November 20, 2015 -
Financial technology experts are predicting that the PIN number will be obsolete within the next five years as banks turn to biometric authentication technology, such as fingerprint, vein pattern and voice recognition, according to a report by The Telegraph.
Banks will encourage their customers to use biometric readers or contactless payments at retail stores and ticket terminals instead of the standard “chip and PIN” system, by offering discounts and arguing that the technology offers a more secure transaction.
Several major banks, including Halifax and Barclays, have said that PINs are a “flawed” security measure that is inadequate in protecting customers against identity fraud.
Banks have introduced new rules that state that customers who write down their PIN, even in disguised form, will be considered “negligent”.
More than 96% of transactions are used via chipped credit or debit cards. However, the British banking industry lost nearly £480 (US$730 million) million in card fraud, which is the highest loss in the last decade with the exception of 2008.
David Webber of mobile payment software developer Intelligent Environments said the PIN will be “dead” by 2020 as customers are continually losing faith in its ability to protect their money.
“Many customers fail to observe basic PIN security measures which demonstrates a dangerous ambivalence, putting them at risk,” said Webber.
Meanwhile, PINs have become redundant for “contactless” spending in retail stores and at self-service ticket machines.
Webber said banks should begin to prepare to phase out Pins as a result, and replace it with “more progressive security methods.”
For higher value transactions, banks are already acting to introduce increasingly hi-tech payment methods to make it “impossible” for fraudsters to impersonate a customer.
Michael Mueller, head of cash at Barclays, said the bank’s business customers are already using vein-reading biometric technology.
“A PIN is something that you know – but finger vein readers replace this with ‘who you are’ which we think is a lot more secure,” said Mueller. “It’s a significant part of our strategy and I can safely say it’ll be in years rather than decades,” said Mueller.
Despite this, Mueller does not think PINS will “disappear anytime soon” because customers have grown accustomed to entering in the four-digit passwords when they use cashpoints and for higher-value transactions in stores.
“In the long run biometric security will play a much bigger role and is advancing very fast. It will be phased in incrementally in the coming years,” said Mueller.
Meanwhile, Lloyds Banking Group said that some of the new biometric technology is less secure than other methods.
Lloyds is currently testing a wristband that reads a customer’s heartbeat to identify a person based on their unique bodily circulation.
“A heartbeat pattern is the most secure form of identification than fingerprint or iris scanning, because it cannot be replicated fraudulently,” said Marc Lien, a director of digital development at Halifax, part of Lloyds Banking Group. “We test our gadgets on customers to find out if it works and how they react to it. At the moment we’re trialing technology that scans your eyes, along with looking into the use of fingerprints by the likes of Apple, and using systems that identify you by how you type on a keyboard.”
Recently reported, the Hawaii Bankers Association and Attorney General Doug Chin, as well as Michigan Senator Gary Peters, are recommending credit card companies adopt biometrics instead of chip and PIN technology.