BMO is betting that newly popular biometric authentication options can solve an age-old problem—the headaches business travelers face when managing smaller expenses.
The new options are the fingerprint readers built into more and more modern smartphones, including Apple's TouchID. And while many other issuers are focused on bringing this technology to consumers, BMO sees a way for biometrics to address a pain point of corporate spending.
"Everybody talks about how biometrics will reduce fraud. The key for us is customer experience. We have many ways to stop a suspicious transaction today, but you also want to execute the valid transactions easily," said Steve Pederson, head of North American Corporate Credit Card Products at BMO Financial Group.
The bank, which has a large T&E business including the Diners Club brand in North America, sees embedded mobile technology such as fingerprint authentication or mobile self-portraits as a way to give business travelers a security option that's more palatable than old school protections such as the 3D Secure protocol that has long backed SecureCode for MasterCard and similar card network online security.
The card brands are updating the older 3D Secure protocols, part of a broader industry effort to support biometrics and other risk-based ways to replace static passwords that have to be entered frequently.
"I think the key here is the potential for biometrics to be easier than the existing stepped-up mechanism," said Julie Conroy, research director at Aite Group.
A lot of financial institutions are still using hard tokens for transaction authentication, which are easy to forget, Conroy said. "And even as many financial institutions migrate to one-time passcodes sent via SMS, that can still represent a challenge for business travelers, since SMS delivery is not assured, particularly in cross-border scenarios."
A biometric, on the other hand, is something that a user will always have, and the mobile device makes biometrics easy to use, Conroy said.
Pederson hopes the trend will boost online payments for corporate card users, both for procurement in the home office and for travel expenses while on the road.
The latter is more complicated because online purchases can originate from different locations, thus making the payments more likely to draw a red flag that requires stronger authentication, Pederson said, adding ID security that can make quick use of existing smartphone technology can be helpful.
"You're on the road and are booking travel on your own, there are more digital transactions happening today where you would interface with [3D Secure]," Pederson said. "Biometrics takes out this interaction and replaces it with a user friendly approach."
Biometric fingerprint and photo identification methods cover technology available on most smartphones.
"A lot of the recent mobile devices have fingerprints, but the 'older' smartphones have cameras that can take selfies," Pederson said. "Making multiple tools available is important to serve the whole customer base."
BMO is deploying biometric authentication in collaboration with MasterCard. Users will access the MasterCard Identity Check mobile app to scan their fingerprints or take self-portraits to validate their identities, then return to the merchant's site to complete the online purchase. BMO also have plans for availability beyond corporate cards, but the bank did not reveal its timeline.
"Consumer security and consumer experience have long seemed at odds," said Jason Malo, principal executive advisor at CEB, adding smartphones can bridge that gap, and consumers are more patient with security measures given public awareness of the threats. "Consumers now want more security and we can deliver it in an intelligent, low cost way."