The future of secure issuance

When the coronavirus pandemic hit, many bank branches, credit unions and financial institutions across the country had to close their doors, having no safe way to service customers in accordance with health and safety guidelines.

A portion of financial institutions did have drive-up teller windows, standalone ATMs or ITMs, which made conducting business possible, but still difficult.

Face-to-face meetings and customer service were conducted digitally or were severely curtailed for safety reasons, causing a large percentage of customers to shift to digital banking and contactless payments. Was this a temporary shift or will customers choose digital banking over in-branch service in the future? Can financial institutions create a personal connection, provide card issuance when needed and build trust with customers through a digital landscape?

To answer these questions and others, Andy Cease, product marketing manager for Entrust, a provider of identification, payments and data security, moderated a panel during the Self Service Innovation Summit entitled, "The Future of Secure Issuance: Creating a Foundation of Trust."

The panel was comprised of Rauly Butler, EVP, director of retail banking for Mechanics Bank; Brent Crossland, senior manager, state government initiatives at Entrust; and Kevin King, executive director, product management for NCR Corp. The discussion was sponsored by Entrust.

Cease kicked off the discussion by centering on the relationship between the consumer and the bank.

Andy Cease, Entrust

"With the COVID-19 pandemic, we've seen new things come about," said Cease. "I think we have all seen an acceleration of technologies coming for the last couple of years. There's an interest in and a demand for some of these remote solutions, but that doesn't mean we are going to necessarily lose sight of the physical credentials either."

Among the issues Cease brought to the panel was first how to identify and authenticate a customer and then identify and authenticate customer data for issuance.

"Identity typically and traditionally [identification and authentication] is done face to face in a branch, but that is happening somewhere else now. How are we able to truly establish trust if we never see a citizen, or in this case, a customer member of a bank or credit union?" asked Cease.

"In the United States everything we do depends on identity and authenticating that identity," Butler said. "I think also the perspective that I have is state governments are fundamentally the source of identity, at least in the U.S. We depend on state DMVs to get our [driver's] license. We depend on state vital records to get birth certificates, marriage certificates and death certificates."

King from NCR Corp. agreed. "The identity you have established is fairly strong through these systems," said King. "Where I'm interested is in how do we marry those? How do we really tie those identities together so that [the identity] the state is creating and managing can allow us all to do business with the real identity that's created by those processes?"

"State government stores a tremendous, tremendous amount of data about every one of us, from medical

Brent Crossland, State Government

information, tax information and all kind of things from driver's licenses (and) license plates to what vehicle you registered. All that information is scattered around the state government," said Crossland. "We have to be able to tie digital identity to those physical credentials so that our transactions aren't separate. We can't look at you as one identity on your driver's license and another identity of when you file your taxes and yet another identity when you register a car. That concept of identity needs to converge."

Instant issuance and 'channel hogs'

A lively point in the discussion was determining what constitutes a good example of a consumer journey from a card perspective.

"There's obviously the big players, Visa, Mastercard …but there is still a need for physical cards out there at the moment," said King. "We are seeing a lot of that pushed to the ATMs, especially in Kuwait, the gulf, Saudi and Dubai. We have a lot of pilots ongoing right now where we have instant card issuance devices attached to the ATM," said King. "You can go to the ATM, open an account and get a card or replace a lost or stolen card. You can start most of those transactions on the phone."

King pointed out if a customer loses a card or a card is stolen, under the pilots NCR is running, a customer can turn off the debit card on the mobile app, request a new card, authenticate themselves as a user and even set a pin.

"The card holder then comes to the self-service device at the branch, authenticates themselves again, and then the card is issued to the user on site. It's dynamic," said King. "I've seen kiosks where all you can do is go up and change your address or request a balance. It's become so much more than that now."

Cease pointed out that instant issuance from a self-service mechanism may begin and end by combining technology.

"We have seen some increase in the amount of card issuance from self-service mechanisms… and what we think is self-service is not necessarily an ATM, or even an interactive teller machine where you can do things like receive a checkbook or deposit cash. It [can be] starting on the phone with the bank [to request services] and maybe finishing on the phone as well," said Cease.

Cease asked Butler what a bank looks at when it comes to card issuance and identification and authorization.

"First of all, consumers demand everything to be on mobile," said Butler. "There's no question about it. There's a bank that has this phrase, 'mobile first' but [they] need to get with it because it's not mobile first, it's mobile everything," said Butler.

"When it comes to issuance, a consumer doesn't want to be taking a picture of their ID or sign up for trial deposits. What they will put up with is databases so you use something like Lexis Nexis or something else, give them a series of questions and verify their identity through a series of databases. That does work," Butler said.

Raley Butler, Mechanics Bank

In addition, Butler explained that what consumers want are things like a virtual wallet, but they don't want to lose what they already have.

"They want to get rid of the plastic but they're frustrated because the bank can't necessarily issue a virtual wallet, nor can all merchants accept virtual wallets at this time," Butler said.

