The Circuit: Placing Bets at the ATM, Debit & Prepaid Forum
Just down the hall from the casino at Bellagio in Las Vegas, bankers recently gathered around a different set of tables, placing their bets.
Bets on mobile. Bets on new networks. Bets on each other.
As the nature of transactions, and transaction processing, evolve, bankers are eager to establish new standards across the payments ecosystem. Increasingly they are determining that they need to forge alliances to do so.
"No bank is an island," says Zilvinas Bareisis, a senior analyst in Celent's banking group. "You can't survive this; you can't do this alone."
The idea of working together to further a common interest has spawned groups such as the FIDO Alliance (short for Fast Identity Online), which has brought together more than two dozen industry players-including PayPal, Mastercard and Lenovo-to work on a standard that lets applications, browsers and servers speak the same language for authentication.
The interest in such alliances was evident at American Banker and PaymentsSource's ATM, Debit & Prepaid Forum, where even the most digitally connected attendees engaged in some old-fashioned, face-to-face networking.
After his presentation during the opening day of the conference, dubbed Payments Innovators Day, Brendon Wilson of Nok Nok Labs, an outfit attempting to revolutionize authentication through FIDO, approached Michael Strange, the chief technology officer at Mitek Systems, which recently debuted software to introduce mobile picture-taking into the account-opening process (i.e. snap a photo of the front and back of a driver's license and the information is automatically populated into the application).
"I just thought, you know, we could create a process with what we have on the device," says Wilson, whose session on authentication was voted conference favorite. "So at the end of an account opening process, rather than setting up your username and password, you scan in your fingerprint."
He handed Strange his card.
Mobile of course has been a major theme for years now at payments conferences. But there's also a lot of attention being paid to the comparatively quaint ATM-in some cases having to do with new ways to make the machines compatible with smartphones.
Fexco and First Data demonstrated their take on a concept that allows people to use smartphones, instead of cards, to withdraw cash from ATMs. (NCR and Diebold also offer this capability, and several banks already have begun trying it out.)
Another device on display at the conference, by an upstart called Lamassu, converts cash into bitcoins and sends the cryptocurrency to a digital wallet. "Our machines are, in a sense, bankless ATMs," says Lamassu co-founder Zach Harvey, who took the stage clad in a bright red shirt that was unbuttoned a quarter-way down his chest.
Lamassu's machine scans a dynamic QR code that is sent to the user's smartphone. An app on the phone substitutes for an ATM card, providing another measure of authentication.
Harvey and his brother, who accepted bitcoin at their guitar shop in New Hampshire, designed the Lamassu machine to allow people to purchase bitcoins for themselves, but the technology can be used to make person-to-person transfers (by depositing funds into someone else's wallet) or payments to merchants (by depositing to a merchant's walet). All that has to change is the QR code that the user displays to the machine.
It's a long way from filling out slips to make deposits and withdraw plain old cash. But even more traditional bank industry players have put those days in the rearview mirror now. Jonathan Velline, the head of ATM banking and strategy and Wells Fargo, told conference-goers about a Washington, D.C., branch where tellers roam the floor with tablets, encouraging customers to enter their information digitally.
"We are trying to make the teller even more effective with technology," Velline says later, when stopped in the hall after his keynote address.
But back to the future: wearable computing was another hot topic of discussion at the forum, although not all of it was positive.
Google Glass, eyewear that is functional if not fashionable (except maybe to the ultra-geek set), has helped bring at least the idea of wearable computing, if not the devices themselves, into the mainstream, and financial services concerns already have taken an interest. For instance, Intuit reportedly has adapted a version of its GoPayment app for Glass wearers, Fidelity has developed a first-generation app for Glass, and a Spanish bank is working on a piece of Glass software as well.
But when a room full of bankers was asked whether they think wearable computing will play a role of any significance in financial services in the next three years, only a few raised their hands. This raised the hackles of Jim Marous, senior vice president of corporate development at New Control, a digital direct-marketing agency. "You need to place bets in the payments roulette," chides Marous, who authors the Bank Marketing Strategy blog. "If you don't put some moderate bet, either financial or in time, you are falling behind."
But the bankers' hesitation was understandable. The applications for wearable computing, and even the demand for it, remain largely unproven. And with so much of payments in flux, who needs another item on the priority list?
A big source source of the flux is, of course, debit. Uncertainty about the "when and how" of debit regulation, uncertainty about U.S. adoption of the EMV card standard-all of it is affecting how banks are approaching the payments space, says Tony Hayes, a partner at consulting firm Oliver Wyman, who chaired the conference.
Card issuers are being pushed to upgrade to EMV at a time when they already are dealing with high costs related to their programs. According to Ben Stewart, a debit executive at Bank of America, roughly 10 percent of the call center volume that BofA receives is for debit-related issues.
"The costs to run the program are substantial. It's not just about fraud, or authorization and clearing costs," Stewart says.
But to be clear, the executives in attendance agreed that banks will continue to rely on debit to generate consumer loyalty and engagement. For all the expense that debit customers introduce into the system, they're worth the price of the upkeep.
(Austin Kilgore and Daniel Wolfe of PaymentsSource contributed to this report.)
21st Annual ATM, Debit & Prepaid Forum
When: Oct. 20-23
Where: Las Vegas
For: Bankers, debit and ATM executives, payments technology innovators
* Achieving the next breakthroughs in payments innovation
* Digital disruptors
* Accomodating mobile
* Fresh strategies for the ATM
* Debit model overhaul
Host: SourceMedia's American Banker and PaymentsSource