Banking in the metaverse
Issue 322 | 11 May 2022
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The ultimate guide to banking in the metaverse
When Neal Stephenson coined the term “metaverse” in his 1992 science-fiction novel, Snow Crash, he could hardly have foreseen that the phrase would be everywhere by late 2021. With bigtech giants like Tencent, Meta and Microsoft all making big bets on the metaverse, there is little doubt that the internet is on the verge of an evolutionary leap.
In this new phase of the internet, it will evolve from a disparate collection of sites and apps into a persistent 3D environment where moving from work to a social platform is as simple as walking from the office to the movie theater across the street. Beneath the user experience of inhabiting a digital world with a sense of presence, the next generation of digital technologies make it all possible with a data framework that generates veracity, scarcity, and even trust.
Just like the real world, this virtual world where people can transact and own or lease digital assets will need financial services. Therein lie exciting opportunities for banks to enable payments, investment, insurance and loans in the metaverse economy. But the potential doesn’t end there—the metaverse also offers banks the opportunity to put the humanity back into banking.
In today’s digital world, digital banking is functionally correct but emotionally devoid. Think of when you were a child, and your parents took you to your bank branch to get your first card or savings book. That was an exciting experience that may well have started a lifetime relationship with your personal bank. What will future generations first memories of banking be?
The empathetic and meaningful conversations we had in the past have been lost, along with much of the customer’s trust in banks. In addition to the huge potential for product and service innovation, the metaverse is an opportunity to restore the dialogues that have been lost in digital channels—to create memorable experiences for the next generation of banking customers, many of whom may never need to step into a banking branch in their lives.
Little wonder that banks are excited by the metaverse’s possibility to transform everything from the basics to the future of business. We cannot be certain how this new channel will evolve in the years to come, but few are disputing that the change will be rapid and far-reaching. Banks cannot afford to stand by and watch it unfold; they need to start exploring its potential and getting ready to scale rapidly to create great new customer and employee experiences.
Nationwide stops 2000 more frauds a month with SCA rules
Nationwide Building Society says that the introduction of Strong Customer Authentication (SCA) rules in March is helping it stop 2000 cases of online card fraud a month.
In the biggest change to UK payments regulation since the roll out of Chip & Pin in 2006, all online transactions over £25 have been subject to two-factor authentication checks since 14th March, to help combat online fraud.
While SCA has been controversial, with retailers concerned about customers abandoning transactions, Nationwide says that its research suggests that the regulations are proving effective.
Despite the fact that some transactions now take a little longer, a poll of 2000 Brits for the building society reveals more than two thirds of people are happy for a slight delay if it is more secure. More than two thirds of Nationwide members complete the SCA check using their mobile banking app, while 21% authenticate using a one-time passcode sent via a text message.
Matt Cox, chief product owner, digital payments, Nationwide, says: "Many people prefer the convenience of online shopping and, while merchants strive to make the checkout experience as quick and easy as possible, we generally accept that a small delay is worth it when it comes to our security and personal details."
Early data shows that the rollout of SCA is already having a positive impact in reducing online card fraud, with the Society seeing around 2000 fewer cases a month. Meanwhile, 42% say that SCA makes them feel safer when shopping online, while more than a quarter say the extra security it provides meant they are more likely to shop online.
However, around a fifth of people have previously reported a problem with the new system, largely because not all merchants are yet compliant. Other issues include customers not having up-to-date contact details, meaning they couldn’t get the code, or not having their phone with them to get the code.
UK to introduce new rules to preserve cash and reimburse fraud victims
The UK Government is to introduce new legislation to protect access to cash and to require banks to refund victims of authorised push payment fraud.
The new Financial Services and Markets Bill, announced in today’s Queen’s Speech at the state opening of parliament, will "ensure the continued availability of withdrawal and deposit facilities across the UK, and that the country’s cash infrastructure is sustainable for the long term".
The Bill will also enable the Payment Systems Regulator to require banks to reimburse authorised push payment (APP) scam losses, totalling hundreds of millions of pounds each year.
Economic Secretary to the Treasury, John Glen says:
We know that access to cash is still vital for many people, especially those in vulnerable groups. We promised we would protect it, and through this Bill we are delivering on that promise. We are also sticking up for victims of financial scams that can have a devastating impact, by ensuring the regulator can act to make banks reimburse people who have lost money through no fault of their own.
Glen says more details on the proposed measures will be available when the Bill is formally introduced.
