The Mobile Payments Biometrics FinTech Boom

Mobile payments. Biometrics. FinTech.

That about sums up the buzzwords for 2015. Those very buzzwords are what has driven innovation and product/service launches throughout the year, and what will continue to do so during 2016. But what’s most interesting about those three topics is how the are colliding and converging into one major industry that’s setting the tone for the next generation of payments.

In fact, new research on the subject points to just how booming of an industry the “mobile biometrics” has and will become. The latest data from Goode Intelligence indicates that as of today, there are at least 120 million customers using mobile biometrics on a daily basis for their financial transactions.

In terms of what that means for 2016, the forecast shows there will be 16 billion mobile biometric payment transactions. And by 2020, the number of FinServ customers using biometrics to authenticate payments via mobile devices will skyrocket to 1.1 billion.

“Biometrics is a disruptive force for the financial services industry and is being used by new FinTech entrants, including mobile device manufacturers and mobile platform owners (Apple, Google and Samsung), as a method of dominating the banking and payment experience through ownership of a customer’s identity,” wrote Alan Goode, Founder of Goode Intelligence and author of the research report.

“This fact is not being lost to the established banking and payment providers who are responding with the development of their own mobile biometric identity solutions that attempt to regain control from the technology companies,” he continued in his report.

Of course, the biggest disruptor in the mobile biometrics industry has been the implementation of TouchID. JPMorgan Chase, for example, in the past year has integrated it into their mobile banking app for a seamless customer login that eliminates typing in a password. With more and more security requirements being placed on financial service providers, Goode points out that the pressure is being put on FIs to implement more secure tech.

For one, that often means ditching passwords for fingerprints. And then there’s iris authentication that Samsung has tapped into. Or which may eventually pave the way for “selfie mobile payments” through facial scanning innovations from companies like MasterCard and Alibaba, or voice recognition from a number of other mobile pay players.

As the competition to stay relevant in the modern-day banking and financial service space heats up, banks are having to appease both sides of the spectrum. That means ensuring security standards are being met, and also that customers feel banks are providing the latest tech on the market.

“We are seeing a flurry of activity by banks and payment services providers investigating ways in which they can implement mobile-based biometrics that meets their security requirements and satisfies the business need to manage their customer’s identity,” Goode wrote.

The Pay Players Weigh In On The Hill

The release of this report comes around a particularly interesting time for the mobile pay industry, as it’s been top of mind on the congressional docket as earlier this month representatives from PayPal, Samsung Pay and MCX gave testimony in front of the U.S. House Energy & Commerce Committee about mobile payments and biometric security.

The mobile pay players, of course, pitched the security (stronger authentication) of mobile payments. PayPal’s VP of global payments policy John Muller spoke about the necessity of mobile biometrics.

“Biometric authentication features on mobile devices are radically changing this [mobile] model and, subsequently, are minimizing damage done in a breach or hack,” Muller testified at the hearing.

“Through PayPal’s leadership and collaboration with Samsung and the FIDO Alliance, PayPal was the first payment company to introduce fingerprint biometric payment authentication on Android mobile devices,” he reminded the committee.

Rep. Frank Pallone Jr., D-N.J., was quoted as saying that the committee wants to: “explore the new ways consumers are paying for goods through their mobile devices, and how consumer information is being secured on mobile devices.” He followed those remarks highlighting the security aspect of the conversation saying that “we want to be sure that information saved on mobile devices is secure, even if data on mobile devices can still be hacked.”

The need to ensure mobile devices are secure for financial transactions is increasing as more and more consumers embrace mobile payments. With projections from eMarketer forecasting that the value of the mobile payment transaction market will grow 210 percent in 2016 (which suggests that close to one and five smartphone users will make an in-store mobile payment in 2016), that shows the urgency of these discussions.

“In 2015, mobile payments will total $8.71 billion in the U.S., with users spending an average of nearly $376 annually using their mobile phone as a payment method,” eMarketer’s research suggests. “By 2016, total mobile payment transactions will reach $27.05 billion, with users spending an average of $721.47 annually.”

There’s an estimated 23.2 million that made proximity mobile payments in 2015, but the projections for 2016 show that will jump by 61.8 percent to 37.5 million.

With mobile payments projected to triple next year, there’s a lot on the line for the major mobile pay players to keep up with. And from the looks of the industry research, mobile biometrics are going stay in line with that trend.