What the New iPhone 5s Really Means for Banking

What the iPhone 5S Means to Banking

After trying out the new iPhone 5S, you can see the future of banking.  While seemingly not that much different than the iPhone 5, the 5S is a huge step forward to developing a secure and reliable mobile banking platform.


For starters, the 5S has a fingerprint scanner that is unlike any on the market. While it takes us an average of 2-3 tries to utilize the scanner on our laptop, our test of the 5S was nearly flawless. The 5S fingerprint authentication works quick, worked when your finger is placed on the scanner in any direction and has such great usability that you feel a letdown when you go back to typing in the passcode.


According to Apple the odds of another person’s finger working is 1:50,000 or 5 times better than what a four digit passcode could provide. All that said, Apple’s new fingerprint scanner was hacked within 48 hours of release.  No problem, as Apple expected this. Future software updates to modify the transdermal recognition are already planned in the coming quarters that will make the scanner more secure. Further, Apple has a longer term plan that bankers should take note. We will cover this in a second, but first more on the 5S architecture to set the stage.


When Apple does finally produce a phone that is near-hack proof it will roll out its payment platform and that is where the next level of banking will begin. Currently, the fingerprint technology resides on a completely separate A7 chip that is really at the heart of Apple’s brilliance. Up to this point, most fingerprint factors were integrated into the technology chip set allowing the ability to bypass the fingerprint authentication completely. Now, security is taken to the next level.


In addition to developing one of the fastest fingerprint scanners on the market and a secure chip to handle the identification, Apple moved to the 64-bit, dual core processing architecture that allows the fastest processing speed of any phone at one of the lowest power drains. In addition, the more than 1G of RAM will be enough to keep almost any banking application humming.


While other phones will surely catch up, the combination of the above will give Apple a year plus head start in developing the first truly widespread adoption of a payment application. This new payment application will not be impressive for what it can do, but for how other applications access it.


The structure of the new iPhone 5S is such that it not only lays the groundwork for iWatch integration, but brings location-based services a new level that was not previously available before because of the power drain and accuracy. Now, the new iPhone 5S can collect, access, and process very accurate location based data in real time without a significant drain on power.


What this means is that Apple is laying the groundwork to move authentication from its current static framework to a dynamic, behavioral-based methodology. Not only does a hacker have to physically duplicate your fingerprint (which is not that easy), but you will have to be within your home, work or normal route of travel to authenticate a banking transaction. If you are not in your normal route of travel, then an additional authentication step will take place to include behavioral hand gestures, passwords, proximity test of other devices (like iPads or iWatches) or another out-of-band procedure.  The important part here is that the latter will only happen a very small percentage of the time. 


What will emerge is a device that will be crucial for all near-perfect authentications to include other software applications, document signing and even physical building access. The new architecture will also make inside-the-store, aisle transactions possible. Because of the faster processing speed and low power location services, consumers will be able to purchase goods at the point of pickup with sensors verifying the purchase.


Banks will soon upgrade their applications to take full advantage of the fingerprint authentication and the greater memory. However, it will be another year before the full capabilities of the iPhone 5S are realized. We believe that the combination of fingerprint scanning, faster processing, more memory and behavioral, location induced modeling will provide consumers and businesses  the highest level of security available and will give the Apple platform a major  advantage when it comes to securing banking applications, payments and contextual banking applications. 

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