The next top-end iPhone's probable use of facial recognition technology is likely to rapidly spur changes to banks’ mobile offerings.
Though the latest iteration of Apple’s juggernaut won’t formally debut until Tuesday afternoon, many of its features, including facial recognition tech, have already leaked. Though bankers were reluctant to talk about their plans ahead of the launch, there were signs many would move quickly following Apple’s announcement.
“We focus on new technologies and being first to market,” said Alice Milligan, chief customer and digital experience officer at Citi Global Cards. “We are maniacal about serving digital customers in ways they demand, and in new ways they don't expect. And this requires us to stay at the cutting edge of device and operating system developments in the industry through such endeavors as our current exploration of integrations with Siri and so forth.”
A Wells Fargo spokesman noted that the bank has been exploring how biometric authentication can improve the user experience in digital environments, suggesting that it might be interested in the new iPhone’s capabilities.
“In our Innovation Lab, we’ve built prototypes for facial, palm, fingerprint, and voice authentication,” he said. “Currently, some corporate banking customers are scanning their eyes with their mobile phones in place of an ID and password to access their accounts, and consumer banking customers are using their voice to authenticate themselves when they call a phone banker. We, like many of our iOS-enabled customers, look forward to hearing more about Apple’s next iteration.”
Apple is rumored to be releasing different versions of the iPhone. The iPhone 8 is expected to be a moderately upgraded version of the iPhone 7, while the widely expected iPhone X, the price of which may top $1,000, is expected to include all the extra bells and whistles, including facial recognition.
Some say the next iPhone will not spark as big a change as previous versions.
Jacob Jegher, senior vice president for banking and head of strategy at Javelin Strategy & Research, said bankers are excited about the next launch, but “there’s a general feeling of, how much further can smartphone technology really go?”
“Are we at the point where this is now a mature device and the types of improvements you're going to see are better screens?” he said. “How much resolution can you get on five inches? New forms of authentication are interesting, but let's recall that banks have already implemented forms of authentication and already have those mechanisms in place.”
Indeed, the Samsung 8 smartphone already comes with facial recognition tech, and a few banks, including USAA, already offer it on their own apps.
Still, the iPhone remains the best-selling smartphone, and could speed adoption and use of the tech.
When Apple released TouchID, many banks were onboard and ready to use the fingerprint recognition in their apps soon after the launch.
“When TouchID came out, we all thought, is it going to work? Will it be real? How soon will it emerge?” said Douglas Hartung, senior director of global software innovation at Diebold Nixdorf. “Very quickly after TouchID was made available to third parties, the mobile banking app providers started to support it and what I considered to be a very large number of banks supported it. I don’t see why we would expect it to be different in this case. The fact that you can just pick up your phone and you’re automatically authenticated into that application, seems like a very clean user experience.”
To be sure, there is often hesitancy with this type of change, Jegher said. “Any new technology for a financial institution involves planning, it involves testing, it involves fear, but it also is an opportunity,” he said.
“I think like any new technology, you'll find those that are willing to go out on a limb and experiment and say we're going to be one of the first,” Jegher said. “I expect folks to test it.”
It may ultimately turn on whether the bank’s pool of Apple customers is worth making login more convenient and easier.
It’s also possible that Apple’s facial recognition will be linked with Apple Pay, allowing people to pay with a selfie.
“What I'm most interested with Apple Pay or any form of mobile payment is what will drive adoption and usage?” Jegher said. “Because right now, mobile payments using a smartphone is far from ubiquitous and it will take a lot more than a new form of authentication to increase usage of mobile payments.”
Hartung sees promise in the use of Apple’s facial recognition to help authenticate ATM transactions. It would be a cheaper and simpler alternative to hardware-based biometrics on ATMs.
Apple is also said to be ready to launch an updated Apple Watch Series 3 and Apple TV 4K. These could both theoretically be vehicles for mobile banking, but previous efforts have disappointed. Though a few banks have created apps for it, Apple Watch banking never took off and TV banking has never become a thing.
Some features thought to be in the iPhone X make the phone more useful, but don’t necessarily add anything to mobile banking — for instance, wireless charging, an OLED screen, a virtual home button and a tap-to-wake feature. And one feature doesn’t appear to have any practical application, the Animoji — the ability to send three-dimensional animated emoji based on facial expressions.
Yahoo Finance conducted a survey that garnered responses from 15,000 people to find out what people most want from the new iPhone. The most desired feature was longer battery life, the first choice of almost a quarter of respondents. The second-most desired feature was an unbreakable display, which 16.7% of survey respondents said they wanted most.
“There is a Maslow hierarchy of needs going on,” Hartung said. “I love the new tech, but can I just not charge my phone at midday?”
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