banks.
Keep calm and fintech on?
It’s an exciting time for the UK. Its financial landscape is at an interesting turning point: moving swiftly from ‘talk’ to ‘walk’ in open banking, consumer-centric applications and the launch of new payment form factors.
Biometrics is the “biggest development in card technology in recent years”, adding value to contactless cards, and we look forward to seeing how the nation’s financial services players will utilize biometric technology to add value across other payment form factors and financial services.
One thing’s for sure, Britain’s fintech future is bright.
By Lina Andolf-Orup, Senior Director, Fingerprint Cards