September 4, 2014 -
This is a guest post by Steve Cook Director of Business Development at Facebanx
Examining the use of biometrics in ID protection and KYC
Biometric identification systems are now being deployed within various applications into more and more public and private institutions. For those that are new to biometrics, biometrics are the unique characteristics of a human being that can be used to clearly identify a person. Biometric technology such as fingerprint, iris, face and voice recognition is now widely available at an advanced level and has many different user cases when it comes to the financial services sector.
One of the key areas where using biometrics will play an important role will be in the on-boarding process. It will form part of the credentials of an individual in the enrolment procedure. For example, some new online banks and mobile wallets are now requesting new customers to add one or more biometric characteristics during a registration or transaction process. This could be an impression of your finger to create a unique fingerprint, or a voice print containing a phrase or random numbers, or even a photo of your face. 80% of Apple iPhone 5S and Samsung Galaxy S5 owners are already familiar with using their fingerprint to unlock their smartphones. In the case of the Samsung Galaxy S5, customers can already authorise certain payments through their PayPal account by just using their unique fingerprint as authentication. Apple had announced recently that it was opening up the API for its Touch ID fingerprint sensor to app developers so that it could be used for authentication. Apple is also planning to launch its new flagship iPhone 6 very shortly with a digital wallet called the “Apple Pay” that allows their customers to make physical purchases with fingerprint authentication.
The fingerprint is currently leading the way in the biometrics field as the choice of preference, but other biometrics such as face and voice are not far behind.
Biometrics are seen as a high end tool for verifying new customers. It also meets with banking compliance regulations. Both banks and card companies are looking into the possibility of introducing biometrics as a way of improving their KYC (Know Your Customer) processes. Visa Europe recently announced that it is going to introduce biometrics in order to enable quicker and more secure payments on mobile devices. Retailers are turning to different APIs that store payment card data in the cloud. This way a consumer doesn’t have to type in all the payment card information but instead just properly authenticate to the site. Visa’s digital payments objective is to strive to ensure the payment experience facilitated by such technology is safe, secure and consistent for consumers.
At Facebanx, we are currently working with a number of banks, payment processors, money transfer operators and mobile wallet providers, utilising both the face and voice biometric applications as a way of proving who a person is. For example, in the on-boarding process, a customer will be requested to add an image of their face. A photo of a person is taken through existing hardware such as the camera from a PC, tablet or smartphone. That image is added to the database. It is also checked to see if that face matches any other faces in the database. This can prevent multiple accounts from being active in different names. Facial recognition technology has an accuracy of around 95-99%, providing a good quality photo can be taken. If a number of face matches occur, known as false positives, a voice print can be taken and then matched against these identical faces to reduce the selection down to just one person. A customer may be asked to read out a set of random numbers for example. The software detects these patterns to prove a liveness test and to show whether the person is genuine. However no single operator should solely rely on biometrics for a complete verification method, but using two or more biometrics within the enrolment process reduces the risk. Using biometrics in conjunction with other verification checks can provide that extra secure layer of authentication.
So what is in it for the customer? Why would consumers want to add their unique biometrics to their personal accounts? Providing a customer’s privacy and data protection rights are upheld then there are considerable benefits for consumers to adopt biometric verifications. Obviously it is an easier way to pay for goods and services allowing for a frictionless process, with instant log-in into an account replacing the dependency for passwords with different accounts. New technology is moving all of us into these new ways of proving who we are. However one of the strong cases for consumer adoption is preventing identity theft. Having your unique biometric characteristics pinned to your bank account makes it much harder for fraudsters to circumvent your account. With the amount of data breaches and account takeovers that are happening these days, biometrics could be seen as the answer for preventing your ID from being stolen and what is more, being used to perpetrate other frauds. Recently a group of Russian hackers have amassed the largest ever cache of stolen internet credentials, reportedly accumulating more than 1.2 billion user name and password combinations and more than 500 million email addresses.
Identity theft is becoming a daily occurrence. Identity theft is one of the most insidious and fastest growing consumer crimes in the United States. It affects nearly twelve million people every year. That’s around 30,000 identities stolen every day. These are alarming statistics, but even worse is that some of these identity theft victims are arrested for crimes committed in their good name.
There are many different scenarios for adopting biometric technology; from replacing passwords and password re-sets to improving KYC methods, identifying fraud, preventing account takeovers and multiple accounts from taking place. However it is in the on-boarding process that biometrics will play a key role. Over the next few years, using your face and voice to open accounts and to purchase goods and services will become fairly standard, particularly with the younger 16-25 age group, where biometrics has already hit the mainstream with the advent of the smartphone and tablet ‘selfie’ generation.
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