CFPB boss urges banks for greater consumer control over payment methods
Third-party tech providers are likely to bring increased competition to this space in the future.
Technology is constantly enhancing the way we manage our finances. The leading US consumer watchdog agency stresses banks need to improve digital services and accessibility in order to better serve customers.
On the eve before stepping down as director of the Consumer Financial Protection Bureau (CFPB), a position he held after being appointed by former President Barack Obama in 2012, Richard Cordray wrote a letter to the chief executives of several banks, credit unions, and finance companies, encouraging them to think creatively about how they can give their customers more control over payment methods and elevate associated services.
“Today I am writing to you again to urge upon you an issue for your consideration, which we believe is especially timely and important for American consumers,” Cordray wrote in his letter.
Cordray insists digital servicing platforms have the potential to create more security by establishing controls that make it difficult for unauthorized transactions to occur. He emphasized that customers were also seeking greater control over the way they spend their money, keen to enforce their own limits on how, and to what extent, their accounts are accessed.
Some institutions already have features on their mobile apps that enable customers to instantly switch on and off payment card capabilities when a bank card is misplaced, lost or stolen, without having to cancel the card.
While Cordray finds this technological attribute laudable, he believes there’s much more that can be done.
“For example, with digital servicing, financial institutions may be able to offer consumers the ability to set spending limits on a card-by-card basis for particular merchants, channels of transactions (online versus phone versus in-person versus recurring transactions, for example), or categories of spending,” he said.
“Digital servicing may also allow customers to receive an alert or warning if a transaction is attempted that falls outside the consumer’s personal preset parameters (or parameters for an authorized user). Financial institutions could likewise embed other money management tools within their online and mobile platforms.”
Cordray warned that third-party tech providers are likely to bring increased competition to this space and therefore those who don’t move quickly in this direction may find they risk losing business to those who do.
For example, Apple Pay Cash, Apple’s peer-to-peer payments service, arrived in the latest iOS update, allowing users to pay people via their cell phone’s messaging service and make purchases in stores, in apps and online.
In October, international technology company IBM joined forced with blockchain startup Stellar and payments company KlickEx Group to enable high-speed cross-border payments for banks and other financial institutions.
Blockchain, the technology behind bitcoin, is a revolutionary distributed-ledger technology that offers a secure and immediate way of transferring a range of data – more specifically, in this case, currency transactions.
Earlier this year in June, finder.com co-founder and director Fred Schebesta interviewed 10 leading experts from fintech companies that deal with cross-border payments and independent consultants to get an idea of the tech innovations they’re most excited about, what they’re working on right now, their predictions for the industry, market segments that will be most affected by these technologies and how to overcome challenges.
A recent report found three out of four banking experts (76%) believe that in the next three years, the majority of industry organizations will deploy Artificial Intelligence (AI) as their primary point of customer interaction.
Compare a range of financial products and payment methods before deciding on your next credit or debit card.