Biometrics: The Key to Enhancing Security and Customer Experience in Banking

Introduction

In the fast-paced digital banking environment of the current era, security and convenience are paramount. As financial institutions race to avoid cyber threats while meeting customer demands for seamless service, biometric authentication has emerged as a powerful solution. By using unique biological traits, such as fingerprints, facial recognition, and voice patterns, biometric authentication offers banks a cutting-edge tool for strengthening security without sacrificing user experience.

As banking continues to embrace Open Banking, Continuous Process Improvement (CPI), and data quality initiatives, biometric technology stands out as an essential element in reshaping the future of financial services. It combines security with the need for more efficient, user-friendly digital interactions, a balance that is crucial in a highly competitive market. Biometrics are becoming an advanced layer to many personal and enterprise security systems.

What is Biometric Technology?

Biometric security is a modern identification and authentication method that uses unique physical traits, such as fingerprints, facial recognition, iris, or retina scans, to verify a person’s identity. Biometric security systems are effective in authentication because these unique characteristics are virtually impossible to forge or replicate, making them incredibly reliable in establishing a person’s identity.

Furthermore, biometric security provides a convenient and efficient approach to authentication. By eliminating the need for passwords or physical tokens, individuals can seamlessly access secure areas or personal devices with a simple scan or touch. This not only saves time and reduces the burden of remembering multiple passwords but also minimizes the possibility of identity theft or fraud.

With the advancement of technology and an increasing need for strong security measures, biometric solutions are being integrated across many sectors, including healthcare, government, and especially banking. In banking, biometric technology boosts security while also elevating the customer experience by simplifying authentication procedures.

Figure 1: Introduction to biometric technology

Main types of biometrics in banking

While there are many types of biometric authentication in use today, the five most common examples are:

1. Fingerprints
2. Facial recognition
3. Voice recognition
4. Iris recognition
5. Palm or finger vein patterns

From these examples, two main categories can be identifiable: behavioral and physiological: behavioral and physiological.

Behavioral Biometrics

Behavioral biometrics refer to the unique way a person performs a certain behavior, like writing their signature or walking down a hallway.

While this technology is still evolving, some existing methods include:

• Keystroke recognition: This method records a person’s typing pattern, including the pace at which they type particular letters or words, to isolate and identify the user entering their login credentials.
• Gait recognition: Some advanced systems examine and track the way a person walks to match their gait to that of a known user profile. While it’s not feasible in every situation, gait recognition can be an accurate identifier of an individual.
• Digital signatures: This system consists of a static system that compares the user’s signature input to an existing handwriting sample and a dynamic component that tracks their hand movements while writing.

Physiological Biometrics

Physiological biometric authentication analyses an individual’s unique biological markers, such as fingerprints, eye structure, and face shape to ensure a match with an existing user profile.

These physiological factors are easy to track and highly accurate because they’re difficult for fraudsters to replicate without expensive equipment.

Some examples of physiological biometrics include:

• Fingerprints: Everyone has a different fingerprint, so it makes sense fingerprint scanning is one of the most widely used and cost-effective types of biometric authentication out there.
• Eye scanning: The user looks into an eye reader, which analyzes either their iris pattern or retinal structure to match it to an approved user profile.
• Facial recognition: Device cameras scan the user’s face to verify their identity by measuring key facial features. Large-scale environments requiring tight security, such as casinos, use facial recognition technology to solve cases of theft.
• Vein recognition: The system examines the unique vein patterns in the user’s finger or palm to confirm their identity. This method is more secure than fingerprint identification because vein patterns are subdermal and, therefore, harder to alter.
• Ear recognition: Some systems assess the unique shape of a user’s ear and match it to their profile.
• DNA (deoxyribonucleic acid) matching: Everyone’s DNA is unique, so technology matching the length and sequence of the acids in DNA to individual user profiles is a highly accurate identification method.
• Finger geometry: Some systems can identify a person by the unique shape of their hands or fingers.
• Voice recognition: This method of authentication analyzes the sounds a person makes when they speak for specific patterns and cadence.
• Body odor recognition: Although such systems are rare, placing sensors against certain body parts - such as the backs of the hands or the armpits - enables this technology to recognize individuals by their unique body odor.

Figure 2: Main types of biometrics in banking 

Why Biometrics Are a Game Changer for Security?

According to the World Bank, 71% of people had access to a bank account in 2022, up from 42% a decade before. This growth can mainly be attributed to the digital revolution – two-thirds of adults worldwide now make or receive a digital payment, which has risen from just 35% in 2014. Juniper Research estimates that the number of remote banking customers is expected to exceed 3.6 billion by 2024.

