November is Financial Biometrics Month at FindBiometrics. In some of our dedicated coverage, we looked at the emergence of biometric payment cards, the pioneering efforts behind ‘naked payments’, and four of the biggest FinTech trends concerning biometric tech. Now, with Financial Biometrics Month coming to a close, it’s a good opportunity to look at the current state of banking biometrics, and where it might be headed next.
The Ascent of the Selfie
The most important trend in online banking of the last few years has been the rise of biometric onboarding. For a growing number of financial services providers – and especially those with a strong focus on digital channels – this is the key front-facing biometric technology for customers.
It almost always revolves around selfie-based facial recognition. A given app, whether on mobile or web-based, will ask a user to upload images of their official photo ID alongside a selfie image. Then, facial recognition technology is used to match them together. If the face on the photo ID matches that of the end user who took the selfie, then the biographic data on the photo ID is presumed to belong to that same user.
It’s essentially the same approach to identity verification that is used when someone opens a bank account in person – a bank agent asks for a photo ID, and checks to make sure that it matches the customer in front of them. But facial recognition automates the process, and allows it to be done remotely. This means that banks can let customers open new accounts without coming into a physical branch while still complying with Anti-Money Laundering and Know Your Customer requirements.
The benefit to financial institutions is obvious, and this approach to onboarding was already gaining impressive momentum toward the end of the last decade. But the pandemic, with its lockdowns and stay-at-home directives, only accelerated selfie onboarding’s ascent, as detailed in our Year in Review at the end of the first year of the pandemic, and illustrated in the constant stream of coverage of the trend ever since.
Biometrics in the Background
Being at the front line of customer service, and so wildly popular, selfie-based onboarding was a natural place to start an assessment of the state of the art in banking biometrics in late 2022. But there are some remarkable technologies in operation on the back end of banking, largely out of sight for customers, that are helping banks to transform security and fight fraud.
One of them is behavioral biometrics. Typically, this technology takes the form of a software solution that analyzes patterns in the behavior of end users as they interact with a digital interface, looking for anomalies that may indicate fraudulent activity. It’s often perceived as an extra layer of security for banks, and a particularly valuable by virtue of not interfering with the user experience – behavioral biometrics systems operate passively, in the background, quietly assessing user behavior without requiring any particular action for authentication.
This tech has seen steadily growing adoption in recent years as various financial services institutions have come to recognize its utility. In recent months, we’ve seen deployment announcements from BioCatch – whose solution has been embraced by ABNB Federal Credit Union and Indue, an Australian Approved Deposit-taking institution that offers services to a network including financial institutions – as well as CallSign, whose solution was selected by Union Bank of the Philippines.
And this month brought the news that Silicon Valley startup Darwinium had raised $10 million in seed funding. The company claims that its behavioral biometrics technology is sophisticated enough to actually recognize a given customer, rather than simply flag signs of fraud, and could help to further accelerate adoption of behavioral biometrics going forward.
Then there’s voice recognition, which is both passive and active: it requires the customer to speak, but in a call center setting, the customer is already doing that anyway, allowing voice recognition systems to quietly operate in the background, verifying that the customer is who they claim to be.
It’s another security layer that is gaining traction among financial services institutions. Just last month, WaFd announced that its implementation of a voice authentication system from Talkdesk Identity had led to a 90 percent reduction in the time it takes for customers to perform an account balance inquiry.
Meanwhile, providers of call center solutions are folding voice recognition systems into their platforms. Eltropy acquired Marsview.ai in late summer, explaining that the move would allow it to offer the latter’s voice tech to its credit union and community bank customers. More recently, Daon’s voice biometrics technology was integrated into the Genesys AppFoundry, a collection of software tools aimed largely at call center applications.
As Daon CEO Tom Grissen noted in an interview with FindBiometrics, voice recognition offers “a much more natural approach” to customer authentication over the phone than the usual question-and-answer session, and the modality is also very effective in the fight against replay attacks.
The Mobile Biometrics Revolution Continues
With voice recognition securing the phone lines, behavioral biometrics guarding against fraud online, and selfie onboarding verifying customers from the very start of their digital journeys, a bank would be pretty well-defended against fraud and cyberthreats even as it enhanced customer service. And then there’s the most ubiquitous form of biometric security across financial services – biometric login through the end user’s smartphone.
Pretty much every smartphone on store shelves supports some kind of biometric authentication mechanism – typically a fingerprint sensor or a facial recognition system, if not both. And the financial services sector was quick to embrace these technologies to let users of mobile apps easily access their accounts.
Biometric login is likely to become even more common as passkeys start to proliferate. Pioneered by Apple, in collaboration with the FIDO Alliance and W3C, the passkey concept essentially creates a unique password for each of a user’s online accounts, and stores them all on the user’s smartphone, locking them behind biometric authentication. Google and Microsoft are preparing to roll out their own passkeys, and passkeys are already being embraced in the world of e-commerce, most notably in the form of PayPal’s recent announcement of support.
This early flurry of activity points to a future in which biometric login via mobile becomes even more prominent in banking. And that adoption is likely to dovetail with further deployments of behavioral biometrics, voice recognition, and selfie onboarding systems, with these key trends already shaping the future of digital banking.
November 25, 2022 – by Alex Perala