Three technologies allow new forms of service and payments to take place in the retail banking industry. Working together they have the potential to wipe out the use of plastic cards. For the past few years, technology firms have been developing solutions based around Radio Frequency Identification (RFID) chips. These wafer-thin chips are used in credit cards for contactless payments, where you wave your card over a reader and it takes the payment without any card insertion. Since then, there have been a few interesting additional developments.
First, there is the growing usage of biometrics with RFID. At this stage, most RFID payments are for small purchases because contactless security is considered to be poor. The pure aim of RFID is for speed. However, some retailers are trialling biometric payments: for example, the Discover Card in the US has teamed up with Pay-by-Touch – a fingerprint payment system – to allow biometric payments. Combine this with RFID and you have the ability to deliver contactless payments for any amount securely.
Second, RFID chips can be placed in clothing, jewellery and other items, such as keychains. That means you do not need to have a plastic card on you; instead, you just wear your bank issued watch or ring. If you think that sounds a bit futuristic, the JCB credit card firm in Japan has had a Casio wristwatch on the market for over a year for contactless payments.
Third, another technology is taking off: Zigbee is a sensor-based system which picks up RFID and other signals. The Zigbee sensors are tiny microchips that can be built into roads, pavements, walls, shelves – anything. They pick up specific functionality, such as the identification of an RFID chip-holder as they walk past.
The interesting idea is that this means you could use Zigbee sensors around the walls of a bank branch to pre-identify customers before they walk through the doors. Knowing more about them, by the time they are through the door, you can direct a customer representative to service their needs. For example, if they looked up a mortgage on the internet the previous night, a mortgage expert could greet them.
Between RFID and biometrics wiping out the use of plastic cards, and the potential of RFID and Zigbee for pre-recognition of customers, it cannot be that long before we truly live in a cashless, personalised world.
Chris Skinner is an independent financial commentator (www.balatroltd.com)
