Published on November 20, 2017 in Financial Services • Innovation

The release of the new iPhone X, which uses facial recognition instead of a PIN, has got me thinking about biometrics – and their role in banking in particular.

This technology is fairly established.

It was born with fingerprint ID in the early ‘90s, moved on to facial recognition in the early 2000s, and now we’re seeing a similar approach used on the iris, voice, palm and even cardiac rhythm (heartbeat).

Several banks have now started to roll out biometric technology.

HSBC is making use of voice recognition software; TSB has adopted iris recognition, and soon Lloyds will be allowing customers with online banking to log in with just a selfie.

And it’s easy to see why banks are taking on this new technology.

According to Equifax, 56% of people online would prefer to use a biometric security method over traditional approaches like a password; and again, according to this research, 29% said that they were more likely to use a bank that offered biometric security.

I think this is sure to accelerate, because biometrics simultaneously solves two of the biggest problems facing the sector today: security, and customer experience.

You could even say that biometric technology is a natural fit for banking.

A solution to banking’s biggest problem

First, it’s obvious that bank fraud remains a huge issue for the banking sector.

In 2016 alone there were 3.6 million cases of fraud, plus an estimated 2 million cases of cybercrime.

Banks have a duty to try and safeguard against this kind of criminal activity, both for their customers and for themselves.

Biometric tech is a great way for banks to generate these safeguards – although it obviously isn’t a cure-all for all types of fraud.

Instead of just using a password that can be forgotten stolen, or hacked, customers can access their account using their biological data – which can’t be copied or faked (or at the very least, it is much harder to copy or fake fingerprints vs a password).

Biometric verification has already proven its value to banking: while there are some funny stories about voice recognition being tricked by grey parrots or twin brothers, biometric tech on the whole is very secure.

The error rate on iris recognition, for instance, is at 1.8% false rejection and no false matches over 2 million attempts.

And according to Apple, there is just a one-in-a-million chance of their FaceID software mistaking one person’s face for another.

Besides, biometric verification can be made even more secure if it’s incorporated into a two- or three-factor authentication system which also includes a device and/or a password. This might be a good way of introducing biometrics more gradually to customers who haven’t yet encountered it – by keeping it as one of a range of security features which can be deployed.

Security without the hassle

But the difficulty with a three factor system – or with any verification system, in fact – is making it frictionless. By this I mean that it must be easy and quick for the customer to use.

Banks don’t want fraudsters to be spending our money, or getting to our data, but they also don’t want to delay us, the legitimate customers, from accessing our accounts.

I recently had an experience that illustrates this point perfectly. I was on holiday and my bank card got blocked as I was using it abroad.

And while I appreciated my bank taking precautions, it was rather frustrating to spend 45 minutes on the phone waiting in a queue, only then to be asked a raft of security questions to establish my identity.

It would have been much easier, and a much more pleasant experience on my end, if I could have accessed my banking app, checked the status of my card, and, using fingerprint ID, verified that I am who I say I am.

This might not be a workable option for all transactions just yet, but it would be advantageous in this kind of identity verification scenario.

In this case, the bank’s systems would have been effective in preventing fraud by blocking my card from suspicious transactions, but I would have been able to easily verify that the transactions were legitimate using my biometric profile.

In this way I feel that biometric technology can neatly and effectively resolve the balancing act between customer experience vs security, because it’s both safe and easy.

Consumer demand in the driving seat

So, it seems obvious that the banking sector should be eager to increase its uptake of biometric technology.

As I mentioned earlier, customer demand for biometrics is high.

And with the release of more devices like the iPhone X, this demand will likely increase.

People will want to access their bank account with the kind of easy, safe technology that they use every day on their phone. Biometrics will only become more familiar.

This will probably lead to all banks embracing biometric technology wholesale. In a very short space of time, it will be the norm.

After all, it provides better customer experience, greater security, and is better liked by the customers themselves. What’s not to like?

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