I wanted to take a few minutes of your time to provide you an overview of research and commentary that has been published by the Emerging Technologies Advisory Service here at Mercator Advisory Group. I hope the structure below will help you quickly zoom in on those topics that most interest you.
E-Commerce Security and New E-Commerce Payment Opportunities
One of our most recent reports Securing E-Commerce: Competing Technology Crowds the Market, released in February, identifies why we expect 3-D Secure, version 2.0 (3DS2) will enter the U.S. market faster than many in the payments industry expect. The report also highlights new opportunities that will be created for those organizations that can tie together device provisioning with the issuer’s authorization process. Still, as the networks often do, the networks are promoting a new EMVCo Secure Remote Commerce (SRC) standard that leaves merchants questioning the value of moving quickly on 3DS2. The major networks really need to consider more carefully the impact their announcements will have on merchants. On the plus side for merchants is an advance the Mercator report cited above also identifiesحwe explain how the W3C Payment Request API can be used to quickly enable existing browsers to support a wide range of new payment types for online shopping, including a merchant-branded direct debit capability if merchants are so inclined. This could be implemented directly by the merchant or by those service providers that are already offering direct debit capabilities.
Next in queue for release by this Service is a report to be released soon titled Should Banks Do Cryptocurrencies?, which addresses cryptocurrency broadly. Recently in Payments Journal we stood up for Ripple when Forbes suggested it was a scam and mocked the idea that Ripple, as it exists today, is a better cross-border solution than Visa and Mastercard. We also argued that volatility of cryptocurrency is not the primary reason the public hasn’t accepted it. Rather, the reason is a total lack of acceptance locations and all the bad press regarding exchanges losing or stealing crypto. Last, we offered an alternative to the rumor that Facebook was considering a plunge into the crypto world. We suggested that Facebook avoid issuing its own cryptocurrency and instead focus on a closed-loop prepaid crypto, perhaps specific to loyalty and incentives that could easily follow existing prepaid regulatory constructs.
We are currently working on a report that looks at the fascinating concept of self-sovereign identity and its recent adoption by IBM, Microsoft, and Mastercard. We did a project almost three years ago with CO-OP Financial Services that evaluated the Evernym solution, which is the foundation of the Hyperledger Indy project and the basis of the Sovrin Foundation. Evernym, Hyperledger Indy, and the Sovrin Foundation combined have addressed many of the concerns identified in that custom white paper and has won public support from industry giants. If interested in learning about what self-sovereign identity is and why IBM has bet on it, this article I wrote for PaymentsJournal when Facebook lost vast amounts of consumer data in late 2018 might help.
We have a substantial body of research regarding biometrics, behavioral biometrics, and authentication in the Emerging Technologies Advisory Service archive on the Mercator Advisory Group website. These topics are particularly relevant with respect to a challenge response initiated by 3DS2. Few banks have really considered how they will lock down a delivery channel to the user’s handset so that a challenge can be sent safely and securely. The current reliance on the SMS channel (deprecated by NIST) is a recipe for disaster. We covered a recent press release that suggests one solution here, we looked at how important it is to have a multifactor strategy here and here, and we shared our doubt about adoption of fingerprint-enabled payment cards here.
AI / Machine Learning
Since Mercator’s release of the research report 70+ Processes Banks Have Already Improved Using AI in January, an almost unlimited number of new topics worthy of research and analysis have presented themselves. For example, there is the impact AI will have on retail shopping. There is also this article that highlights the importance of training data in the development of any AI tool. This is particularly relevant today because synthetic data, a topic discussed in a paragraph in the Mercator Emerging Technologies Service research report Bringing AI into the Enterprise: A Machine Learning Primer almost two years ago has become very important for both creating training data and providing a mechanism to share data with others safely and securely without releasing any PII, or personally identifiable information. (If you have the time, this PaymentsJournal podcast describes how ARM Insights utilizes synthetic data to safely share bank information.) To be clear, I am a huge proponent of AI but I’m also very concerned about its social implications. As AI displaces unskilled jobs, business leaders need to consider the implications or eventually the government will have to.
When I read that Bank of America’s Chief Operations and Technology Officer Cathy Bessant is a blockchain skeptic, I couldn’t resist piling on with the #BlockchainSkeptic hashtag here despite the fact that I fully expect there will eventually be several blockchain success stories. The problem is that disrupting industries isn’t for the faint of heart and so there won’t be nearly as many success stories as are currently enjoying an insane $4 billion in VC funding. Even worse than that level of investment in blockchain start-ups is the insane activity around ICO funding mechanisms. What could be better than an investment platform built on as yet unproven blockchain technology that uses as yet unproven smart contracts (I know not all utilize smart contracts but some do) that operate in an almost totally unregulated market? This article, which includes content from Scott Purcell provides what I consider a well thought out perspective on ICOs.
If you are an Emerging Technologies Advisory Service member interested in delving into any of these topics in greater depth, let’s set up some time to do so! Just email me at firstname.lastname@example.org with three or four times that you are available and I’ll try my best to accommodate! By the way, if you find this recap was worth the 3 hours it took me to create it, please let me know at that same email address!
All the best!
VP, Payments Innovation
Mercator Advisory Group