The World Beyond Passwords - Biometrics & Banking

Guest Author

Blog By: Tushar Chitra, Senior Director, Product Marketing, Oracle Financial Services

Managing passwords is a big issue for today’s connected customers in a digital world. Customer expectations are changing at a fast pace and is putting tremendous pressures on banks. Security and convenience have a major impact on customer choice. Due to outdated processes and increase in cyber crime, banks have experienced incredible amounts of friction and increased costs.  Banks have realized that one of the best features of biometrics is to present an exact, unique form of identity. Banks need to explore suitable biometric alternatives for authenticating tech savvy users that can balance both these factors. Customer trust in biometrics has also risen considerably in last two years because of the convenience and huge security benefits it has to offer. According to a study by Visa in the U.K., “9 out of 10 respondents (85 %) showed interest in using biometric authentication to confirm their identity by banks and 81 % would trust payment networks”.

Biometrics is a priority for banks right now and several facial, eye, voice, vein, and fingerprint recognition solutions are being implemented. Over the coming years, the global biometric authentication and identification market is projected to undergo significant growth. According to Grand View Research, the market size for biometrics is expected to reach $24.59 billion in the next six years.

The other inflection point in this field has been the rapid development of biometric sensors and the rapid reduction in their costs. Many mobile manufacturers are introducing various biometric sensors in their new launches which help collect data that can be used by service providers. Everyday hundreds of biometric apps are popping up in the App Store. According to a research by Globe and Mail "by 2019, around 770 million biometric authentication apps would have been downloaded worldwide”. Even on the software front, the ability to convert a standard camera into a biometric device has seen an upswing. Due to rising usage of smart phones and biometrics authentication, banks will be forced not only to work closely with biometrics technology providers but also with the biometrics developers to create seamless and easy to use solutions which can help their customers.

Customers are looking for really simple and convenient ways of logging in. Social login is being used extensively for this purpose from existing social accounts like Facebook, Twitter, Google+ or LinkedIn. When the customer visits a site that offers social logins, they have the option to register, log in with their regular ID and password or through a widget or plug-in that connects the site to their choice of social platform. Although it is easy and convenient and helps in blocking spam mails and fake users, it is not very secure for identification and authentication purposes.  Here are some of the areas where biometrics is being explored:

  • Banks can use biometrics beyond authentication, like emotion and mood detection and accordingly cross sell and modify their products.  A bank in New Zealand is using its facial recognition software to measure their customers' behavior in different financial scenarios, for example if the customer has to book a flight at last minute, the software records their muscle movement through webcam and decodes their micro-expressions. As the system captures such emotions better than what humans do, it offers enhanced guidance on their financial decisions using emotions. Recently, an Israel-based bank has become the first in the world to embrace behavioral biometrics as a password replacement on mobile devices.
  • Shopping has been revolutionized due to advances in technology like wearables, mobile payments, wallets, and contactless cards. Retailers are taking full advantage of this and creating lucrative offers and deals for young shoppers to give them best experiences. Alibaba, a major player in mobile payments market recently launched ‘Smile to Pay’ or ‘Pay with Selfie’. Just click on the 'buy' button on the app and click a selfie with a smile to place your order. Mastercard recently rolled out its 'Selfie Pay' in Europe and will open this up for rest of the world by the end of this year. Surely, other major technology vendors like Apple and Google will come up with something in a couple of years.
  • The market will soon start to see solutions which leverage biometrics for improved security and user experience as technology becomes more advanced and sensors (fingerprint, camera, and microphone ) on devices improve. Bank customers are showing an increased interest in IRIS scanning authentication, facial recognition is being used for mobile authentication by companies like MasterCard  and banks have embraced voice recognition for their call-in centers already. Apple is also coming up with a new biometric sensor, which will use a customer’s heart rate from a wearable device for identification.
  • Until now banks have implemented Biometrics for replacement of mobile banking passwords. But now new areas are being explored like multi-factor authentication for high risk activities like payments and money transfers, cardless cash withdrawal and so on. At the basic level, security is about something you know and something you have which can be used for identification, hence making it impossible for someone to forge or tamper financial transactions. Bank of America, HSBC, Charles Schwab, Citi are already using multi factor authentication for their retail customers.

 While banks are deploying Biometrics in a big way and customers are also embracing the shift, there is a high potential risk of cyber attacks, online fraud and identity theft. Banks and service providers are therefore investing heavily in cyber security measures. Banks are working closely with Fintechs to help curb cyber fraud. Fraudulent transactions can occur through multiple channels as customers have the flexibility to access their account from any channel as per their wish.  However, banks with advanced systems that give them a view of all of the customer's  transactions  will be able to able to prevent fraud based on their knowledge of  the customer's previous transaction behavior. Alternative modes like fingerprint scanning, facial recognition, and voice recognition which are nearly impossible to forge, due to the uniqueness associated with them, also offer a convenient way to prevent fraudulent activities. Though banks are pushing hard for a cashless, branchless future, eventually it will be customers who have to accept or reject the new tech heavy banking system.

My colleague Parul Jain and I co-authored this blog. We would love to hear your views.  We are reachable at tushar dot chitra at Oracle dot com and parul dot j dot jain at Oracle dot com.



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