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The Rise of Biometrics For Financial Institutions
Biometrics, a form of measuring physical characteristics to verify one’s identity, was once a form of cutting-edge technology seen only in sci-fi movies. But with the increasing rates of reported fraud, many organizations are being pressured to find better security options and biometric authentication seems to be the answer.
Many fintech analysts predict that the PIN number will be obsolete within the next several years while others disagree, arguing that it won’t be gone anytime soon. Whether the PIN is here to stay or not, biometric authentication is beginning to play a much bigger role and is quickly advancing as many institutions are adopting this new form of digital security.
Apple and Samsung’s finger recognition capabilities has allowed financial institutions to confidently adopt Touch ID authentication for mobile, which allow users to sign-in with a touch of a finger. The emergence of biometric solutions provides an added layer of security beyond the simple password, measuring specific characteristics of a person, including voice, handwriting, fingerprints, face, retina or iris of the eye, vein infrared thermogram, or a combination of these identifiers. While biometrics still has its faults, many banks are turning to this technology to enhance their user experience for mobile banking by offering users more security and convenience.
Alongside the rise of fraud rates is the indisputable surge of biometric authentication in the mobile space as banks are rethinking security. This post will provide an overview of how biometrics are influencing the banking industry and how institutions can embrace this new technology.
Trends in the Biometric Landscape
As millions of customers shift onto digital platforms for their banking needs, fraud has become a major concern for financial service institutions. According to a study by Grand View Research, the global biometric authentication market is expected to grow significantly over the next five years. The market size for biometrics is expected to reach $24.59 billion in the next six years and a lot of the growth will be seen from banks. Here are some of the major market trends we’ll continue to see during this growth period that will impact the adoption of biometric technology in the banking industry:
PINs and Passwords Aren’t Enough Anymore
While many banks ensure that their customer data is safe and secure with passwords and PINs, customers are still at risk of fraud. Companies such as Microsoft and Intel are beginning to recognize the pressing need for powerful security and are building biometric authentication systems into their future products. Biometric single sign-on (SSO) is a password management technology that protects data from unauthorized users. These forward-thinking companies are paving the way for banks to enter the biometric space for mobile banking.
More Devices Are Being Built With Biometric Technical Capabilities
According to a study by Gartner, over 30% of mobile devices are currently using biometric authentication as a security system. The number of mobile devices with biometric integrations is rapidly growing and something banks should see as an opportunity rather than a barrier to adoption.
Biometric Modalities For Security and Convenience
There are different modes of biometric authentication that institutions can adopt such as fingerprint, voice, retina, heartbeat, facial recognition, etc. HSBC recently introduced fingerprint and Touch ID sign-in to its mobile banking app with many other banks to follow. This eliminates the pains of remembering passwords and suffering the dreaded account lock after too many password attempts. With this new technology, users are provided with an enhanced user experience with greater convenience and security.
Biometric Technology Influencing Other Platforms
Apple Pay is constantly making mobile POS payments on smartphones more secure by using fingerprinting with Apple Touch ID to verify a user’s identity. Previously, Touch ID was limited to the App Store, iTunes purchases, and unlocking the device itself. This new security method caught the attention of banks who are now integrating Touch ID for users to access their mobile banking services. Some of the banks who have already adopted Touch ID include American Express, ING Direct (now Tangerine), and HSBC.
Multi-factor For Powerful Security Assurance
Using PINs and passwords as the sole security option positions consumers as easy targets for fraud. Many organizations are now considering multi-factor authentication (MFA) by combining a fingerprint with either retina, voice, or facial recognition, for example. MFA makes it extremely difficult for a hacker to infiltrate customer accounts.
MasterCard for example, launched its “selfie” pay, which allows users to approve online purchases by taking a picture of their face for verification. In addition to facial recognition, users can also opt for authenticating their purchase with a fingerprint. There has been a rise in the use of multi-factor authentication as biometric technical capabilities are quickly improving.
Biometric identification methods can be achieved on mobile devices either through its built-in biometric sensors, attaching portable biometric hardware to it via a USB cable, or through a Wi-Fi connection. Here are a few biometrics methods that banks are already taking advantage of:
This mode contains more than 200 unique points of data that are stored in the institution’s database. Many biometric experts believe that the iris scan is the most reliable way of authenticating a user’s identity.
This option is said to work best when paired with another authentication mode. At the beginning of the year, HSBC announced it’s introduction to voice recognition mobile apps and ATMs to allow customers to bank without requiring passwords or card swipes.
Facial recognition can authenticate users at ATMs, as well as online and mobile banking. This type of authentication is dependent on the user’s environment such as the lighting or positioning of the face, making it a less effective security option.
Fingerprint scans are currently the most popular form of biometric authentication used on many devices worldwide.
Vein Pattern Authentication:
Vein pattern authentication relies on the unique pattern of veins in the palm, finger, or eye to identify a user. The vein patterns of the user are as unique as their fingerprints, but not as easy to replicate.
These modes of biometric authentication can be used in a variety of banking scenarios, including withdrawing and depositing cash from ATMs, proving identity when contacting their bank, and most commonly authenticating mobile banking apps. With the advancement of biometric technology, passwords, PINs, and security questions are becoming obsolete. Financial institutions are aware that security is never guaranteed with any method, but should be choosing the best solutions available to protect their customers as well as themselves.
Why Adopt Biometric Technology Now?
Ever since Apple launched its Touch ID and Samsung introduced its fingerprint scanner, using the physical characteristics as a form of authentication to access user data has proven to be very successful. Biometrics Research Group has predicted that the technology will generate approximately $9 billion worth of revenue by 2018 for the biometrics industry.
Financial institutions have the opportunity to optimize their user experience; user’s won’t have to remember passwords and usernames, simplifying their lives. In addition to this, biometric authentication cannot be hacked, shared, or forgotten which is why customers are jumping at the chance to use biometrics rather than traditional authentication methods. This technology is particularly ideal for the financial sector as it satisfies banks’ constant need to protect their customers’ information.
The success of biometrics has proven to be extremely valuable in government and business sectors, but it’s the financial sector that has been particularly slow to adopt. Despite reasonable concerns regarding the security and safety of mobile banking customers, biometric technology will be the definite change for authentication – lowering fraud rates one fingerprint at a time.
Tags: Mobile Payments