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Taking contactless to a new level

05/06/2020

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During the past few months, with lockdowns and physical venues closed, the need for more digital solutions was exacerbated. Tasks that previously were fairly simple - like proving who we are - suddenly became a process spanning not just days but weeks. 

Contactless - Not just for payments

Contactless goes beyond paying with a credit/debit card or an eWallet. Contactless underpins the new way of doing things; avoiding physical contact. This translated in an eCommerce boom, but it also made us painfully aware of all the services that are not yet digitised. 

Digitalisation will have to pace up: 

  • So that services become resilient to a new lockdown, allowing countries to “run” without being taken off-guard.
  • New expectations have to be met. People will prefer contactless, doing as many things as they can from the safety of their homes, or without touching. 

When simple tasks became complex

With lockdowns and social distancing, things that should be simple became incredibly complex and time-consuming. A simple task to prove my identity via a paper document became quite a trek. 

  1. I had to photocopy my passport - luckily, I did not run out of ink in my printer, that came later. 
  2. Then I phoned the town hall to persuade them to open and make an appointment with me so that they could authenticate the photocopy of my ID doc.
  3. Next, I waited for the post office to reopen – which it did a few days after - so that I could send the letter with the paperwork proving my identity. 
  4. After that, it was a 5-week wait for the letter to arrive at its destination, abroad. 

Of course, this is an extreme case in completely unprecedented circumstances. However, the “stress test” tells us a lot about how we could improve services everywhere and make our economies and services more resilient. 

En route to digital identities?

When everything changed eCommerce businesses were ready and could absorb a black-Friday like activity increase with short turn-around. Services requiring face to face interactions were not. Much of the issues that surfaced during this time could have been avoided if digital identities were used at a larger scale.

Digital identities should be the corner-stone of the new normal economy; the trust foundation. These are not thoughts just brought on by sudden change spurred by Covid-19. We actually published our thoughts on the topic in a white paper that we released with the EPA just before the crisis started.

A revised PSD2 - i.e. a new PSD3 - should facilitate digital identities, in time. The Strong Customer Authentication from PSD2 could be a good blueprint to be used in many other services than banking. 

The experience with digital ID in the Nordics is interesting to look at. They are leading the way in Europe with their Bank-Id initiatives: Digital IDs were provided by banks but was made possible thanks to government backing, guidance and control. 

As a result, digital identities are used for many services beyond banking and other financial services. And it has greatly simplified the lives of their citizens while increasing efficiency throughout the process. 

With digital IDs and appropriate controls, the second-hand car selling process was completely redesigned in Norway: Buyers and sellers of second-hand cars can do everything online without contact or paper circulation, from contract through to financing, payment and even registration of the car with the new owner. 

The EBA is due to review SCA and its return on experience in 2021. It might be delayed, but ideas of how SCA could be extended to other financial services, and maybe to other sectors, are already emerging.