John Howells, CEO over at LINK welcomed the news:
We strongly welcome today’s news and are pleased that the Government recognises that protecting #accesstocash is vital. We know that consumers are becoming increasingly digital and using alternatives to cash, but there are still 10m people who rely on cash.
A great deal of progress has been achieved over the past couple of years, in which LINK has played a critical role and we look forward to seeing the details of the Bill in due course.
FICO Fraud Matters Podcast - Episode 1
It was my privilege to join FICO's Sarah Rutherford, senior director, portfolio marketing, for a discussion about the global perceptions of fraud management and customer experience.
In this first of four podcasts we:
Discuss the global perceptions of fraud management and customer experience
Consider what banks are getting right -and where there are opportunities to improve
Discuss the implications of current practices and the trends shaping the future
Pay.UK: Priorities, challenges and opportunities
Here’s an opportunity to catch Dougie Belmore summarising Pay.UK’s priorities, and the challenges and opportunities facing the UK payments market.
The UK's daily, weekly and monthly cash habits
Four cash facts (week ending 8 May 2022)
The volume of ATM transactions:
decreased by 26% when compared to the final week before the first COVID lockdown.
decreased by 7% when compared to the previous week in 2022.
increased by 11% when compared to the equivalent week in 2021.
increased by 33% when compared to the equivalent week in 2020.
Be sure who you pay
Source: Be sure who you pay
It was my privilege to join SurePay at the 2022 Building Societies Annual Conference in Liverpool. The event was a great opportunity to think about the role of building societies in ensuring that the UK’s Confirmation of Payee service delivers “safer payments through (CoP) service ubiquity” or, as SurePay put it, “be sure who you pay”.
SurePay performs over 350,000 checks a day in the UK, which is approximately 35% of all traffic.
For more about the UK’s Confirmation of Payee service and SurePay’s solution:
Download SurePay’s latest report: Move your members toward a safer, more seamless user-experience with Confirmation of Payee & Future proof your Building Society.
Visit: SurePay’s website.
‘Best Use of Security/Anti-Fraud Solution in Payments’ with NatWest Group.
The shortlist is a testament that SurePay’s Confirmation of Payee solution is best in class and that they are on the right track in preventing online payments fraud and mistakes.
Andrea Dunlop From Access Paysuite on Why the Future of Payments Is Integrated.
The complete buyers guide to Open Banking payments - everything that you need to know when considering an account-to-account payments solution.
In Profile: Karl MacGregor, CEO and Co-Founder of Vyne.
It’s not a duck. The impact of the FCA’s failed appeal in the Ipagoo case.
12 May: Is Britain ready to go cashless?
Register for the webinar to be held on the 12 May: Is Britain ready to go cashless?
18 May: The next era of UK payments innovation
Hear from ACI Worldwide, Pay.UK, Santander and NatWest on how they are future-proofing payments for a new era of both innovation and infrastructure.
The panel will discuss what’s next for payments innovation; how technology, competition and Open Baking will transform the UK payments landscape; and how players can prepare for NPA, ISO20022 and more.
Covering Request to Pay, Confirmation of Payee, card payments, Direct Debit and A2A payments Payments:Unpacked is pleased to work with the following partners:
Request to Pay: Join the secure payment revolution with Answer Pay.
Confirmation of Payee: SurePay’s Confirmation of Payee (CoP) service is an innovative, real-time name checking solution that gives UK payers greater assurance that their payments are going to the intended recipient.
Card Payments: Card Industry Professionals supporting Businesses to Accept Payments In-Store, Online or Over The Phone!
Payment Solutions: Seamless, secure & affordable payment solutions that enable organisations of all sizes to accelerate growth & innovation from Access PaySuite.
If you’d like to join support Payments:Unpacked in helping unpack the UK’s payments landscape contact: email@example.com
Instant money comes to Australia
This week’s Payments:Unpacked archive video is an Australian ABC “This Day Tonight” clip from 1969 looking at a ‘convenient’ new invention - the ATM.
Notice that the card is retained by the ATM after use and the bank sends the card back to you and that you can only withdraw AUS$25.
You Lost Your Electronic Cash? Tough Luck
If you want to have digital currency that is a form of electronic cash, that is digital value that can be transferred from person to person (or, more accurately, from device-to-device) without online access to some central database or blockchain or whatever else, then you have the obvious problem that if the device containing the electronic cash is lost or destroyed then the value is lost or destroyed with it.
But is this actually a problem?
Catch Dave Birch on “You Lost Your Electronic Cash? Tough Luck.”
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