eFinance

Technology in banking continues to grow at a rapid pace. At the forefront, we have come to expect a secure environment and easy-to-use online and mobile banking solutions, but there are so many exciting technological changes in store for the banking industry – one that depends on technology more than most.

Banking continues to change as we move into 2017. To think, the ATM was just introduced to the United States in 1969 – and mobile banking on apps has only been around since 2010. Because of rapidly improving technology and increased customer demands the banking industry faces several unique challenges. As a financial services IT consulting expert, we examine each of these challenges and how banks can overcome the hurdles technology in banking poses to them on a daily basis.

Lack of Technology Expertise

For an industry that depends on security more than any other industry in the world, financial services companies are lacking when it comes to understanding technology in banking. A recent document put out by Accenture.com states that among 109 of the largest banks in the world, 43% don’t have any board members with professional technology backgrounds and only 3% of their CEO’s have a background in technology. When it comes to understanding security concerns and implementing truly impactful strategies to evolve and adapt to the ever-changing landscape of technology in banking, these numbers are quite alarming to us.

Financial Services IT consulting services are definitely needed in the banking industry to help key decision makers improve digital processes and understand their risks.

Going Digital

For an industry built on personal interactions, the human element of banking is unfortunately on the way out. Customers demand simplicity and don’t want to spend their Saturday mornings at the branch even if it’s a quick in-and-out visit.

Branches are disappearing while 100% online banks like Ally continue to pop up and thrive.

It’s one thing to have a digital presence, but showing off is half the battle. User experience needs to be seamless between desktops and mobile devices, while additional features like mobile check deposit and bill pay are in high-demand.

Maintaining a Secure Environment

Banks need to be secure both online and off while the security hurdles facing banks are countless. Transitioning to pin and chip cards, enabling an SSL online, keeping up with demanding regulators, managing remote workers, implementing biometric security measures and other authentication protocols are all aspects that banks need to consider when it comes to security.

The banking industry is 300% more susceptible to cyber-attacks than any other industry. In 2014, JP Morgan Chase, one of the biggest banks in the world fell victim to an attack compromising 83 million records that could have been avoided had the proper protocols been in place.

Undoubtedly BYOD and work from home policies need to be extremely well thought out to work in an industry that deals with so much confidential information for so many people.

Adapting to Growing Technology that will Change the Industry

While cash may always be king it isn’t going to be making a comeback anytime soon. Debit cards may be next to go out the door, as bitcoin, PayPal, Apple Pay and other new payment methods surface in the future.

Along with how people pay, technology in banking needs to adapt to considerations like the internet of things, with multi-factor authentication including biometric, facial recognition and other futuristic password replacement measures coming to the forefront.

When a bank doesn’t have the expertise or time to keep up with the ever changing world of technology in banking, a Financial Services IT Consulting expert needs to step in to allow those crucial needs to be addressed.

Trust a Financial Services IT Consulting Expert

A profitable financial institute depends on efficient operations, solid risk management and responsive IT solutions. With a team of IT experts with a proven handle on IT in financial services, ThrottleNet can help banks, credit unions and other financial institutions in the St. Louis area eliminate risk, improve processes and take the busy work out of managing technology in banking.

As a financial services IT consulting expert, we understand the vital software programs that financial firms depend on every day. Along with developing data backup solutions and planning for unthinkable disasters, businesses depend on ThrottleNet every day.

Contact us today to learn more about how ThrottleNet can be your financial services IT consulting expert.

, we wrote about the future of credit cards and how pin and chip technology will potentially cut down on data breaches, as well as the challenges of a nationwide rollout.

October 1 has come and gone, and Visa and MasterCard have made good on their promise to equip their cards with the pin and chip technology that has been present in Europe for years.

The full transition to pin and chip technology (EMV cards) has probably been harder on retailers than consumers. Banks have already, or will inevitably, send consumers new cards with an explanation of the change, but not everyone is aware of these new requirements.

How many times in October have you been to a store and swiped your card through the magnetic card reader even if your card is equipped with EMV technology and the terminal is as well?

We’re used to swiping credit cards, not dipping them at self-pay terminals.

Less than 1/3 of retailers have already made the switch to the EMV method, and even with more inevitably on the way, utilization probably won’t be near 100% until around 2018.

What Makes EMV Cards More Secure

When you swipe a credit card through a magnetic card reader, the system stores card data in its system. Over the years, hackers have been able to break through these systems and obtain card information of previous customers. That’s how all of those big retailer data breaches, from Target to Home Depot, occurred.

EMV cards create a unique code with every transaction, making them much less vulnerable.

The Push for Pin Security with EMV

It’s always been swipe then sign with credit cards, and those two things have at the very root of most data breaches.

However, when a card is physically lost or stolen, an EMV card is essentially useless, in that many retailers still require signature verification rather than pin verification.

Target, a brand that is expectedly uneasy about anything related to a data breach these days are already requiring pin numbers to be provided on EMV transactions just to add another layer of security.

If on top of pin verification, a four-digit pin number is required, that essentially makes it much more difficult to use a card no matter how it was obtained.

In Europe, EMV is already the norm, as is pin verification.

Some argue that pin and chip technology just adds an unnecessary expense to small businesses who have always gone about things the same way, but we’re in favor of protecting consumers and moving the technological world forward with EMV technology.

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At ThrottleNet, we’re always coming up with fresh insights on technology, the information technology industry and much, much more. Read our past blog posts, visit us on Facebook or check out our TNTV series on YouTube. Be sure to also watch TN Tech Talk live on Periscope Tuesdays at 2 p.m. CST!

