Biometric Research Note: Emerging economies embracing biometric banking technologies

December 19, 2012 - 

As the level of security breaches and transaction frauds increase day by day, the need for highly secure identification and personal verification information systems is becoming extremely important, especially in the banking and finance sector.

Biometric technology appeals to many financial institutions as a near perfect solution to such security threats. Though biometric technology has gained traction in healthcare and law enforcement, its application in banking security is still in its infancy. Due to the close association of biometrics to human, physical and behavioral characteristics, such technologies pose a multitude of social, ethical and managerial challenges.

Banks in North America have not yet ventured to use biometric solutions to enhance their customer offerings due to social and legal issues. However, many banks in the emerging economies of Eastern Europe, Latin America, Asia and the Middle East, which are not hindered by the same legal or social restrictions, have experimented this year with viable implementations of biometric-enabled authentication systems for their customers.

As previously stated in a small opinion piece on BiometricUpdate.com, the driving “push” factor for adoption is that biometric technology shortens transaction time. It provides security unlike other measures used. Using biometrics can prevent Internet fraud, money laundering, and identity theft. Consequently, many financial institutions in emerging economies, over the past year, have been electing to use biometric technologies, such as automated teller machines, in their retail banking operations.

Last month, Leto-bank, a subsidiary of Russia’s VTB, stated that it planned to deploy ATMs equipped with fingerprint scanners to authenticate its customers. And in Japan, earlier this autumn, BiometricUpdate.com reported that Ogaki Kyoritsu Bank began to offer card-free ATMs that allow customers to withdraw cash, make deposits and check account balance by way of biometric palm scans.

In Poland, Bank BPH S.A., committed to implementing finger vein biometrics authentication at its ATMs, providing its customers with more secure money transaction services without the need to use personal identification numbers (PINs) to verify individuals. Subsequently, all 287 of the Polish bank’s branches will start using it as a main method of authentication at teller counters by this year.

Throughout Palestine and Jordan, Cairo Amman Bank has used biometrics to register 100,000 customers, according to a previous BiometricUpdate.com report. The Middle Eastern-based bank has deployed over 500 iris cameras to verify customer transactions at all customer service desks, teller stations and ATMs.

In Latin America, CAIXA, Brazil’s second largest bank, announced in the summer that it had opted to introduce fingerprint sensors to its ATMs. Likewise, BiometricUpdate.com also reported in the summer that Brazilian international bank Itautec, also committed to deploying 12,000 automated banking machines with multispectral fingerprint readers.

In Africa, BiometricUpdate.com even reported that the nation’s central bank mandated the use of biometric verification for all of that nation’s retail banking transactions.

Increasingly, with many large countries such as India undertaking large biometric registration exercises, the expectation is that centralized, national databases will also be able to aid in facilitating retail banking transactions. Earlier this month, BiometricUpdate.com reported that the Indian government launched Saral Money, a unique financial services and electronic payments program, using Aadhaar, the country’s biometric national identity system. Visa is collaborating with five Indian banks to ensure anyone with an Aadhaar number can be immediately issued a pre-paid payment card.

And according to other BiometricUpdate.com reports this year, growing assortments of countries have been using biometric technologies to verify recipients of government payments. In the Philippines, the government has been using biometric technology to authenticate cash grant beneficiaries for poor households. In Pakistan, the government has begun to issue biometric smart cards to pensioners, enabling them to withdraw pensions from banks and post offices.

With governments and financial institutions in emerging economies rapidly embracing biometric banking technologies for retail consumers in earnest this year for payment verification, we can expect even more movement toward widespread adoption next year.

Biometrics Research Group provides forward-looking and systematic data about the global biometric market, allowing industry stakeholders to calculate political, economic and investment risk.

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About Rawlson King

Rawlson O’Neil King is a contributing editor at BiometricUpdate.com and is an experienced communications professional, management consultant, trade journalist and author who recently published a book about control and electronic networks and who has written numerous articles in trade publications and academic journals about smart home and building technologies. Follow him @rawlsonking2.