What do you view as the biggest challenge in serving unbanked markets?
Focused on convenience, this is the first of a three-part series on convenience, financial inclusion and advocacy – and lessons FIS is learning in its quest to support global goals of providing financial access and education to underserved and unserved consumers and businesses. In the context of this article, convenience enables consumers, regardless of where they live or who they are, to access their finances anywhere at any time.
Convenience is defined as a thing that contributes to an easy and effortless way of life. Walk back in time with me:
• Early 1900s: the first AC unit is invented – since I call Texas home, and summer is fast approaching, air conditioning is very close to my heart.
• 44 years ago: we saw the very first mobile phone
• 25 years ago: DNA fingerprinting is invented
Fast forward to today, and we couldn’t imagine going through the day without our cell phone in tow – using it to initiate an ATM withdrawal while standing in an air-conditioned branch and using our thumbprint to validate our identity. What I find funny is for those of us who didn’t grow up with a cell phone in our hands, we view this as a convenience. But for my kids, it’s just a normal part of their lives.
Travel with me to London. I was there last month on a business trip and was able to use digital methods the entire day to complete everything I needed to get done. My Uber app helped me get to my hotel where I’d already checked in during my ride in from Heathrow. My digital room key unlocked my room right from my phone – how cool is that? I used an app to help navigate the Tube and later paid for dinner using my mobile wallet. I was able to save time and avoided switching over to another currency – a double time saver.
Engineering the invisible payment
Globally, digital technologies are increasingly enabling convenient transactions, which allow experiences – instead of payments – to take center stage. Wearables such as Disney’s MagicBand bracelets and Dorney Park’s FastPay (prepaid) wristbands represent prime examples of how payments are engineered to become invisible. Think back to the times when you had to stand in line and estimate how many ride tickets to buy for X number of kids and pull out your wallet at concession stands and souvenir shops. Think about all the time we spent doing this instead of actually enjoying the park with our kids (and now my grandkids)! Payment wristbands shorten those painful waits and eliminate the “lost ticket tragedies” that we’ve all been party to at least once.
You may have heard how FIS is partnering with Minor League Baseball (MiLB) franchises as they are adopting our digital payment solutions to improve the fan experience. You can use your mobile phone to pay for parking, buy your ticket and load up at the concession stand. Plus, you accumulate loyalty points that further enhance your experience and incentivize your return visit to the ballpark. This means more time at the park and less time in the parking lot for the whole family… unless, of course, you are tailgating.
FIS is will also help MiLB teams identify employees and provide simple options to pay them on gameday. The solution also provides a cashless per diem option to players and effectively manage day to day expenses, including merchant processing and POS with mobile card readers.
There is so much talk told about the Alipay payment service that has been introduced in overseas airports that are hot destinations for Chinese tourists and business travelers. Think about all the tourists that travel to unknown airports every day. A traveler could use Alipay to skip the hassle and expense of currency conversion at shops in the airport, then Alipay would send reminders to the traveler to arrive at the gate soon. After the traveler lands, he or she can use the location-based features catered specifically to the traveler and find a delicious place for dinner before checking into the hotel that was booked through – you guessed it – Alipay.
Convenient identification through biometrics
Biometric technologies – i.e., thumbprints – are becoming commonplace in countries such as Brazil, India, Africa and Saudi Arabia to verify identities and access cards and accounts. In Africa, MasterCard recently deployed thumbprint identification for credit cards. Individuals must identify themselves through thumbprints before a transaction is initiated and authorized – safer than a signature or even a PIN and more convenient than pulling out a driver’s license. Just a little added security on a card helps consumers rest a little easier at night.
Biometrics are all about fraud reduction. Fraudsters are adapting and moving their focus – just one incident of fraud costs $2,712 for the financial institution and $188 for the consumer, according to Javelin. To help combat fraud, FIS is launching an identity authentication solution that can be used by consumers across financial institutions of all types and sizes to open new accounts, access existing accounts and make secure payments. This solution will replace the use of passwords and other high-friction methods of authentication by leveraging advanced data analytics and leading authentication technologies such as device profiling and biometrics.
Convenience and financial inclusion
From African villages to rural India, financial inclusion has been hard to achieve for numerous reasons ranging from lack of sufficient funds to open and maintain a bank account to hard-to-reach bank branch locations. Digital technologies facilitate convenient and less expensive transactions for the underserved and unserved, according to the World Bank.
Although barriers related to infrastructure and financial literacy pose challenges, clever solutions are being created to overcome obstacles. Jared Cohen, the futurist who co-founded Google Ideas, tells a story about Masai villagers in a rural area of Kenya, where there is no electricity. Despite poor infrastructure, villagers created a way of marketing their livestock using cell phones. Each week, a man from the village gathers the cell phones and takes them to a hotel in Nairobi to be charged. Digital technologies are lifting local economies and encouraging interaction between different communities.
In Brazil, cash remains king, especially among the estimated 55 million unbanked adults. However, mobile devices are becoming game changers in Brazil by democratizing Internet access and e-commerce. Exposed to the Internet, unbanked consumers want access to online shopping, which often offers better deals than their bricks-and-mortar establishments. In Brazil, thousands of convenient access points are available to convert cash to prepaid cards or upload cash to mobile wallets for online and offline use.
In the U.S., Amazon Cash is joining Walmart’s “order online and pay cash at the store” offer and PayPal My Cash to compete for unbanked consumers’ business. Amazon is counting on partner drug and convenience store retailers to upload cash to Amazon’s smartphone app. If a consumer doesn’t have a smartphone, a bar code can be printed and taken to the participating store for scanning into the system.
Digital drives convenience
These examples underscore how leveraging digital supports convenient payments globally for both banked and unbanked consumers, but there is still so much to do. Stay tuned for further discussion on initiatives around the world that are successfully fueling financial inclusion and the roles that banks play in boosting local economies.