Password eradication, contactless tech - Predictions of 2021 digital economy

During 2020, we experienced fundamental changes to all sectors of the economy by rapidly adopting digital technologies. Most of these changes majorly impact the banking, transacting and payment methods that will most likely continue within 2021. COVID-19 has left consumers homebound and forced businesses to make the digital transformation shift to service their consumers. There has said to be a 30% increase in digital and a further increase in first time digital users such as an increase in people signing up for online banking and engaging in e-commerce.

Organisations that are purely physically based had the biggest challenge of fully adopting online transactions. Digital or remote assistance is now a more important part of the business plan than ever for business survival. On the flip side, businesses and employees are now working from home and business plans have been reconfigured to make this a permanent arrangement where possible. This is now the standard for most businesses and has set the scene for 2021, it moved from concept to reality.

Contactless technology is a fast growing technology, more people are tapping with their cards and using QR payments. QR cards are already in use in Asia and its a working method. As a consumer we enjoy the idea of control over our transactions involving our banking details especially from our personal devices. Wireless payments which do not involve touching a PIN pad makes it easy for consumers. This year there will be globally significant developments in QR and NFC enabled tap-and-go payment services to enable a more efficient and safer payment experience.

Another thing to expect is the emergence of completely passwordless systems. The roll-out of Fast Identity Online (FIDO) and the growing network of FIDO compliant solutions will end up with organisations eradicating passwords. The next move will be registering customers using biometric authentication such as those already enabled through banking apps.

“You’ll never again have to worry about remembering or resetting passwords. That’s the promise, at least”

*Predictions for Europe*	*Outlook for the USA*
*Accelerated uptake of delegated authentication in 2021*	In the United States, financial institutions are starting to see some of the challenges around faster payments. The faster money moves, the faster it can be stolen, so we’ll likely see some reaction to that in 2021 as fraud moves back up to being a top-level concern for banks.
*New banking specs will allow merchants* to provide their customers with a vastly improved online shopping experience Merchants will take control of authenticating e-commerce payments, giving consumers a simple, intuitive checkout experience that looks and feels like an extension of the retail brand.	This year is going to be about change – and managing that change without alienating already unsettled consumers.
Europe is going through PSD2 now – the roll-out of regulations opening up competition in banking and electronic payment services. On 1 January, many of the regulations have taken legal effect, followed by another tranche at the end of the first quarter to do with 3-D Secure authentication of cardless payments. Europe isn’t really ready for this huge jump into “open banking”, so 2021 will be a year of pain for banks and their struggles with regulators, as well as competition	Nonetheless expect additional pressure from regulators, new competition, ever more digitally-demanding consumers, and no slowdown in technological innovation.
**Banks becoming PSD2-compliant takes a lot of work and doesn’t bring in any additional revenue.** It may be seen as a competitive disadvantage because they are being forced to open up their systems and processes for the likes of Google, Facebook, Apple and many smaller niche fintech operations
Fraudsters will try to make use of the transition and weaknesses in the opening up of systems. The rest of the world needs to prepare for open banking because it’s coming to a theatre near you, whether through regulatory pressure or market forces. Many lessons will hopefully be learned from Europe’s experiences in 2021.