Biometrics has paved the way for more practical, secure, and inclusive banking and financial activities. Biometrics is critical to digital banking and finance for many banking functionalities to improve future financial abilities.
Strong biometrics is essential, particularly with rising data privacy demands. The role of biometrics in the banking business and financial activities is imperative that banks invest in technology as a robust digital defense to control fraudulent activities. Also, it is vital if companies plan to deliver to the rising demand for seamless banking and financial services through mobile apps to ensure faster and more secure banking experiences.
The Growing Popularity of Biometrics
Biometrics is taking customer and employee identity verification and customer experiences towards a new revolution. Banks and finance firms leverage various biometric technologies to help businesses verify users for multiple reasons, such as fraud detection and KYC.
The banking industry and financial services are exploring broad uses of biometrics in digital transformation. Biometrics is rapidly replacing passcodes, passwords, and manual authentication in apps.
Banks are increasingly leveraging to facilitate fast and secure banking services, and finance firms rely on this technology for secure transactions and payments.
Why is Biometrics Required?
There are several advantages of biometrics in the banking and financial sector. The most significant is fraud prevention. Biometrics is gaining ground as a strong fraud prevention technology in terms of security. It restricts unauthorized access to online customer login to accounts and other activities, thus providing a more secure experience for customers. Besides this, banking businesses also remain under safeguards of biometrics functionalities that permit limited access to employees and only allow authentic access.
Accurate identity verification is required for banks and Finance firms to confirm the compliance processes. Banks need biometrics to verify customers’ identities for KYC requirements, sign in accounts, make payments, make online transactions, and safeguard customer data and digital processes. The technology can better protect banks from rising crime rates and money laundering risks.
A research report, Biometrics Market: Forecast 2023-2028, by IMARC Group, says that the global biometric system market will continue to grow. The market expects to reach $87.4 billion by 2028, up from $33.2 billion in 2022. Particularly for banking, Market Research in Biometrics for Banking and Financial Services estimates that the value of the market value will be $5.2 billion in 2023. By 2030, this is expected to reach $15.2 billion at a CAGR of 14.4%.
The rising adoption of biometrics technology offers banking systems and financial firms a simple and rapid way to access digital services at scale. This has removed the need for manual processes for both customers and firms. The automated nature of biometrics increases efficiency and cost-savings for banks and financial firms and reduces the need for resources.
Common Use Cases of Biometrics in Finance & Banks
Reduced PIN Usage
Banks and financial services firms have provided PINs to authorize transactions and banking services. Complex PINs result in wrong log-ins, which can mean blocking accounts and transactions. With biometrics, such challenges are mitigated. Customers can securely save their accounts, online transactions, and payment data using biometrics. This helps banks and Finance firms protect business and customer data from hackers, misuse, and breaches.
Many companies have realized the benefits of biometric security and launched it for physical finance assets, such as smart cards, that serve both banking and Finance development. Companies are offering smart cards that integrate fingerprint sensors. Smartcards with fingerprint biometrics are difficult to duplicate or manipulate. Biometric smart cards are a shift that empowers customers to save their private information, which minimizes data and financial risks.
Customer Registration and Onboarding
Another use of biometrics in banks and the Finance sector is the onboarding and registration of customers. Banks can quickly verify the customer’s identity, documentation, and data. That makes it possible for bank officials to promptly register multiple customers and onboard them with all verified account details. The process is fast and helps maintain accuracy at scale. Besides, with technologies such as VideoID, digital onboarding, with proper document verification and video identification, is also becoming popular.
The mobile biometrics revolution in banks and financial firms gives many development opportunities. The introduction of the Touch ID fingerprint scanning system has prompted mobile authentication systems to emerge.
Financial services providers and banks have capitalized on the biometric capabilities of mobile devices, particularly in their apps, allowing users using a fingerprint or face scanner to log in instead of relying on usernames and passwords. Companies embrace biometrics to reduce friction while improving security across various channels.
Reduces Digital Divide
The need for biometrics in the finance and banking sector is to improve levels of financial inclusion and provide financial services access for communities across the globe.
For many geographical areas and communities, the digital divide challenges their inclusion in banking activities as banks increasingly adopt digital processes. The login details, passwords, and PINs for financial service platforms can be a major barrier to engagement for many communities on the far side of the digital divide.
Also, a lack of awareness of mobile banking applications is a substantial barrier. Biometrics has the potential to reverse such challenges and remove obstacles to limited digital economy access. All it needs is a fingerprint! That is how it can help to reduce the financial inclusion gap, and access to digital identification is becoming easier everywhere.
For instance, voice biometrics allows banks and financial firms to recognize a user in any language, which facilitates interaction with users of banks from various regions and dialects.
The Future of Banking and Finance with Biometrics
The convenience, security, and inclusivity biometrics offers enable banks and financial companies to deliver services to the next level. Technology has reduced the challenges of not remembering, no use of passcodes, and complete security for credentials.
The banking sector must offer biometric solutions to provide a more appropriate framework for this next level of digital ID, which promises to bring confidence and trust to customers using digital banking and financial services.