By Mike Parker, Specialist Management Consultant, LogicaCMG
Smart Card technology is hardly new. It has been around for over 20 years and in that time has developed a reputation for offering benefits on a scale equalled only by its failure to deliver them.
Much of this has to do with an overflowing of those very laudable human qualities of imagination and enthusiasm. The tendency to fail to consider mundane and trifling issues such as cost, practicality and customer value is a fairly common trait in the area of advanced technologies.
Despite an unenviable reputation as a complex technology, which vendors would like to find a way of getting everyone to adopt immediately so they can recoup their development costs, smart cards have actually delivered huge benefits across a wide range of diverse applications. The deployment of smart cards has proved their worth in secure access, transport, financial services and several areas of government to name but a few.
Naturally enough the institutions using the smart card for its’ primary purpose in their particular area of application are interested in how they might be able to leverage their investment in the technology to gain additional value. Equally naturally the possibility of getting the card to fulfil more than one purpose springs to mind.
Of course it’s not that simple. Creating a smart card to do one thing is comparatively cheap, getting it to do two or more things is incrementally more expensive as far as the card is concerned and even more expensive from the card management viewpoint. This makes the business case much harder.
Smart card prices continue to fall and competitive pressure to deliver greater value and functionality using one token increase, particularly in the financial services sector. The response to this situation though often reflects ingrained “single-function” thinking. This is expressed most clearly in the injunction to “go and find a generic, globally applicable additional killer application to put on our card”. It is implicit that the application should not be anyone else’s even though this would immediately improve the business case as issuing costs could be shared.
This seems reminiscent of Henry Ford’s famous statement about mass-production: “They can have any colour they want as long as it’s black”. The history of modernity is inextricably entwined with an ever increasing focus on the worth and uniqueness of the individual. It was not very long after Ford’s statement that colour, styling and options became central to the automotive industry’s customer offering. Today the emphasis on customer-centric thinking is without precedent and I, the customer, would like to make choices about my card.
Already several banks are recognising the value of this approach. You can now “design” your own credit card picking and choosing amongst different benefits, interest rates and so on. In another example you can submit your own photo and select artwork from a range. Personalisation is inevitably going to become increasingly fine grained, it may well even begin to be distributed through smaller facilities much closer to the point of customer contact.
There is probably not much doubt that the first steps to putting additional applications on cards will involve a single additional application which delivers added value within the Issuers industry sector and comfort zone.
In the case of the banking industry the addition of functionality that can be used in conjunction with a cheap hand held card reader to secure Internet Logons through strong authentication springs to mind. Even so with re-issue periods being two to three years it may be a whole cycle before we see more than just a payment application on most credit and debit cards.
Yet while the different industry sectors which use smart cards for different purposes are in many cases casting around for the added value application applicable to their own cardholder population, they may be missing the possibility of offering customers a choice about what goes on the card. If the customer is able to choose then the make up of the cardholder base may change from its previous single application focus, and open up completely new business opportunities.
In summary, the versatility and choice that could be offered by multi-application cards is much more attractive to the customer than an additional application that the issuer has decided is the “killer”. It is after all the customer who finally decides which card goes in their wallet and whether it is at the front or the back. If I am going to have to carry a biometric ID card in the near future I would certainly like it to be able to do more than just confirm that my finger is actually mine. Maybe we should be thinking about who will rent chip space from the Government and who will compete to be on the menu of available additional applications.