By George Rosenthal

First it was the launch of Apple Pay. Then Facebook announced the option to send money to friends by Messenger. Now here comes Samsung Pay.

Samsung’s goal is to grab its share of a reported $50 billion mobile pay market that is expected to grow to $142 billion in four years.

According to reports the new Samsung Pay will be similar to Apple Pay. Both will support NFC-enabled payments, a sort of industry standard that allows two devices placed within a few centimeters of each other to exchange data. In order for this to work, both devices must be equipped with an NFC chip.

Samsung users will be able to use the fingerprint sensor on the Galaxy S6 to authorize transactions. Samsung’s process may require a few more steps than that of Apple however. Apple Pay only requires customers to tap their iPhone on the terminal and touch their finger to the TouchID sensor to complete the process.

Overall is there really a difference? Samsung is said to support point of sale terminals used for older magnetic strip credit cards. This is through a technology called magnetic secure transmission or MST.  The technology generates magnetic fields to mimic credit card swipes.

MST may not make much of a difference in the U.S.  Here retailers are hurrying to comply with existing rules to change their PoS terminals to accommodate more secure chip-and-PIN credit cards.

These new terminals will also support NFC, which means all retailers will have the required machinery needed to support Apple Pay before the year’s end.

Where Samsung does have a presumed advantage is in developing countries. While developed nations are moving to chip-and-PIN technology, retailers in emerging markets are not likely to upgrade to NFC terminals.  In those countries consumers still widely use the magnetic strip cards.

And while Apple Pay is supported by only 200,000 merchants in the U.S., Samsung is claiming that 30 million merchants will be able to accept Samsung Pay payments at launch. Customers will still need a new Samsung Galaxy S6 though to make it work.

What may change the game is a new fingerprint mobile payment service Samsung has just announced.

The service will first be rolled out in South Korea and then is expected to be launched internationally.

This biometrics authentication solution has received certification from the Fast IDentity Online (FIDO) Alliance, an international standard setter for online authentication, which will allow it to expand the business globally. The certification is called FIDO Ready.

The FIDO Alliance has around 190 members, including Samsung, Google, Microsoft, Visa, and PayPal.

While much hype has surrounded mobile pay services in the past few months the service has many limitations.

Apple Pay is only available if you have an iPhone 6. The same holds true for Samsung where the previously mentioned Galaxy S6 is needed to complete transactions.

A report by InfoScout and PYMNTS.com published in TechCrunch, https://techcrunch.com/2015/04/19/the-year-of-mobile-payments/#.su0xax:4ZJq, revealed in March that 85% of iPhone 6 users still have never tried Apple Pay. Not exactly a ringing endorsement.

Still the market for this technology remains huge. It opens the door for more advanced applications like biometrics and will no doubt get more traction as the battle for mobile pay supremacy heats up.

By George Rosenthal

The government is promising to make your credit cards more secure. In fact they are going to require that every card have an embedded chip built-in by fall of 2015.

The goal is provide better security than the old swiping method and hopefully avoid the problems of fraud caused by hackers at Target and other retailers.

The old swipe machines will eventually be laid to rest. So sometime probably after October, 2015, retailers will be liable for fraudulent purchases as a result of using one of the older swiping devices.

Every other economic power nation uses these chip cards, the U.S. is the last to come online. Why?

Credit cards companies have fought this due to the pricier expense of card production. Payment terminals are also costly to upgrade causing retailers to turn the other cheek. The complexity of the entire U.S. credit card system is also an area of concern as the two main credit card players, Visa and Mastercard, are interfaced between retailers seeking easy transactions and banks seeking secure transactions.

While adoption of chip cards has slogged along, fraud in the U.S. has risen. Those magnetic stripe cards, in use in the U.S. since the 1970s, are easy to clone.

According to a report from BI Intelligence, The U.S. accounted for 51% of global payment fraud costs in 2013.  The cost of U.S. payment card fraud grew by 29% in 2013, from $5.5 billion in 2012 to $7.1 billion last year.

Experts claim the chipped cards will make it all safer. Three firms have combined for the most widely used chipped card called “EMV”, representing those that developed the technology Europay, Mastercard and Visa.

EMV cards include a microchip that creates single-use codes for every transaction instead of relying on the card number, making the data useless if it’s stolen. Some experts believe these this technology could cut some form of credit card fraud in half.

Citing a United Kingdom study, a research firm,  Aite Group, said following chip card adoption, counterfeit card fraud dropped in the U.K. to $67 million in 2013 from a whopping $151 million in 2004. Fraud from lost and stolen cards also dropped by a third during the same period.

So how are the chip cards used? One way is to require buyers to enter a passcode personal identification number or PIN after the chip has been read. This effectively protects them from both counterfeit cards and the use of lost and stolen cards.

The other type of transaction reads the chip, but then asks for the signature. A little like what we have today without the magnetic stripe.

It appears the chip and sign method is what the U.S. will use first. Walmart is first on-board, currently the only major retailer accepting chip cards in its stores. Square has announced they are launching new technology that will use the chip and sign methodology on mobile devices, a boost for retailers. Some however believe thieves will adjust to this quickly and fraud will occur at current levels.

Until the PIN and chip method are fully in place, don’t expect to feel fully secure from credit card fraud. Experts believe it could take several years for this system to be put in place unless another major breach occurs and consumers start screaming for a major change.