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by Zaf Kazmi
Head of Mobile Commerce, CaixaBank
Biometrics is a big talking point at the moment as there is growing consumer dissatisfaction with PINs, passwords and general security around mobile payments. The further down the digital road we go, the more password and PIN management is required and the more frustrated users become. As a technology, biometrics offer a simple solution for consumers which maintain the integrity of a secure systems, regardless of whether they are in smartphones, ATMs or bank branches.
“Biometrics offer a simple solution for consumers” [tweet this]
First Apple and now Samsung have integrated biometrics into their mobile devices, with Samsung even linking its use to mobile financial services (MFS) through PayPal, using the device’s fingerprint scanner to authenticate. Fingerprint is not the only option out there, however, as biometrics encompasses a range of very different technologies, including voice, iris, facial and finger vein recognition, to mention just a few.
There are, however, a number of reasons why most financial institutions have, so far, steered clear of biometrics. Data security is the most prominent of these reasons. Banks rightly fear a consumer backlash if they attempt to utilise their customers’ confidential biometric data. Right now, this information is used mainly for military or government security implementations, and safeguarded by those institutions. That said, consumers do trust banks with their sensitive financial information so perhaps, over time, such concerns can be assuaged.
“Banks rightly fear a backlash if attempt to utilise their customers’ confidential biometric data” [tweet this]
Additionally, most biometric solutions remain immature. There are some promising innovative projects in development, but these are largely from start-ups and are far from market ready. Biometrics will also give rise to a host of new compliance issues which will need to be addressed before services can be introduced. Financial institutions are already embattled by the need to comply with a plethora of regulations and standards, so are understandably reluctant to dive into biometrics before consumer demand is widespread.
What will drive that consumer demand? If the security concerns can be dealt with, the convenience and simplicity of biometric authentication will be the primary driver. For mobile banking and payments, biometric authentication will be faster and simpler than typing a password or PIN. For banks, this means happier customers, reduced transaction times and possibly even an increase in the number of transactions processed. It also means increased server capacity – as the back end will no longer be engaged in the generation of one-time-passcodes, for example.
“For mobile banking and payments, biometric authentication is faster than typing a password or PIN” [tweet this]
In the long term, this will also be a cost saving exercise for banks as biometrics will remove the need for the issuance of authentication tokens and/or SMS-based alerts.
I believe that we will see the industry move forward with a combination of technologies: voice, iris and fingerprint recognition. Evolution will begin with the combination of various technologies and evolve into a simpler model while technology matures. The year 2015 will be the year of biometrics in financial services so now is the time for the financial institutions to be looking at these technologies and learning from other institutions that are further down the road with implementations. Trailblazers will have to overcome customer reservations at first – as was the case with both online and mobile banking services – but once it is shown to offer both value and convenience, adoption will follow.
As ever, evolution will happen quickly and financial institutions will need to be fleet of foot in order to make the most of the opportunity. It can therefore be safely stated that it won’t be long before biometrics plays a central role in global mobile financial services.