When it comes to matters of money, security has long been the paramount concern. When bank customers call to access information or perform certain transactions, bank representatives have to ask for passcodes and biographical data; in a bank branch, customers have to enter PINs even when conducting business in person. When making payments, a signature is used to confirm the buyer’s identity, and in places where chip cards are supported, a PIN is required.
But with the rapid digitization of banking and commerce, that’s all changing. The whole point of things like online banking and mobile payments is to make these activities easier, and so in these domains convenience has become the key consideration. Security can’t fall by the wayside, of course; but these new, digital financial environments have prompted the development of new security systems that can accommodate users’ intensifying demand for convenience. And it’s here that the rapid evolution of biometric technology is making a huge impact, not only securing digital transactions but transforming them to make them even more convenient than ever.
Easy Online Banking
One of the biggest trends to emerge over the last few years can be credited in large part to Apple. The company was a central pioneer in the emergence of fingerprint sensors on smartphones, and its Touch ID system got the ball rolling for mainstream adoption of fingerprint authentication on smartphones. Soon enough, financial services providers were leveraging this kind of technology to enable biometric login on their banking apps. Bank after bank embraced fingerprint login, and additional modalities were also supported, with financial services providers taking advantage of multi-modal authentication software, as well as Samsung’s iris scanning technology in recent years for user login, to name a couple of popular examples.
Now, a year after Apple’s introduction of Face ID, its infrared facial recognition system, the latest phase of this trend is going strong. More and more banks are allowing users to log into their accounts on mobile using Face ID – HSBC and Singapore’s OCBC are among the latest – and as a growing number of other smartphone makers seek to emulate Apple’s approach with their own Face Unlock systems, it’s a fair bet that a growing number of users are going to be able to log into their online bank accounts just by looking at their phones.
Face ID is secure, by most accounts much more secure than a passcode. But more than that, it’s extremely convenient – and that’s exactly what mobile bankers want.
Paying with Your Phone
The next logical step from digital banking is digital shopping, and Apple has played an outsized role here, too. A lot of eyebrows were raised when the company launched Apple Pay, its smartphone-based digital wallet for in-store purchases. It seemed far-fetched at the time. But the fundamental concept was sound: If people are getting comfortable doing banking on their iPhones – thanks in large part to Touch ID security – maybe they’ll want to make purchases, too, with the same security and convenience. They’re carrying their phones around with them everywhere, after all.
Sure enough, before long, rivals followed suit, most notably with Samsung Pay and Google’s Android Pay. To be clear, the latter never required the use of biometric authentication for transactions; but a lot of Android smartphones have supported this feature. Samsung, meanwhile, has made iris scanning a central part of its mobile payments platform, looking to the convenience of staring at your phone to authorize a purchase as an important means of promoting Samsung Pay. And now Apple has made it just as easy with Face ID.
The jury’s still out on just how successful these mobile payments platforms have turned out to be in terms of market appeal, but many analysts expect continuing growth. Younger consumers in particular are glued to their phones, and more and more of them are getting used to the convenience of biometric security.
The Future of Payment Cards
As for everyone else, biometric technology has something for their everyday shopping needs, too: Fingerprint scanning payment cards. A lot of Americans may not realize it, but swiping a card at a payment terminal is looking increasingly outdated in many other parts of the world, with chip-enabled cards now widely used in areas like Canada and Europe. It’s more secure, but it can also be more time-consuming, since many purchases require the entry of a PIN code for these chip cards. That’s part of the reason merchants in the US have been reluctant to embrace the technology.
Then again, chip cards also tend to support NFC transactions, allowing cardholders to make purchases just by tapping their cards on a payment terminal, so long as the purchases don’t exceed certain pre-set limits. Those purchases are way more convenient than swipe-based ones, but of course there’s also a security risk entailed, since there’s no need for a signature or a PIN.
And that, of course, is where biometric payment cards come in. Most of the emerging solutions are designed to facilitate tap-and-go payments while infusing them with biometric security: The cardholder needs only to hold a registered finger on a card’s sensor while making purchase in order to authenticate.
Card makers and biometrics specialists have been busy at work on this technology over the last couple of years, and now major players like Visa and Mastercard are working with their financial services partners to clear the way for large-scale rollouts. That, in turn, means Americans and others around the world will soon have a new, highly secure, and highly convenient way to pay in stores, if they’re not already using their smartphones.
Beyond Biometric Cards
With this kind of biometric security now spreading from the digital realm to the physical world of payment cards, additional real-world applications are starting to come into focus. And it looks like this kind of biometric technology might now start to make its way into ATMs.
It already is, in fact. The biometric ATM concept has been around for years, but real-world deployments are now popping up here and there. Near the start of this year, Bank of China Hong Kong rolled out a finger vein authentication system across a significant portion of its ATM network, for example; and in late spring South Africa’s First National Bank announced it would deploy ATMs that allow users to open accounts with a fingerprint scan. And Bahrain’s Ithmaar Bank just recently announced plans to launch a new ATM early next year that will allow customers to access their accounts with a fingerprint scan and a PIN, and no need for a bank card.
These are one-offs, but the emergence of large-scale biometric payment card programs could be a breakthrough for bigger biometric ATM projects. Banks will be registering customers’ biometrics, and customers will be getting even more used to biometric authentication. That could set the stage for ATMs that interface with user biometrics in much the same way that the new payment cards do. And Mastercard’s announcement this past summer of a ‘banking-as-a-service’ partnership with Diebold-Nixdorf – which has long been discussing the potential of biometrics in its ATMs – could be a sign that this is exactly the future that’s starting to take shape.
Beyond Payment Cards
It will certainly be convenient for consumers to be able to access ATMs without the need for a card. So what about making purchases without a card? That’s on the way, too.
The concept is straightforward enough: With a given consumer’s biometrics linked to their account information, it should be possible to authorize a purchase just by scanning those biometrics. And some FinTech pioneers are already making this idea a reality. Fujitsu has been a leader here, working with partners in Japan to trial payment terminals that scan a user’s palm vein biometrics. But other startups are applying the concept to more conventional biometric modalities: A British company called Fingopay has been trialing a biometric payments system based on finger vein scanning with merchant partners in Britain and Denmark, while Singapore’s Touché partnered with OCBC bank to develop fingerprint scanning biometric payments technology earlier this year. In collaboration with NEC, California’s CaliBurger started trialing a self-serve system that links customers’ faces to their loyalty cards at the end of last year, and said that the pilot could lead to biometric payments in the near future.
As with biometric ATMs, these are, again, one-off projects. But this is another area where the proliferation of biometric payment cards could have a substantial effect: It’s not hard to imagine merchants enabling payments based on mobile fingerprint scans, or the emergence of fingerprint- or face-scanning POS terminals, once a large number of consumers are making purchases using biometric authentication. And this will make shopping more convenient than ever, with no need for a PIN, password, or bank card to buy something.
For some of these applications, of course, it’s too early to say for sure how things will turn out. But with consumer expectations shifting to a place where strong convenience is a central priority, and strong digital security is simply a given, it’s easy to imagine all of these new biometrically-enhanced financial systems blossoming in the coming years. The technology is already here, and it’s pushing the financial sector to a point where embracing these new FinTech solutions is not only feasible, but even convenient.
October 18, 2018 – by Alex Perala