29 March 2017

FUTURE TRENDS - Cardless ATMs and the Continuing Development of Fintech

(City National Bank)
Less than a generation ago, cheques were ubiquitous.

In 2000, cheques were used in more than 40 billion US transactions, and by 2012 that number had plummeted by more than 50%.

In contrast, the use of debit cards skyrocketed.

But with the rapid development and adoption of fintech – technology that enables digital financial transactions – debit cards may face their own rapid end.

Multiple coexisting pressures drive the potential shift.

On the one hand, there is pressure to find an alternative to debit cards, and to introduce technology that is seen as more secure and reliable.

Banks have been dealing with a significant decline in trust for years now, while fintech companies have been gaining trust.

And debit card fraud is a concern for many users.

Although chip cards have reduced the frequency of debit card fraud, they have not eliminated the risk, and consumer trust remains low.

On the other hand, rather than pushing away from consumer distrust and faulty technology, is the positive draw of new technology and the many opportunities opening up within the realm of wearables and bearables – the portable, personal, personalizable, Internet of Things that users either carry with them, or wear as watches, necklaces, or other accessories.

Even Siam Commercial Bank Pcl, which is a 1000-year-old institution in Thailand, is excited about the potential in this digital future.

They’re working on a comprehensive app that would go beyond day-to-day banking and allow users to do everything from finding and paying for entertainment, to becoming a major portal for businesses attracting and engaging customers.

Those types of major banking redesigns are coming to banks globally, but for now, in North America, users can anticipate a smaller but no less momentous shift as banking cards go the way of checks.

And what will replace them?

JPMorgan Chase, Bank of America, and Wells Fargo all either have plans to introduce cardless ATM transactions within the next year, or have actually rolled out the technology in test cities.

Canadian bank BMO introduced cardless ATM machines in some US locations last year, and Spain has had them since 2011.

PayPal also offers some ‘cardless cash’ services, and both Apple Pay and Android Pay have introduced tap technology in both phones and watches.

Mastercard and Coin have also teamed up to offer wearable options.

Most of these ‘wearable and bearable’ IoT technologies rely on near-field chip technology, a growing tech sector that is set to take off in 2017.

There are security risks that come with the new technology, particularly because the IoT itself introduces risks.

Connected devices are often only as secure as the least secure device in the network, and that can leave mobile users open to threats.

Despite these risks, the potential is exciting.

Cardless ATM transactions take a fraction of the time that traditional transactions do, and the prospect of robust and comprehensive financial apps that streamline and secure the payment process across multiple types of purchase is definitely appealing.

About Tiffany Sostar
Tiffany is a published academic, an editor with the Editors Association of Canada, an independent scholar and researcher, and a self-care and narrative coach. She is particularly interested in the intersection of technology and identity - how our tools shape our selves and change our stories, and in how the nature of work is changing as we incorporate more technology into our daily lives.

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