Ensuring the Security of the Digital Banking Experience

By Edward Gross

Outlining what the bank of the future might look like is a wholly different exercise amid a public health crisis. Over the last year, many banks have had to scramble—quickly and deftly—to expand their digital capabilities; to understand new consumer spending patterns and expectations; to educate customers and staff; and to mitigate new, or accelerated, existential difficulties so many of their customers are facing.

It’s more difficult to envision the future when confronting a long list of immediate challenges. This isn’t a complete list, of course, but rather an encapsulation of what might have been in the planning stages when the future became now.

Locking down the ecosystem—making the digital banking experience more secure—should be high on the list of goals for the future-is-now bank. A more secure digital banking environment has two important outcomes: it reduces risk of loss, fraud, and breach—and, when promoted properly to customers, it makes them more comfortable banking from a distance and more likely to do so in the future.

Domains such as .gov and .edu are like gated communities: You must be a verified resident to get in. We won’t pay our municipal tax bill at myhometown.com or tuition at mykidscollege.com. We want .gov and .edu to confirm that we’re interacting with the intended organization. So it will be, and is already, with the gated domain of .bank. Phishing, spoofing and all manner of digital thievery succeed by fooling the user into believing that the email or website belongs to a trusted partner. “If it’s not .bank, it’s not us!” is a great message for bank customers to hear and read. It’s a powerful branding and marketing opportunity, in addition to a fortification of the digital banking experience. It’s also easy and inexpensive to do, and more details can be found at register.bank.

How we spend money shifted significantly during the lockdown. In-person card transactions dropped precipitously when businesses closed or reduced the availability of their services. When in-person spending rebounds—and it will—the future-is-now bank wants its name on the card their customer pulls out in the checkout line. Rewards and cash back are good motivators in the customer’s top-of-wallet decision, but these are often expensive for the issuer. A powerful force in competing for the top wallet spot is available in tap-to-pay.

Much of the world is leagues ahead of the U.S. in contactless card usage, owing mostly to our massively distributed card payment ecosystem and confusing EMV rollout. But the opportunity is there and the potential rewards, especially for community banks, are plentiful. We’ve seen what happens when tap-to-pay rolls out in the US, and we’ve seen what it looks like in mature markets around the globe: Contactless card usage becomes very popular and more frequent because it is easy and slick and cool.

Deep down in the data of tap-to-pay analysis is a tremendously valuable trend for unregulated debit card issuers, many of which make 40 percent of non-interest income from debit card interchange: Tap-to-pay debit cards begin to replace cash as the favored payment method for smaller transactions. A world of $10-ish cash transactions is ripe for conversion to debit card and inclusion in a bank’s interchange revenue. For those banks considering a debit re-issue in a couple of years, I recommend accelerating the timeline to place more user-friendly plastic in the hands of your customers.

There are dozens of projects, plans, and strategies that a bank can advance to enhance its position as a bank of the future. I’ve touched on just two of them, but they are available now and compartmentalized in nature, making implementation easier. The “new normal” of COVID-19 compressed the timeline, and the future—at least for these two things—is now.

Edward Gross is a VP in ABA’s Endorsed Solutions group.