Technological advances in finance revealed

Posted by Jasmin Stopford in Credit Score on 8 October 2014 - Jasmin is a Credit Analyst at checkmyfile

The racing advances in technology are set to throw current banking procedures up in the air over the next decade, by creating unique techniques in order to eradicate fraudulent advances.

Debit and credit cards are first in line to get the axe as they have been considered expensive and clumsy systems which leave room for fraudsters.

Financial tech expert, Gi Fernando says, “We’re on the brink of some seismic changes in the way we all use money. Credit and debit cards are history. Card systems are expensive to run, relatively insecure and pretty easy to copy. Soon you’ll simply walk into a shop, zap your phone [or smartwatch] against a contact point or barcode, and money will be taken from your account to pay for it”.

Banks are set to introduce finger scanners or retina readers to process transactions and Barclays has already been quick off the mark to initiate such advanced technologies. Barclays recently introduced a biometric reader that identifies customers by veins in their finger. Instead of entering a memorable and hackable pin number, customers have their finger scanned which is linked to a computer. The scanner uses infrared lights which scans the vein and blood flow under the skin to confirm the user’s identity. This is a process that has to be repeated twice to ensure that the customer is who they say they are and to also confirm the transaction. That’s not all – Barclays have also been the first to unveil contactless payment wristbands.

Gi Fernando continues, “This is just the start of how technology is changing the banking industry. The bank of the future is going to be a lot more fun to engage with for customers than it is right now”.

Gi Fernando also predicts the movement of bank branches into coffee shops, cafes and supermarkets and that the way that we’ll be judged for credit is likely to change. Such ideas will modernise the banking industry and make it easier and more approachable when trying to obtain credit.

Currently Facebook users are already familiar with security procedures in which they are asked to identify a friend’s face before they can successfully log in. It’s predicted that banks will begin to rely on such social networks in a way customers will have never before experienced. As the number of those who aren’t social network active is continuing to decrease, banks could start trying to seek access to such accounts. One mind-set being that users of social networking with stable accounts would be seen as less of a credit risk than those whose friends chop and change regularly. Although a stability and consistency of friends could stand you in better stead when applying for credit products, those that don’t use social networks could be unfairly rejected and penalised as potential creditors have been unable to analyse them.

Gi Fernando explains, “The old saying largely remains a truism. You are defined by the company you keep. You could easily have a scenario in ten years where a customer’s chances of credit are determined not only on their spending, but also on their friends, family members and their social profile. By giving up a bit more information to the banks, you might stand to benefit in a wider choice of financial products”.

Calculating someone’s credit score based on their Facebook activity, and not just on their spending habits, is a means to speeding up applications for credit and making customers eligibility stretch further as a result of deeper investigation.

He goes on, “The advance of technology means the end of clunky processes and waiting six weeks for an appointment to see a manager. If you cut back on transactional costs, it means banks can offer more specialised advice on mortgages and investments to everyone, not just the privileged few. The companies that take digital seriously now, that give their employees training in coding, apps, social media and security, will take the initiative. They won’t get left behind”.

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