Froud on Fraud: Top 5 Predictions for 2016

If I was any good at predicting the future, I would be writing this from my yacht in the Caribbean, and not from my kitchen in Southwest London. That said, I do get to work mostly from home, so maybe I’m doing something right.

While my predictions for 2016 will necessarily be as narrow as my field of expertise, there is a lot going on that will eventually change we the way everyone performs many of their daily functions. Probably not this year, and maybe not within the next 5, but once they DO begin to change, there will be no looking back. This is a good thing, and well past its time.

Prediction 1: Identity Management will begin to replace single-factor authentication ANY single form of authentication is inadequate, and even multi-factor and multi-mode authentication is of limited use. For the Internet of Things, payments, or any other transaction to take place securely and accurately in the future, identities must be seamlessly and mutually introduced. Authentication only provides the what-of-you (and usually only in one direction), not the who-of-you, the full function of ‘distributed transactions’ (i.e. mobile based) requires both.

Prediction 2:Identity Management will be decentralised onto consumer mobile devices as a corollary of prediction 1, the control of identities and authentication will decentralise from individual credential stores (user databases) to APIs and/or block chain-esque distributed ledgers that create authentication and identity mechanisms on-the-fly. The level of information provided will be agreed and controlled by the consumer prior to any transaction taking place, and must be mutually assured. i.e. the receiver of the authentication must themselves authenticate, unlike almost all e-commerce today.

Prediction 3: HOW you pay will become increasingly irrelevant you have a value in the bank you want to spend, you should not have to care HOW you get to that value as long as you are getting the best deal to do so. Third Party ‘Money Management’ Services, APIs, and even regulations like the Payment Services Directive 2 (PSD2) here in the EU are forcing traditional financial institutions to open their books. You’ll open ONE application, regardless of which retail store you’re in, comparison shop against price and ratings, and your app wil choose not only the best price and rewards, but the best WAY to pay, all behind the scenes. Credit / debit / direct debit will mean little to you, nor should it, the only thing that matters is that we will eventually stop paying the price of plastic.

Prediction 4: Value-Add Services and Customer Service will be the only differentiators with the enormous competition available to the global economy, price and quality will have little impact on the purchase decisions you make, they will be much the same. Brand loyalty (even if this exists in the future) will instead be driven by the services provided around the products you want; from instant coupons, to ratings and reviews, to reward and loyalty choices, to availability and payment terms, these will be made available instantly in a multi-function app (much like, or even the same as, prediction 3) for consumers to make an educated choice of vendor. But the Customer Service provided throughout the entire consumer journey will be the ultimate differentiator, and any vendor not treating their customer like royalty will be out of the game, regardless of everything they may do well.

Incidentally, this is also why mobile payments have yet to reach anything like their true potential, they are no better than the plastic they will replace.

Prediction 5: Loyalty Programs will begin to centralise I think we can all agree that there are simply too many loyalty and reward programs out there. Every coffee shop, retailer, airline and hotel have their own points scheme, few of which are interchangeable. How many points would you say you have floating around out there that you will likely never use? It just makes sense that the single app provider (per predictions 3 and 4) will begin centralising and normalising any point scheme available. This will be very difficult, but will be their differentiator to which app provider consumers choose.

While these may seem very narrow in focus, perhaps even of little relevance to the ‘masses’, the payments industry alone is a multion-TRILLION £/$/€ industry and the opportunities for innovation and/or investment almost limitless. We already have the device upon which all of these future trends will rely, all we need now are the APIs and Third Party Providers to bring it all together.

Unfortunately we still equate our value with money, and have done for millenia. Money itself is irrelevant, and you work in order to obtain the things you need to survive / be happy, so HOW that transaction is effected should be irrelevant. The above predictions should get us back on track.

Technology and even regulation is pushing simplification down to the consumer, this can only be a good thing.

Done correctly…

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