Top 5 biometric recognition methods to reimage digital banking systems in 2023
By Damien Martin, Marketing Executive at Shufti Pro
When it comes to money, online payments, and other financial errands, security is the paramount aspect to consider. With digital fraud seeing a spike in recent years, the protection of nearly 215 million online banking personnel is soon to come completely at the mercy of cybercriminals. Therefore, the security threat concern is grasping the utmost attention both from online banking service providers and regulatory watchdogs.
With huge advancements in financial technologies, there has been an unprecedented and hastened shift to remote payments where digital banking service providers cannot leave security protocols behind. Furthermore, financial companies do not consider online transactions the only center rather, consumer protection, innovativeness, and adaption to new technologies are equally crucial.
In this shift towards open banking, biometric recognition solutions address the majority of external fraud risks during digital payment processing.
The concept of digital banking
The evolution of financial technologies has transformed conventional banking from time-consuming, face-to-face, and lengthy processes to more swift transaction systems. It all began in the 20th century with the launch of USA’s Fedwire – the world’s first e-fund transfer solution. Right after this, the launch of credit cards in 1950s was another step towards digitization of global banking systems. Since then, there has been no stopping the revolution of payments.
All of this came crashing down to the 2008’s Global Financial Crisis which created a vacuum for online banking success. However, the development also formulated a conducive environment for fraudsters, with a record increase of 30 percent in 2022. Hence, this leaves no doubt why customers are skeptical about the security of their online bank accounts.
Impact of biometric technology on online payments
Biometric authentication technology is a potential combat for increasing fraud incidents in the online banking sector. It takes identity verification, data security, payment authorization, and ongoing monitoring to other levels of accuracy. The use of biometric recognition has taken manifold in digital banking operations by tossing reliable fraud detection methods more often.
From fingerprint analysis to eye pattern scanning, biometric authentication technology has come a long way in transforming online payment security. It replaces passcodes, user PINs, and Two-Factor Authentication (2FA) with biological/behavioral screening for high user safety.
Types of biometrics and their individual benefits for online banking systems
The demand for online payments highlights an increase in the usage of digital wallets, credit cards, Buy Now, Pay Later (BNPL), Electronic Transfer of Money (ETF), and QR codes. With digital banking projected to top 13 trillion by 2032, the need for secure financial services also grows. Therefore, online payment service providers should consider integrating biometric technology for more than just a way to access online accounts.
Digital banking systems can meet diverse regulatory requirements regarding customer identity verification, data privacy, external cyber risk prevention, and ongoing payment monitoring, as highlighted in the FATF’s 40 Recommendations. By using biometric security solutions, they can also offer secure and convenient ways for remote account opening.
The next section discusses types of biometrics and their use cases for online banking further in detail.
Fingerprint analysis – the oldest method of customer authentication
Fingerprinting is the oldest and longest in-use biometric method. Smartphones started using this authentication method back in 2004. Fingerprinting is as old as the banking system itself. In ancient times, thumb impressions were recorded on a piece of paper to confirm customer authenticity. With the biometric revolution, digital financial service providers can analyze fingerprints by simply asking users to scan them in their mobile phone sensors.
In years to come, AI-powered biometric recognition will mature to analyze swirls and ridges around fingerprints critically. They will further be able to cross-verify vascular patterns before processing a payment.
Voice-based identification – a relatively newer user authentication method
Biometric security systems have several checks in store for digital banking service providers. Fingerprinting has some limitations, such as tampering by using candle wax or creating similar impressions with plastic sheets. Voice recognition, on the other hand, is relatively secure.
AI-powered biometric tools take vocal characteristics and create a profile of users in mathematical algorithms opting to access online accounts. It further helps banking systems to authenticate customers by cross-referencing voice patterns across financial and criminal databases.
The advanced form of voice recognition will enable online banking platforms to analyze voice patterns accurately. Furthermore, they can also identify users even in sickness or any other condition that changes vocal characteristics.
Facial recognition – an advanced approach within the biometric banking landscape
Since Apple launched its 20 times more accurate, secure, and convenient Face ID as a replacement for fingerprint identification, the shift towards facial feature analysis-based user authentication was certain. Customers prefer log-in solutions that uphold their privacy without compromising their time. Considering this increase in demand, digital banking service providers started offering biometric security checks with facial feature analysis.
The biometric-enabled CCTV cameras in ATMs verify customers in real-time and detect deepfake attempts (if any). Furthermore, in the case of remote banking, AI-powered facial feature analysis tools will differentiate between twins, look-alikes, and other individuals with similar features with the same level of accuracy. Around 15 percent to 20 percent of financial institutions are already embracing the applications of biometric analysis.
Iris and retina scans – the most futuristic form of biometric check
Fingerprinting, voice recognition and facial feature analysis have become mainstream. Banking systems are now making a move towards more advancement by integrating iris/retina scanners in ATMs. With advanced biometric verification tools in smartphones, online payments are also given an additional layer of security through eye analysis. Banco Bilbao Vizcaya Argentaria (BBVA) was the first bank to offer their users an iris scan through their digital banking app in 2017.
Being an advanced form of user authentication, biometric recognition is the most reliable method up till now. Biometric screening tools are undergoing evolution and coming back to their most advanced form. Hence, digital banking service providers can not accurately scan pictures even if users are wearing a pair of optics or not even facing the camera properly.
Behavioral biometrics – a new era for secure digital payments
Customers’ day-to-day financial behavior is changing with every innovation that emerges in the digital banking landscape. They prefer remote payments over the use of paper money and online accounts rather than physically visiting banks. Furthermore, advances in AI and ML spheres are sweeping further changes in financial activities. Similarly, biometric analytics are bolstering banks’ risk assessment efforts with cognitive computing to handle big customer data.
Behavioral biometric security checks provide insight into particular financial decisions that later aid in suspiciousness detection. With this improved form of customer analysis, digital banks can offer easy money management for their users to save an extra buck. Furthermore, biometric recognition takes the load of paying bills by offering swift billing solutions.
Customers can simply log in to their online bank accounts, select bills, invoices, or whatever category of payment and process a transaction by scanning their facial features.
Since the launch of Touch and Face IDs, biometrics has been an integral part of every business operation. Banks were relatively slower in adopting applications of this ever-evolving tech-driven IDV solution. As of now, biometric user authentication methods can be seen reimaging the ecosystem of digital banking services.
AI-powered biometric security solutions make not only high-risk transaction handling easier but also detect fraudulent payments in real time. Hence, customers can avail streamlined online payment experience, safer access to financial services, and digital onboarding while banking service providers stay compliant with the regulations.
About the author
Damien Martin is a Marketing Executive at Shufti Pro, an AI-powered identity verification service provider.
DISCLAIMER: Biometric Update’s Industry Insights are submitted content. The views expressed in this post are that of the author, and don’t necessarily reflect the views of Biometric Update.
banking | biometric authentication | biometric identification | biometrics | digital identity | KYC | secure transactions | Shufti Pro