Mobile Money
The global financial sector is witnessing a significant transformation due to technological progress and the role it has played. Over a span of decades, various technological innovations have led to new business models and products including new methodologies to conduct financial transactions; from the invention of ATMs to Core Banking Systems and now Peer to Peer Lending. In the recent decade, technological progression has exponentially increased as compared to past decades. The race of innovating a financial product equipped with technology having more efficiency and more customer centric has led to introduction of new business models.
Fintechs are one of the main reasons for increase in financial inclusion in developing countries. The conventional brick and mortar structure of the banks is not cost effective due to higher fixed and maintenance costs. However, the cost effective innovative solutions used by the fintechs have made it possible. One of the prime examples is DFS amalgamated with mobile phone technology.
The most successful case of mobile money is M-Pesa in Kenya. At least 25 million Kenyans use this service which transacted US$25 billion in 2015. To put into perspective, this was equivalent to 44% GDP of the country. Mobile money has also empowered women by providing them tools related to privacy, monitoring and control. Various studies have shown that mobile money has enabled womens’ earnings to receive, safeguard and invest in better avenues like childrens’ education.
In addition to mobile money, mobile phones have enabled digitall payment services. Digital payment services include utility bills payments, government taxes/fines payment, donations to charities etc. for the utmost convenience of the payer. In addition to the convenience, digital payments also reduce costs for both payer and payee, alongwith increase in transparency and privacy. Lower transaction cost is a game changer in the financial markets. The benefits of digital payments have been highlighted in various studies which were conducted over a span of years involving a variety of stakeholders’ perspectives; from convenience of customers to transparency of payments to encouraging bank-shy customers to join formal banking channels thus reducing cash based transactions.
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Biometrics
A biometric is a representation of characteristics of a person such as fingerprints, voice, face or iris pattern. Biometric characteristics are unique for every individual and difficult to forge which is why biometric verification and authentication is commonplace in immigration control, law enforcement and forensic studies. Many banks worldwide are already using biometrics with their banking systems to authenticate employees and customers and among all banks utilizing biometrics, 52 percent are located in Asia. Japan has more than an estimated 15 million customers using biometric authentication for banking transactions. Banks in Mexico, South America, Africa and the Middle East are also moving towards the use of biometric identifiaction technology because of its popularity with consumers and ability to offer more security than traditional Personal Identification Numbers (PINs) and passwords.
Biometric solutions are the systems, processes and technologies utilizing biometrics for the purpose of identification or verification of individuals in different applications. Biometric technology is slowly replacing traditional passwords and token-based electronic access, signature-based branch service access and PIN based access in mobile banking and at ATMs. Financial service providers are using finger print biometrics for customer identification in their branches because it delivers quick results that are suitable even for the busiest of branches. Some of the benefits of using biometrics in banking are:
- Protecting banking information
- Fast, secure and accurate branch banking/customer service
- Protection against insider fraud
- Secure online banking
- Audit trails
By using biometric technologies, financial organizations are enhancing their Know Your Customer (KYC) procedures for better customer experience. Bioemtrics has already hit the mainstream with the advent of more and more devices currently using biometric authentication and this technology will gradually become the focal point of the improved KYC process.
[box type=”note” align=”” class=”” width=””]The writer is a Karachi based freelance columnist and is a banker by profession. He could be reached on Twitter @ReluctantAhsan[/box]