92% of Large Banks Interested in Metal Cards to Boost Security

As banking fraud unfolds, financial institutions (FIs) are challenged to protect customer data and provide pleasant customer experiences. The rise in credential theft has sparked interest in solutions like tap-to-authenticate metal payment cards, which are embedded with chips and let users authenticate by tapping the card on a smartphone.

A PYMNTS Intelligence report, “A Tap Could Solve Banking Authentication Problems — With the Right Metal Payment Card,” in collaboration with Arculus, shows most FIs believe these cards can improve security and profitability.

The Need for Improved Authentication

Fraud based on stolen credentials accounts for 41% of all fraud cases, surpassing other types like fraudulent transactions (24%). Nearly 90% of FIs have reported an increase in credential-based fraud over the past year, highlighting the weaknesses of current authentication methods. As password-based systems prove inadequate, FIs are turning to tap-to-authenticate cards as a secure, passwordless solution. Consider 76% of FIs believe these cards could increase profitability by reducing fraud and enhancing the user experience.

Large FIs, especially those with assets over $100 billion, show the most interest in tap-to-authenticate metal payment cards. According to the report, 92% of these institutions are either significantly or somewhat interested in implementing the technology, driven by its potential return on investment. By adopting this authentication method, FIs aim to reduce fraud, bolster security, improve customer satisfaction and increase profitability.

The Challenges of Current Authentication Practices

The current banking authentication landscape is fragmented, with FIs using a mix of usernames, passwords, biometrics and one-time passcodes. This lack of standardization creates a cumbersome experience for consumers, as 76% of FIs require multiple authentication steps for monetary transactions and more stringent methods for actions like changing personal information. As a result, consumers face inconsistent and often confusing processes depending on the type of transaction.

Physical passkeys, such as tap-to-authenticate metal cards, are underutilized but gaining popularity as a streamlined solution. These cards offer enhanced security and convenience by allowing users to authenticate their identity with a simple tap on a smartphone, eliminating the need for passwords or multi-step processes. As consumers become more frustrated with remembering credentials and logging into multiple devices, FIs are eager to adopt tap-to-authenticate technology to simplify the authentication process and ensure security.

The ROI of Tap-to-Authenticate Cards

While the initial cost of implementing tap-to-authenticate metal payment cards may seem high, many FIs already offering metal payment cards view the investment as worthwhile. According to the report, 96% of FIs issuing metal payment cards believe that adding tap-to-authenticate technology would improve the customer experience and elevate loyalty. Additionally, 84% expect that the implementation of this technology would increase profits and strengthen security.

FIs already offering these cards report smoother authentication processes and reduced customer service costs. While some institutions are hesitant about the initial expense, the potential for improved security, customer satisfaction and ROI makes tap-to-authenticate cards a compelling investment. Additionally, future iterations of this technology could lower costs by using plastic cards instead of metal, making the solution more accessible to a wider range of FIs.