Why biometric technology holds the key to restoring consumer trust in digital ID
By Vince Graziani, CEO, IDEX Biometrics
Over the last few years, digital ID has paved the way for more secure, practical, and inclusive payments. Digital identification, also known as digital ID, signifies information that is stored in a digital format to prove the identity of a person or an organization.
Strong customer identification is important now more than ever in the age of digital transformation and especially with rising data privacy demands. Meanwhile, the same consumer base are now demanding a more personalized experience, in fact, 80 percent of consumers prefer to transact with brands that enable digital identity (digital ID) verification as they seek both security and seamless user experience.
To contextualize its role in business preservation and financial planning, just a single authentication failure can cost a financial firm up to $42 million. This further emphasizes the need for businesses to invest in digital defenses in order to be more proactive in the fight against fraudulent activity, as well as continue to deliver the now-in-demand personalized digital experience consumers expect.
To satisfy customer demand, transactions must be quick, secure, and reliable. Although digital ID is not yet fully optimized it is a critical tool for businesses to ensure such robust access control.
Goodbye, PIN. Hello, Biometrics.
Users have long been accustomed to PINs – personal identifying numbers assigned to an individual by a bank or an organization to authorize transactions. A more complex and seemingly secure PIN is often difficult to remember, especially as users set up more accounts. Digital ID’s added layer of both convenience and security initiated a shift away from PINs.
Despite digital ID being deployed to aid data privacy concerns, it isn’t entirely protected from hacking and fraudulent misuse. Today, 84 percent of consumers care about the privacy of their data and want more control over how their data is being used. This privacy concern calls into question digital ID’s trustworthiness in its current state.
When data is stored on servers or in the cloud, hacking risks increase as well as the potential for identity theft and harassment. When customers are exposed to fraud, organizations run the risk of losing consumer trust and damaging their reputations.
If digital ID holds the key to more convenient and secure transactions but has inherent security risks through current deployment methods, is there a suitable alternative?
Enter biometric smart cards.
As an industry, biometrics has evolved with the direct purpose of allaying data privacy concerns around tracking, monitoring, or owning data. And, as such, a host of key players are realizing its benefits and subsequently developing biometric cards that integrate fingerprint sensors into smart cards.
Once a user places their fingerprint onto the sensor, the image is captured, encrypted and stored only on the card. Security is also built into the sensor, meaning the fingerprint image is encrypted and cannot be hacked or manipulated. This offline solution means data is not transferred onto bank servers or the cloud.
Ultimately, biometric smart cards represent a shift in data ownership – one that empowers users to store their private information with total agency and control, and in a way that minimizes risk of data being retrieved illegally, thanks to its encryption.
In essence, it represents digital ID 2.0… and, more broadly, the death of the PIN.
Tackling the digital divide
The need for an upgrade to digital ID’s current role in the global digital economy is made even clearer when looking at the situation through an inclusivity lens.
Despite efforts to improve levels of financial inclusion, barriers that prevent access to financial services for communities across the globe remain unsettlingly common. Marginalized segments of society continue to be impacted, including low-income minorities, refugees, and those suffering from dementia, literacy challenges, or impaired vision.
While the PIN has been at the heart of best-practice data security for decades, it is no longer the most secure and seamless solution. The multitude of login details, passwords, and PIN numbers required for financial service platforms can represent a significant barrier to engagement for many of these marginalized groups. Also, a lack of familiarity with mobile banking applications means that older people may need greater reassurance of their security in an online environment.
Digital ID has the potential to reverse many of these systemic challenges, removing barriers faced by those with limited access to the digital economy. Examples already being seen around the world include the Nigeria Digital Identification for Development project, which has recently pledged to bolster Nigeria’s digital economy by enabling people living with disabilities in the country to have their biometrics captured. As a result, the inclusion gap is closing, and access to identification is becoming democratized.
Similarly, in Europe, a consortium of six countries – Denmark, Germany, Iceland, Italy, Latvia and Norway – led by the Nordic-Baltic eID Project (NOBID), is set to embark on a new pan-European digital wallet pilot. The digital wallet will allow citizens across the continent to easily verify their ID, access public and private services and store sensitive digital documents in one secure location.
What does the future of digital ID look like?
Digital ID is already providing a revolutionary step in the field of payments, for consumers around the globe who require universal access to secure transactions. Subsequently, it comes as no surprise that global digital ID revenue is forecasted to exceed $53 billion by 2026.
Biometrics represents one step further in this evolution. The convenience, security, and inclusivity of this mode of digital ID are more than just a final nail in PIN’s coffin. Its broad set of use cases spans access control, payments, crypto, and digital wallets. All with the knowledge that a person’s entry to these domains is dictated by their own identity, and nothing else. No remembering, no passcodes, no leeway for that person’s credentials to fall into the wrong hands. Altogether, we’re heading towards a safer and more convenient way to prove our identity that combats fraud and puts the power of our identity firmly back into the hands of the consumer.
Now is a pivotal time for the market to continue engaging with biometric solutions, and for governance policies to provide a more suitable framework for this next phase of digital ID which promises to bring confidence and trust back to the consumer.
About the author
Vince Graziani is Chief Executive Officer at Idex Biometrics. IDEX Biometrics provides fingerprint identification solutions including biometric fingerprint sensors and modules enrollment solutions which are used in payments, identification, access control, and IoT applications.
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.
biometric cards | biometrics | data protection | digital ID | financial inclusion | Idex Biometrics