Translated from original La carte bancaire : de nouveaux enjeux sur un marché en pleine mutation (latribune.fr)
Cuong H. Duong, President & CEO of Linxens
While some players recently questioned the future of the bank card, as did some European banks, it is clear that the small rectangle, often blue, is still firmly anchored in usage.
The latest indication? Swile's $200 million fundraising, announced on October 11, and the decision to tax-free tips by bank card announced by Emmanuel Macron at the International Restaurant Show in September. These are strong signals that remind us that the French are using cash less and less and are using cards for all their payments, whatever the amount.
But if the customer values the bank card, this is even more true for banks. With the birth of fintechs weighing more and more in the ecosystem and the digitalization of traditional players, the bank card is becoming the last physical element linking the customer to their bank, especially for online neo-banks. As a result, it is now at the heart of a real battle, with various challenges to which it must respond.
Maintaining links in a digitalized world
First of all, there is the issue of the future of the bank card, the vector of a unique link between the bank and the customer. Indeed, in addition to the symbolism of the object in a virtual financial world, the bank card is a source of precise information on the customer for financial players. From this point of view, the rise of wallets and other payment intermediaries is a risk for traditional banks, which find themselves deprived of useful information. It is therefore in their interest to invest in making the public want to continue to use the bank card, to show it off and to make it an object of social recognition.
Undoubtedly, investments will also have to be made to strengthen cybersecurity and combat fraud. But how to invest in this highly regulated world? How can we innovate in the face of the automatic use of traditional bankcards acquired over time?
With the arrival of the PSD2 regulations in Europe, the online payment process has become considerably more complex, with - for example, in France - double verification via the smartphone application. This lengthy process, subject to new hazards ("what if my battery is flat?", "what if I've forgotten my phone?", "what if I don't have a network?") has finally become part of the routine. However, wouldn't the customer be happy to go back to a simpler and still more secure transaction? These are the opportunities offered by the biometric card, or the dynamic cryptogram card where the three-digit security code on the back of the card changes regularly. Two innovations that are coming onto the market, and that will simplify the daily life of customers of banks that are increasingly attentive to the experience they offer them.
Become THE preferred card
Indeed, behind the issue of data access and cybersecurity lies the third challenge: becoming THE preferred card in a wallet. With the arrival of new financial players, the French find themselves owning more and more frequently several bank cards (for joint accounts, personal accounts, a meal voucher card, etc.) - whereas just a few years ago, unlike the US population, they had only one. According to available statistics, the French had an average of 1.24 bank cards in 2012, and 1.44 in 2020: the evolution is significant.
This new reality, which implies greater competition, is forcing banking players to innovate further, and beyond just practical or technical aspects such as cyber security. Like the car in the past, the bank card is becoming a status object, which can be displayed from a specific angle at the time of payment: a wooden card for an eco-responsible aspect, a heavier metal card for a premium effect, coloured electronic modules for a design effect. One of the latest examples, the Swile restaurant voucher card announced on September 28 that it had decided to "push the personalization cursor to the maximum level", by allowing its customers to choose the color, the engraving or even the PIN code... The multiple innovations open a new field of possibilities - and a field of competition - for financial players.
The bank card, such a common yet complex object, is already facing major challenges today: creating a link between the bank and its customer, repelling the risk of fraud, but also representing its owner in the most faithful way possible. However, as dematerialization and competition in the traditional banking sector become stronger every day, its importance in the future will be even greater. Will the bank card be able to meet these challenges? I think so.