CIO view: Banking on NFC – Gold rush to replace the plastic fantastic?

Ashley Veasey, CIO, Standard Chartered Bank, Hong Kong

Before businesses go rushing out to invest in NFC, what are the alternatives and complements that we need to consider which may fuel the perfect storm of disruption?

The truth is that people still habitually take out a credit card to pay for things. NFC has never really taken off. That little piece of plastic, the humble credit card is still taken out of a wallet and used the world over. And knowing how popular the credit card still is with consumers, it is interesting to see new technologies that reinvent the physical credit card without the need to leapfrog to mobile payments.

Take Coin for example, a credit-card-sized gadget from a US start up that lets you store multiple credit, debit, and gift card numbers in a single, slim piece of 'electronic plastic'. It's a reimagining-the-credit-card form factor, quite similar to how Standard Chartered integrated the remote token required for online banking in Singapore into the plastic ATM or credit card. Coin is attempting to link the plastic card with mobile apps to allow customers to switch cards on the fly and integrate loyalty features. They have essentially accepted the fact that consumers still prefer using the tactile, physical plastic card to pay.

And in the US, Starbucks and Square have been the frontrunners for mobile payments that do not require NFC at all. At Starbucks, you pay for your coffee using a QR code on your mobile. Square enables you to pay anyone with a dongle by turning any mobile device into a credit card reader. While innovative, Square still requires merchants to have a working dongle for you to swipe the plastic.

If anything, trend watchers take note, the introduction of Apple's iPhone 5S (with the impending launch iPhone 6 just around the corner) and CEO Tim Cook's admission of Apple's ambitions to enter the mobile payments market is an ominous sign of things to come.

This current iteration of the iPhone with Touch ID fingerprint sensor has the possibility to completely reinvent how we shop and pay for goods. The combination of Passbook and iBeacon in iOS7 alongside Touch ID in the iPhone may bring about a fundamental shift in how we approach security, personalisation and what our mobile devices can do for us.

With the iPhone 5S, Apple has not only introduced the concept of securing and unlocking the new iPhones using fingerprint recognition. Cook said that Apple has also seen great response from customers to buying music, movies, and books using Touch ID.
Pretty obvious stuff right now—the big question is how long before Apple allows verification for any purchase to be approved through the same process, attached to some 600 million credit cards now on iTunes and the App Store?

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