The speedy digitization of banking services and the constant need to adopt stringent customer identification protocols to prevent identity theft and fraud have increased biometric applications.
These areas have forced biometrics to become an integral and strategic part of banking service security platforms. Biometrics in the banking sector also supports increasing customer trust in their banking experience. That makes it necessary for banks to have more robust authentication solutions due to the growing pace of transactional technology adoption and the rise in fraud and security breaches.
The Impact of Biometrics on Banking
Biometric authentication technology in the banking sector can potentially combat increasing fraud incidents. It uses data security, identity verification, payment authorization, and accuracy monitoring.
The application of biometric recognition is diverse in digital banking operations, particularly in security and seamless banking experiences. From fingerprint analysis to facial scanning, biometric authentication technology is necessary to transform online payment security.
It substitutes user PINs, passcodes, and Two-Factor Authentication (2FA) with a behavioral screening of users for high user safety.
Biometrics Applications in Banking
Biometrics in Online Payments
High demand for online payments highlights increased usage of credits, digital wallets, QR codes, Electronic Transfer of Money (ETF), and Buy Now, Pay Later (BNPL). As the digital banking market expects to expand more, according to the Global Market Insights report in Digital Banking Market Size 2023-2032, surpassing USD 9.4 trillion in 2022, it will grow at 3.6% CAGR from 2023 to 2032. The rise in the market signifies that secured financial services will also increase. It includes high usage of electronic & mobile payment services through NFC and POS terminals, which has introduced biometrics into the devices used for online payments. In this way, banking systems are rapidly integrating biometric technology for accessing online accounts.
Biometrics for Fingerprints
Fingerprinting has been the longest-in-use biometric method banks have leveraged for many purposes, but manually. However, now the emphasis is more on online banking with the advent of digital transformation and the usage of smartphones in the banking system. With the biometric revolution, digital finance services use biometrics for security and authentication purposes of customers and employees. Fingerprint analysis through biometrics can gather users’ identities and scan all data.
The advanced AI-powered biometric recognition can potentially analyze data across all fingerprints critically. They also are capable of cross-verify vascular patterns before processing payment. Banks are leveraging biometrics for fingerprints to ease banking activities for customers and detect customers’ information faster and instantly.
Biometrics for Security
Banks have critical and complex security infrastructure. As the functionalities of banks require multiple access controls and provide security throughout banking app usage for customers, safety remains the top concern. However, with biometrics, banks can strengthen or increase security measures. Biometric identity verification increases security and controls all access controls. Also, biometrics technology in banking apps can help customers to use them securely. Multiple layers of security solutions, including strong passwords, unique characters, PINs, and multi-factor authentication (MFA) systems, efficiently detect spoofs.
For instance, IDmission provides a unique approach to MFA by adding a biometric layer to the current authentication process. It requires a keycard, a PIN, or facial recognition to get access. This biometric-enabled MFA ensures that certain banks can access only the areas of authorization to access. Better employee access control helps banks to face fraud cases of identity theft and hacking.
Biometrics for Voice Recognition
Banks leveraging biometrics can find huge benefits by utilizing the power of voice recognition for security and ease of accessibility. Fingerprinting may hinder, such as tampering. However, voice recognition is relatively more reliable and secure.
AI-powered biometric tools identify vocal features and create a customer’s profile choosing to access online banking accounts. The tools help banking systems to authenticate customers by cross-verifying voice patterns across the customer databases and allowing access when they find similar voices.
The advanced biometric technology with voice recognition will enable online banking platforms to analyze voice patterns accurately and provide more security solutions across their apps and websites. Banks may leverage the technology and detect if any breaches occur in terms of account hacking or misuse of data.
Biometrics for Facial Recognition
Face ID recognition is a shift from fingerprint verification. Biometrics technology for facial recognition uses the facial features of customers and employees. It is an analysis-based user authentication system rising among banks and financial enterprises.
Customers prefer log-in solutions that support their privacy at scale. With the high demand for improved security measures for banking and financial apps usages, digital banking service providers offer biometric security checks with facial feature analysis. The biometric-enabled sensors in apps and websites verify customers in real-time and detect deepfake attempts. Furthermore, remote banking has pushed the need to employ facial recognition tools that have increased technology usage.
AI-powered facial feature analysis tools differentiate individuals with different features with the same level of accuracy. On this note, Grand View Research Facial Recognition Market- 2021 – 2028 finds that the global facial recognition market size was USD 3.86 billion in 2020. The market is expected to develop at a CAGR of 15.4% from 2021 to 2028. Image recognition technology will be widely used in banking and finance to detect fraud.
Behavioral biometrics is a new digital era for secure digital banking and payment system. Customers’ behavior changes with every innovation emerging in the digital banking landscape. Technologies, such as AI and ML, are bringing innovation—one of its kind in biometrics is behavioral biometrics, which strengthens banks’ risk assessment solutions to manage and safeguard big customer data.
Behavioral biometric security functionalities give insight into particular users’ financial activities that further helps in suspiciousness detection. With this advanced version of customer analysis, digital banks can offer seamless money management for their customers.
More and more banks look forward to behavioral biometrics to replace passwords and PINs to increase convenience for banking operations while keeping security measures on top of mind. This means the “one-size-fits-all” approach is an advanced way in which new security policies and innovations are spaced equally. Banks can develop an engaging and easily navigable customer experience through behavioral biometrics when approaching customized banking services.
Biometrics to Expand and Takeover Legacy Technology
The previous banking methods were not customer-friendly and were expensive to provide all customers with secure banking. Those unsecured ways caused password breaches through phishing websites. The risks still prevail when banks are digitally transforming. However, banks and financial institutions must need to be ready for new kinds of attacks.
Banks were comparatively slower in adopting applications of biometrics. But now, biometric user authentication methods can reimage the landscape of digital banking services. AI-powered biometric security solutions help manage high-risk transactions. It also makes banks detect fraudulent payments easily. Hence, customers can benefit streamlined online payment experience and safer access to banking services.