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US committee sees AI fintech threat, public ready for biometric defense

Mitek survey shows customer experience advantage over passwords
US committee sees AI fintech threat, public ready for biometric defense

The U.S. Financial Services Committee held a hearing with finance tech innovation leaders on opportunities and risks associated with AI. At least some members of the committee are clearly interested in the potential for digital IDs to fight fraud while promoting financial inclusion, and at the same time, a Mitek-sponsored survey shows higher customer satisfaction with biometrics than legacy authentication methods, and a similar appetite for stronger authentication amongst businesses.

Committee hearing addresses generative AI threat, digital ID opportunity

Attendees of the Committee hearing discussed how technology should be used to facilitate responsible financial innovation while protecting customers and complying with regulations.

The rise of generative AI increases the threat of sophisticated fraud, which can be addressed with applications that enhance fraud detection and address financial crime.

AI can be used “to enhance bank customer services and products ranging from the use of chat-bots that aid in directing customer inquiries… to supporting more efficient credit underwriting, which has the potential to promote greater access to banking services by underserved communities,” said Donna Murphy, acting deputy comptroller for the Office of Financial Technology at the Office of the Comptroller of the Currency (OCC) in her opening statement to the committee.

She adds that “OCC supervised institutions are generally approaching generative AI with caution and its use is not widespread.” AI opens the door to more complicated fraud that can generate texts and images that can be used to produce deepfake attacks.

The use of biometrics to defend against these kinds of attacks was not explicitly mentioned during the hearing, except by Congressman Bill Foster.

Covid relief programs run by the American government were clobbered by fraud, and government agencies frantically turned to biometrics to stem the tide. A full embrace of advanced ID technology is progressing more slowly, however.

The Strategic Hub for Innovation and Financial Technology (FinHub) is using machine learning such as natural language processing as well as to analyze data sets and identify trends and aberrations, according to its director, Valerie A. Szczepanik.

The National Credit Union Administration (NCUA) is evaluating uses for digital IDs such as state mDLs. Credit unions have completed pilots using digital IDs and have reported more efficient onboarding processes, according to Charles Vice, director of Financial Technology and Access at the NCUA. Digital IDs pose opportunities to better serve the unbanked population, as well.

Still, some states have been slower to implement digital IDs and the U.S. lacks a national standard for a digital ID framework. When the committee asked for comments on the utility of a national standard for digital IDs, no witnesses responded.

Consumers and providers more open to biometrics

While lawmakers and federal agencies are considering their options, popular opinion seems to be galvanizing around biometrics. An IDC consumer survey on biometrics and customer satisfaction sponsored by digital ID and fraud prevention provider Mitek Systems finds that one in four respondents has had an online account taken over. Passwords remain a high friction authentication factor, with one in three respondents reporting that remembering passwords is their biggest authentication headache.

One in five dislike the password reset process. Consumers’ experiences with biometric authentication are more seamless, with only one in 20 respondents reporting they struggle with biometrics.

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