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EDITOR’S QUESTION
ROB OTTO, EMEA FIELD CTO
AT PING IDENTITY
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D
igital transformation is interesting
in that it’s mostly a consumer-led
revolution. As technology and
connectivity become more ubiquitous, cheap
and easy to use, businesses are finding
that customers expect simplified access to
services across a variety of digital channels.
Payments play a critical role in many of
these interactions and the associated
demand for easily-consumable payment
services is necessitating innovation across
that industry.
One of the interesting side effects is the
de-monopolisation of payments. Due to
the complex, inflexible nature of legacy
payment processing systems, a relatively
small number of players were able to
leverage their significant investment in the
appropriate technology in order to corner
the market. The emergence of legislation
(such as the European Union’s ground-
breaking Second Payment Services Directive,
or PSD2) is forcing change, with new
channels for payment initiation opened up
through standardised APIs.
PSD2 was introduced to open up competition
by breaking monopolies and making payment
services a commodity that any authorised
entity can access. All banks will be mandated
to provide API-based access to payment
initiation capabilities that third parties can
integrate into their own user journeys. This
new approach allows banks to remain in
control of the process of authenticating the
account owner, while preserving privacy
towards the third-party provider. This allows
us to move beyond the old model where a
payment card number essentially became
a proxy to a user’s identity, to be used (and
potentially abused) at each merchant’s whim.
www.intelligentcio.com
PSD2 offers banks the ability to develop
innovative authentication solutions for their
customers that improve overall security
and then to incorporate these flows into
payment processes triggered by third parties.
Banks have a unique opportunity here to
increase stickiness and improve customer
retention if they get this part right – and
many are looking at approaches that
incorporate mobile apps and biometric
authentication as a key part of the payment
authorisation process. Tying the process
of authorising payments together with
the same platforms used to secure access
via other digital channels is the end goal.
This provides best economies of scale for
the banks and allows them to innovate
around this single authentication service
and also to reduce friction for customers by
incorporating behavioural and risk factors
into authentication flows.
Being able to make a truly intelligent
decision as to what exactly needs to be
done to safely identify a customer each
time they interact – whether it’s approving
a payment, accessing an online banking
site or even dealing with a customer service
agent over the phone – is a goal-driving
innovation across the payment industry
and beyond, which is ultimately great news
for consumers. n
INTELLIGENTCIO
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