According to Butler, what happens with a lot of customers is they become 'channel hogs.' A channel hog, Butler explained, is a bank customer that banks in person but if the bank issues something new, especially in terms of technology, they will adopt it and use it but they won't give up what their former device was. In terms of cards and virtual wallets, the customer wants a virtual wallet but they're not giving up their plastic card.

"So hence, that's why there's instant issuance," said Butler. "There is the need to be able to put a card in someone's hand. There's a couple of things [that customers trust] about cards. One, they won't lose power if they get wet and two, they don't need a battery."

Butler went on to explain that customers don't really want to come into the bank, especially now, given the pandemic if they don't have to.

"The card is a primary payment device," said Butler. "Not everybody in America or the world qualifies for a credit card. A lot of people rely on their debit card so when you are able to issue a card at a kiosk or device or over the counter inside of a bank branch, it is a life changing event for some clients. Today if someone were to offer me the choice between front counter efficiency which would give me security or instant issuance, I would take instant issuance hands down," said Butler.

Instant issuance also drives customer loyalty and trust and more importantly, according to Butler, it reduces of attrition.

"One of the greatest areas of attrition in banking is the first year of an account's life and the instant issuance drives that down by 27% in our experience, which is terrific," said Butler. "Cards are here to stay for the time being. Virtual wallets are important but people's patience for identification process and channels are becoming quite minimal right now."

What will 2021 look like?

Looking ahead, from a banking perspective, King said the consumer experience in biometrics is a big topic for the banks right now.

"Latin America, for example, is very focused on palm vein authentication. India is very much focused on fingerprint biometrics. But for everyone else, there's still a lot of distrust in biometrics," said King.

Kevin King, NC

"Consumers trust the bank to look after all their money, but when it comes down to it, they won't give them a thumbprint or an iris to scan. The interesting thing here is the first thing you do when you take your new iPhone or Samsung out of the box is give them your digital identity. You have no problem giving your thumbprint for the phone, so we have got to find a strategy that allows consumers to feel that same trust in the industry. We have to get them to trust and understand that we can manage their digital identity as well as we manage their cash."

The panel ended with a look at trends for the future.

"When we look at self-service in many ways it provides a lot of value in a world that is looking to reduce human-to-human contact," said Cease. "As we look to 2021 potentially having a widely available vaccine and people being able to get back out to retail environments whether it's in a branch or an airport or a university or wherever, what are some of the exciting trends that you're seeing? What do you believe will persist and what trends do you believe are temporary?"

In looking at trends, Butler believes that on the hardware side, ITMs will be powerful and ATMs are useful, but you won't see these types of machines on the sidewalk.

"An ITM has a phone in it to connect you to a banker and a screen ID displayed. These have to be in a vestibule inside of a building," Butler said. "But ITMs are limited, so the best deployment is into rural areas so people won't have to drive two hours away from the next populated town in order to get to work."

According to Butler, there's exciting stuff on the horizon. Some of the processes his company has allows consumers to turn on and turn off their cards in case they get lost, or train their bank to ignore any transactions unless a customer's debit and phone are within five feet of each.

"We spoke a lot about issuance today and that's a very important step" said Cease. "As for the question of trust, in my experience people trust people not companies. What advice do you have for banks who are having a hard time getting employees to tell and believe the digital story?"

King recalls how this was a difficult issue for his company.

"This was a huge roadblock for us back in the early days of the interactive teller," said King. "We were moving transactions from the teller line to the ATM channel but the employees in the bank were still encouraging customers to come to the teller line in the branch," said King.

But the real trick, King explained, was to show staff a career path to a different skill set. Tell them, said Butler, 'You're no longer a teller. You can become an advisor or a salesperson."

"Banks are just giant technology houses so the question is how do you get these people to trust this or use them," Butler said. "Training does not instill the sense of trust that you need; what you really need at the tipping point is an epiphany."

In banking, the tellers tend to be very young and transient, Butler said. They are looking for their next job and just want to be introduced to technology.

"What I do," said Butler, "is I take up a road show. I visit with these tellers in groups. I use two cell phones with me so I can send and receive and then call my son and send a message that he will be receiving money from me. I have him trained that if he receives money digitally from me, he has to text back within 30 seconds or he doesn't get to keep the money. People think I am just showing them how to send money but what I am doing is showing them how fast it is to use the ATM instead of a teller. The younger crowd needs you to introduce the technology to them. They are experts on their phones and they will virtually adopt anything. People trust their phones with anything, but they don't always trust a bank."

Butler explained the older crowd of 40s, 50s, and 60s, just want convenience and safety. They would like to be up to speed with where their kids are, but they realize they never will be so they are willing to adapt.

"It's really how you couch it with them," said Butler. "I am just about to mail out 20,000 envelopes that say 'check enclosed on them' that include a $5 dollar check if people will adopt and make a mobile deposit with that check. You'd be surprised how many people send me a letter back or an email telling me they did deposit it digitally. On average we have a 28% response rate for that direct mail because of that message on the envelope that says a check is enclosed. On average, in six months those same people will have made four more deposits via mobile. People can be trained. And they just need to be enticed."