The role of biometric authentication in the pursuit of global financial inclusion
This is a guest post by Stan Swearingen, CEO of IDEX Biometrics.
Many of us take our bank accounts for granted, but without them, the ability to interact in the economy and wider society is almost non-existent. There are currently an estimated 1.7 billion adults who remain unbanked today across the globe for a range of factors from language, health limitations and physical barriers to a distrust of the financial system.
Financial inclusion is a reference to the quest to make financial services accessible and affordable for all individuals and minorities. Once major factor can be cited as Illiteracy. In fact, according to UNESCO data from 2017, there are as an estimated 750 million adults that remain “functionally illiterate” across the globe.
Research by the Global Findex also claims that the majority of unbanked adults live in the developing world in countries such as Bangladesh, China, India, Indonesia, Mexico, Nigeria, and Pakistan. A major inhibitor for financial inclusion within developing economies is cited as the lack of the correct government identification that is initially needed to set up a bank account. In countries such as the U.S. and UK, formal identity is issued at birth, through the use of birth certificates and thereafter passports. In developing countries however, access to formal identification is scarce, this is due to the costs being far too high and ultimately a lack of daily necessity for formal identification.
There are also those who whilst being banked, are struggling to hang on to their financial independence, due to either physical or mental health limitations. Currently there is an estimated 47 million people in the world currently living with dementia, because of this, sufferers often find it difficult to remember PINs or passwords needed to access their bank accounts. Currently signatures are used as a second factor authentication in this situation, but what happens if someone can’t remember their signature?
The financially isolated
Whilst the financially excluded might be made up of minorities, when combined, those minorities account for a huge proportion of the population that is currently being underserved. Those who lack access to financial services are missing out on the many benefits financial inclusion has to offer, as they are unable to gain access to credit, overdraft facilities or the welfare needed to improve their financial circumstances.
Governments across the globe have a part to play in improving financial inclusion, but ultimate responsibility must sit with the banks and financial institutions to bridge the gap to the unbanked. The argument for the involvement of banks in this movement is twofold. Not only do banks have the opportunity to benefit from additional revenue by reaching out to these individuals, but they also have the chance to build a relationship with these individuals and improve their quality of life. Banks must consider how they can make financial services accessible for all in order to help to strengthen and drive growth in emerging economies.
Further research by the 2017 Global Findex found recent progress in solving the issue of financial inclusion had been driven by digital payments, government policies, and a new generation of financial services accessed through mobile phones and the internet. With a need for simple, secure and convenient authentication solutions to bridge the gap to financial inclusion, biometrics could be the latest technology to assist with this.
Advances in biometric fingerprint authentication mean that consumers can be linked directly to their card by their fingerprint alone. There is no need for traditional government identification in this case as individuals will be personally linked to their card, thus providing a solution to the 1.1 billion people worldwide without official identification. This method of authentication will mean that financial institutions can be confident that the person they are extending credit to is the person intended, as ultimately nothing is more secure, or personally identifiable, than a fingerprint.
Fingerprint authentication will also remove the barriers that face those with literacy challenges, or face difficulty with memory, as card payments will no longer be about what you know, or what you can remember, but who you are. Biometric authentication will be a simple, secure and convenient solution eradicating the need for passwords and PINs as a form of authentication.
Latest advancements in remote enrollment of biometric payment cards will also mean that enrollment for biometric payment cards can take place in the comfort of your own home. This prevents individuals from having to leave the house to visit a bank branch, meaning this solution will be accessible for all, including those who might have physical health limitations.
Fingerprint authentication will eradicate a number of obstacles that stand in the way of financial inclusion, as well as enabling individuals to hold on to their financial independence for longer.
Whilst biometric authentication technologies offer a clear solution to this problem, cost efficiency is vital to future success and will be the difference between failing to utilize the vast benefits of biometrics and providing financial inclusion for all.
To address the issue, biometric companies are already working alongside card manufacturers and financial institutions, paving the way for biometrics to have a real impact on financial inclusion over the next two years. Developments in biometric enabled payment cards could also see breakthroughs in display integration and dynamic CVC, offering card issuers extra value and additional layers of security.
Providing almost a third of the world’s population with greater financial inclusion is a significant challenge that will not be accomplished over night, but these advances in biometric technologies are set to make a real difference.
About the author
Stan Swearingen has served as Chief Executive Officer (CEO) of IDEX Biometrics from April 2018.
DISCLAIMER: BiometricUpdate.com blogs are submitted content. The views expressed in this blog are that of the author, and don’t necessarily reflect the views of BiometricUpdate.com.