Digital banking offers many benefits but also carries significant risks, as it depends on trusting user identities, which can be exploited by cybercriminals. As banks expand digital services and enhance user convenience, they may unintentionally open doors to fraud.

Figure 3: Biometrics provides a high level of security

Banks face mounting pressure to deliver fast, secure remote banking while dealing with fraud threats and navigating KYC and AML compliance requirements. To address these challenges, many are turning to advanced verification technologies, shifting away from manual processes and outdated methods like passwords. Biometric verification offers a seamless user experience, boosts security, and supports compliance, though its level of protection can vary across solutions.

Biometric technology is revolutionizing security in banking for several reasons:

• Enhanced Security: Unlike traditional passwords or PINs, biometric data is unique to each individual and much harder to replicate. This significantly reduces the risk of identity theft and fraud.
• Convenience: Biometric authentication is quick and easy, eliminating the need for customers to remember complex passwords or carry physical tokens.
• Seamless Customer Experience: By using biometric authentication, banks can offer a more user-friendly experience, allowing customers to access services securely without additional steps.
• Fraud Detection: Behavioral biometrics can detect unusual activity patterns, making it easier to identify and respond to potential threats in real-time.

The FPT eID identity verification solution has applied biometrics within the Liveness detection technology to streamline the registration and authentication process for users while ensuring security and compliance with anti-fraud regulations in transactions.

Challenges and Concerns with Biometric Technology

Biometric technology, despite its benefits in enhancing security and convenience, faces several challenges and concerns. Below are some of the challenges associated with biometric authentication:

Privacy: Biometric authentication handles highly private personal information. There are legitimate concerns regarding the collection, storage, and use of this biometric data. Organizations need to implement strict security measures to protect them from unauthorized access or misuse.

Theft and forgery of biometric data: Just as passwords can be stolen or forged, biometric data is also subject to risk. While it is difficult to accurately replicate biometric characteristics, it is not impossible. Cybercriminals try to use fake fingerprints, face masks, or even voice recordings to trick biometric systems.

Feasibility: Implementing biometric systems can be expensive, especially in environments with many users. Furthermore, some biometric methods are not practical in certain situations or contexts. For example, facial recognition can be affected by lighting conditions or angle variations, while fingerprint reading is difficult in some types of manual work.

Accuracy and error rate: Biometric systems are not perfect and may have error rates, both false positives and false negatives. This means that in some cases an authorized person may be denied access, while in other cases an unauthorized person may be erroneously authenticated. The error rate needs to be minimized to ensure a reliable user experience.

Standardization: There are several biometric methods available and the lack of standardization hampers interoperability between different systems and devices. This limits the widespread adoption of biometric authentication and makes sharing information between organizations more challenging.

As biometric authentication continues to gain momentum, this technology will play a central role in the future of banking. Innovations like behavioral biometrics, which analyze patterns such as how a user types or moves, are expanding the scope of biometric authentication, offering even more layers of security and customization.

Additionally, as banks leverage artificial intelligence (AI) and machine learning (ML) to enhance data analytics, these technologies will further refine biometric systems. AI-powered biometric solutions can continuously learn and improve, offering faster, more accurate recognition and better fraud detection.

In a future where Open Banking, cloud-based infrastructures, and integrated financial platforms dominate, biometrics will be essential in creating a unified, secure, and frictionless banking experience. As IT leaders in identity verification solutions, it’s our responsibility to ensure that biometric technologies are deployed in ways that prioritize security, improve data quality, and enhance the customer experience.

The FPT eID identity verification solution stands out by providing a comprehensive approach that simplifies user registration and authentication, ensuring a seamless experience while maintaining high-security standards. As digital transformation accelerates, FPT eID is at the forefront of revolutionizing identity verification, combining biometric technology and liveness detection to enhance security and compliance with anti-fraud regulations across various industries.

Conclusion

In light of the swift digital transformation occurring in the financial sector, biometric security is essential in protecting sensitive data and verifying the authenticity of financial transactions.

Biometric security is critical in the ever-evolving financial technology sector due to its effective integration with associated technologies, advanced capabilities, and favorable security ramifications.

Through adopting these advancements, users not only strengthen the safeguards against cyber threats but also improve the overall user experience, thereby establishing a foundation for a future in finance that is more secure and interconnected.

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References:

1. World Bank Group - COVID-19 Boosted the Adoption of Digital Financial Services

2. Juniper research - Digital Banking Users by 2024