It’s like your credit card, only better

Gerhard Oosthuizen|07 March 2019
It’s like your credit card, only better

In the “old days” – the days of magnetic stripe cards – we proved that we were the owners of our cards with a handwritten signature at the point of sale (POS). Then came the chip cards, for which we switched to using a PIN number in card-present situations to authenticate ourselves as the card owner. This is not the case in the USA, however, where using PIN numbers for credit cards and POS purchases are rare, and cardholders continue to sign slips. Even this though, is becoming increasingly rare with US card issuers dropping the requirement for a signature without replacing it with a PIN.

While this may sound like a security concern, it is not as serious as it initially appears. Like magnetic stripe cards, chip cards are issued to and activated by cardholders in a controlled and relatively secure way. Unlike magnetic stripe cards, however, chip cards are much harder to copy and easy to disable if stolen. It is this greater assurance that is lifting the burden of signatures and PINs from shoppers at the point of sale.

What this powerfully illustrates, is the weight issuers give to a tangible item as the unique factor of possession, as well as the importance of consumer convenience.

In card-not-present situations, it is much harder for banks to validate a consumer’s true identity. The possession factor is less assured, because, after all, we are only inputting strings of numbers. To prove we are the rightful cardholder, we must authenticate ourselves by another means. What further complicates matters is that unlike in the physical space, where the card as a payment method is ubiquitous, there is no comparatively universal payment method in the digital space.

But the widespread adoption and computing power of the mobile phone means that a solution might already be on hand. Ticking the boxes of security and convenience, the mobile banking app has the potential to become the payment tool of choice and unseat the credit card from its long-held top slot.

The rise of the mobile banking app

The use of banking apps has taken time to gather momentum in some markets. A reason often cited is the fear of fraud and identity theft. This is understandable when you consider that securing a banking app with a password and user name only goes so far in guaranteeing the factor of possession. As a result, banks often err on the side of caution, avoiding rolling out more innovative (and hence generally more risky) services and products on the app. They also try to solve the assurance problem with additional security techniques, which can be expensive, and usually impact usability. Consequently, the whole consumer experience is far from ideal.

But what if you could securely use the mobile phone as a factor of possession? It would force the hidden digital criminals back into the physical world, making any theft a far more perilous endeavor. Additionally, the consumer is now actively involved in approving a transaction, providing an anchor to their digital journey and experience. This also helps to create a level of trust between the bank and consumer, building a durable relationship that can move “beyond banking”.

Digital certificates and encrypted communication channels go a long way to increasing your level of assurance. The ongoing battle for the banks between security and customer friction can finally be laid to rest, which is a win for everyone concerned (well, except the cybercriminal of course)!

Suddenly, the mobile phone becomes an extremely valuable commodity. It becomes your passport to all types of digital experiences without the hassle of unnecessary authentication requirements. Mobile banking apps are easy to use, faster, cheaper and safer than other traditional methods of banking. One of the biggest advantages, however, is their ability to facilitate financial inclusion. People who do not have access to a physical bank branch or do not have a formal address (which is usually required to open a bank account), can now be part of the formal banking system just by simply having a smart phone.

These days, with the certainty of a trusted communication channel at its foundation, mobile banking apps provide far more than just being able to easily access banking functionalities. They are enablers of new forms of banking and commerce that will not only transform the banking industry but will also revolutionize our lives. From applications, approvals and accounting, your finances are now available 24/7, from anywhere in the world, at the tip of your finger. It’s like your credit card, only better.

Share

About the author

Gerhard Oosthuizen

Gerhard Oosthuizen

CTO

Gerhard provides the organizational and operations heft to turn vision into reality. His role at Entersekt represents the CTO function in its purest and most exciting form. Our purpose is, after all, to design and build high-performance, market-leading software and support systems for an international customer base with extremely high expectations.

Subscribe to our newsletter for our latest news, press releases and events

logo entersekt

Entersekt is an international software development company based just outside of Cape Town, South Africa.

We are leaders in authentication, app security, and payments enablement technology, offering a highly scalable solution set with a track record of success across multiple continents.