innovation in mobile payments

QUALITY. PRODUCTIVITY. INNOVATION. endava.com

Innovation in Mobile Payments

Innovation is one of the three core tenets at Endava. One of the ways we keep innovating is through Endava Labs, our sandbox approach to building proofs of concept and demos for large clients including retail banks, insurance and payments companies. Currently we are looking at a few innovations in the areas of Identity Management and APIs in financial services that could change your business immeasurably...

Identity

Let’s start with identity. The Internet is still rubbish

when it comes to identity.

In the real world we have driving licences, passports,

signatures and PIN numbers to prove who we are.

These are all forms of identification trusted by

governments, financial institutions and businesses.

When combined, we have what we call two-factor

authentication. But on the Internet, we still don’t have

any authenticated identity. You can create an account

on a website, but that doesn’t prove you are who you

say you are.

Businesses transact using SSL certificates to prove they

are who they say they are, but sometimes those

businesses or other individuals need to know

consumers, are who they say they are. Take AirBNB for

example. You don’t want to rent a room from a

convicted axe murderer, and you don’t want to rent a

room to an axe murder either – you need to trust the

tenant or the home owner. But if you have a great

eBay rating, you still have to start from scratch again

when you create an AirBNB account, why? because no

one trusts anyone else’s digital identity assurance.


Then we have Facebook Connect – where a user

registers or logs into any website using their Facebook

credentials, unsurprisingly that isn’t trusted - yet.

Endava conducted some consumer research, and right

now, even the under 30s don’t want to log into their

bank accounts with their Facebook credentials.

This is going to change over time, once we get so

utterly sick and tired of usernames and passwords, and

of course, organisations’ inability to keep them secure.

Clearly Facebook Connect isn’t the answer at the

moment either.

Perhaps surprisingly, the answer is likely to come from

the government. The UK government is working on an

identity assurance platform to solve some of the

problems highlighted here. Bookmakers for example

will be able to check with the government whether this

person trying to log into my site really is over 18. As a

car insurer, you’ll be able to check whether this person

applying for car insurance really has a clean driving

licence.

The government Identity Assurance scheme will enable

UK citizens to have their identity physically confirmed

by a number of third-party agencies, such as the Post

Office (which already performs some of these functions

for hard copy government forms).

This all sounds great, and could be a game changer. But

the icing on the cake, and half the cake itself, is that the

UK government has already started working with other

governments to ensure its identity assurance scheme is

recognised internationally, we’ll return to this theme

later on in this paper.


APIs

The second concept, of APIs, is also well underway.

APIs are the interfaces which enable systems to talk to

each other. Banks have been building APIs into their

systems for the last couple of years, mainly so that they

can release mobile apps, which interact with the bank

through these APIs. Some banks’ APIs are more

developed than others, but as mobile apps become

more comprehensive, so will all the banks’ APIs.

APIs have finally provided the much-needed interface

into the dark areas of the bank’s mainframes. For

decades, mainframes have been the primary reason

banks have been inflexible and resistant to change. But

APIs abstract this complexity and provide the much-

needed flexibility.

Identity + APIs = New opportunities

So once we have an international identity assurance

scheme and APIs in banks, consumers will have the

flexibility to do banking globally. Just as you can buy

something from Amazon in Italy, Alibaba in China or

John Lewis here in the UK, consumer banking could

become global too. But aren’t regulators going to have

to quickly catch up, because soon it’s going to be quite

straightforward to open a current account in your local

currency, a mortgage where interest rates are really

low, such as Japan (where they are 0.1%), and a savings

account where interest rates are high, such as Brazil (at

11%).

We’ll want to spread our risk with our savings because

we won’t get the Financial Services Compensation

Scheme – where the UK government will cover my

savings up to £85K. So we’ll spread savings across Brazil

(11%), Turkey (9.5%), India (8%) and Indonesia (7.5%) –

you get the point.

There is an irony here of course. What’s the prefix to

almost every website you visit on the Internet? It’s

“www” of course. And what does www stand for? The

World Wide Web. The WORLD WIDE Web was founded

roughly 25 years ago – it’s taken that long, (plus

another 3-5 years) to really digitally revolutionise

banking.

Also half the big UK banks replace the www prefix with

their own prefix (names like online, onlinebanking and

ibank) – which makes you think they are preempting

the move to globalization.

New opportunities and a new marketplace

Extrapolating beyond this model is what third-party

companies can do. For our purposes we’ll call them

“Financial Services Apps in 2018”. These Financial

Services Apps in 2018 will be automated, and move our

money around to get the best savings rates and the

best mortgage rates. And this can be automated ONLY

because of the identity assurance the banks’ see from

an internal security perspective, and the APIs the banks

offer externally. It really will be the ultimate offset

current account!

What of bank branches? Just like the role of libraries

today – we can buy books from a penny off Amazon

and have them delivered literally to wherever we want

to read them, and that’s just paper books. We can

download and read a digital book in seconds. But we

still have libraries. And bank branches will be the same.

ATMs, telephone banking, Internet banking and mobile

banking – they’ve all “heralded the end of bank

branches”, but we still have them.


What next? How does this affect me?

During a panel discussion with Ian Sayers from Zapp,

Bradley Howard from Endava, Chris Cooper-Bland from

Endava and Nick Telford-Reed from WorldPay, the

following points were made.

If you’re thinking “What next?” or “How does this

affect me?”… the answer is that for all the programmes

you are working on, make sure that you are building

open APIs as part of the project. Some agencies and

industry experts talk about “Mobile first”. At Endava,

we say “API first”.

API first is future proof. Whether your customers start

using Google Glass, wearable devices or their large TVs

at home – as long as your API supports the

functionality, it doesn’t matter what the output device

or channel is. Whereas coding for a specific device is

expensive and likely to be short-termist.

And finally, we recommend a look at the Government

Digital Service (or GDS) blog on Identity Assurance.

Which of us really likes the current username and

password situation? Be honest! Well GDS looks like the

best path to solving the issue. Together with your own

APIs, we look forward to seeing your organisation in

the Financial Services App Stores in 2018.

Thank you We would like to thank to the speakers at “The Future of Digital Payments” event for all their inputs on the topic and

the sparkling conversations generated during the event:

Nick Telford-Reed, Director of Technology Innovation, WorldPay

Ian Sayers, CTO, Zapp

Chris Cooper-Bland, Group Head of Architecture, Endava

Bradley Howard, Head of Digital Media, Endava

About Endava Endava is a privately owned IT services company established in 2000. With over 1,600 full time employees, Endava currently has 11 locations across the UK, USA, Germany, Romania, Moldova and Macedonia, and an annual revenue

of over £40 million / € 50 million.

Endava delivers, builds and runs mission critical IT solutions and platforms for some of the world’s leading companies

in the Banking, Insurance, Telecommunications, Retail, Travel and Media & Publishing sectors. Endava specialises in

delivering services such as: Application Development, Digital Media, Independent Testing, IT Consultancy, Application

Management and Cloud Services.