COVID-19 has rapidly accelerated digitisation of the customer experience, particularly with respect to how consumers shop, pay and bank. The shift to digital channels has been an important lifeline for many consumers, providing access to essential products and services during a time when physical contact must be significantly reduced or eliminated.

But the pace of digital evolution this year has brought two significant issues to the fore – an increased risk of fraud, and an urgent need to address the barriers some consumers face in accessing digital and financial services, which has resulted in them being  financially excluded. A lack of financial education, physical restrictions, limited access to technology, and security concerns are some of the factors that have prompted the industry to invest more effort and ensure that financial services products are accessible, secure and meet the needs of all consumers, irrespective of age, financial status, disabilities or any other factors.

As COVID-19 continues to change daily life, possibly for some time to come, how do we balance the benefits of digital channels while ensuring financial inclusion and protecting everyone against fraud?

Digital adoption and the risk of fraud

The shift to digital has been happening for years; even before COVID-19 cash transactions represented only 23% of all payments in 2019, according to UK Finance. And digital transformation has fast become a strategic imperative for any business seeking to remain relevant, enabling a technology-driven digital experience across multiple touchpoints, channels and devices, whenever and wherever consumers need it.

Furthermore, regulatory changes have also played a key role in encouraging digital innovation and security, while also incentivising further developments for the benefit of the consumer. For example, changes to strengthen security and authentication standards are a crucial step in ensuring all customers can securely access financial services with great confidence.

As a result and unsurprisingly, the risks of fraud have dramatically increased in light of more digital offerings and cashless transactions, and despite changes in regulation such as extending the contactless limit. In fact, UK Finance released a warning that criminals have been exploiting and adapting to the opportunities COVID-19 has enabled.

An example of this is the closure of TSB branches across the country. Impersonation scams – where fraudsters pose as bank staff – almost doubled in the first half of the year, rising to 15,000 at a £58m cost to victims, and it hasn’t dropped yet. Conducting its own research on the topic, TSB found that over a third (37%) of Brits would respond to at least one fraudulent message claiming to be from their bank, which indicates just how convincing these scams can be.

Against this backdrop, we acknowledge the importance of working collaboratively as an industry to collectively and continuously ensure consumers are educated and aware of the latest online fraud and security threats, and how to prevent them.

Wider digitisation impacts the elderly and visually impaired

While digital evolution brings a degree of risk for all consumers, there are groups of people who are more at risk in a digital environment than others. As pioneers for technological innovation that impacts consumers, we must be mindful of the risks posed to those who are most vulnerable.

The highest risk group is elderly people, who are not only high risk when it comes to coronavirus, but also tend to be most negatively impacted by the shift to digital. This is for a multitude of reasons, not the least that many simply aren’t as tech savvy as younger digital native generations. They also tend to be less trusting of financial technology due to a lack of familiarity with digital processes, information overload or underlying health issues, which makes them less eager to adopt. 

If we look at the UK as a case study, prior to the pandemic roughly four million over-65s did not use the Internet at all, according to Age UK. And, while Mintel has found that 43% of those in this age group have now shopped online, there are likely some who still struggle to adjust to making payments and managing finances digitally.

Physical restrictions such as visual impairments can also impact adoption, which are a prominent route to financial exclusion - using small screens can be challenging and dexterity issues can hinder the ability to use mobile phones and pin pads. Blindness and visual impairment affects at least 2.2 billion people around the world, so it is essential that the digital solutions being developed are inclusive for people of all abilities.  

In 2018, a blind woman made headlines when she lodged a lawsuit against Commonwealth Bank of Australia over its "inaccessible" touchscreen-only Albert POS terminal, which she said was so difficult to use she often needed to share her PIN with shop staff. This is a particular area of focus for MYPINPAD.

The payments industry’s role in supporting vulnerable people

As an industry we have a responsibility to tackle the challenges facing all consumers, and especially those more vulnerable groups. And while the threat of online fraud is present for everyone, as we continue to develop more financial offerings and services that better serve the individual, we must ensure that everyone can access and benefit from these, safely and securely. 

Now, more than ever, we must push forward in the deployment of solutions without friction points that provide equal access for all people, regardless of age, stage, race and ability. This is especially true as smart devices with stronger security standards continue to play an increasingly vital role in supporting our society. 

Payments regulators have identified stronger authentication standards for ‘PIN on Mobile’ which enables smart devices to become financially inclusive payment and authentication tools. From contactless payments and new regulations, to improved authentication measures and seamless user experiences, global financial inclusion payment innovations hold the key to improving the way we transact now and in the future.