One of the biggest trends in consumer-facing authentication technology over the past few years is selfie-based authentication. Just as the previous decade’s boom in mobile fingerprint sensors was catalyzed by Apple’s introduction of a fingerprint-scanning iPhone in 2013, the tech giant’s launch of a Face Unlock feature on its buzzy iPhone X in late 2017 led to a preponderance of face-scanning systems across the smartphone ecosystem in the ensuing years.
As these face-scanning systems have grown both more sophisticated and more commonplace, they have also led to one of the biggest trends in financial services: selfie-based onboarding.
Banking on Biometrics
The idea is simple: to leverage mobile biometric technology in order to remotely verify a customer’s identity. For the end user, that typically means uploading a selfie photo to a banking app along with images of an official identity document such as a driver’s license. The financial services provider uses facial recognition technology to match the selfie to the image on the ID, thereby confirming that the end user is who they claim to be.
It’s essentially the same as the process that would traditionally be undertaken at a bank branch, where a new customer would hand over their ID as part of the account opening process. But it lets the customer do it remotely and conveniently, while streamlining the identity verification process for the bank.
This approach to remote onboarding has proven to be a powerful tool for a number of up-and-coming challenger banks that often were already seeking to differentiate themselves in the financial services market with a tech-forward posture. But big banks have also been getting onboard. Major names like BBVA and Banco Santander have been deploying selfie onboarding systems in recent years, and this year two of Canada’s biggest banks – CIBC and Bank of Montreal – launched their own selfie services, while Abu Dhabi Islamic Bank announced an ambitious remote enrollment system that hooked up directly with the UAE Ministry of Interior face database for identity verification. (To its credit, HSBC – something of a maverick in embracing biometric tech – got into the game even before the iPhone X, back in 2016.)
The trend can also be seen in the recent quarterly updates from various vendors of selfie onboarding solutions, some of whom have been reporting triple-digit year-over-year revenue growth, thanks in large part to booming demand from financial services providers.
The Crypto Frontier
Naturally, this approach to onboarding is being embraced in parts of the financial services sector beyond banks. A number of investing and securities trading platforms have embraced selfie onboarding, including Europe’s eToro and Canada’s WealthSimple. A number of biometric onboarding vendors, meanwhile, have also been reporting growing interest from crypto exchanges and wallets, as well as other firms operating in the crypto and blockchain spaces.
And this new frontier of financial services is where selfie biometrics gets really interesting. In general, crypto exchanges want to verify their users’ identities in order to ensure compliance with KYC and AML regulations. But for many of those performing transactions in cryptocurrencies, much of the appeal is the anonymity; a Bitcoin transaction, for example, can be traced only to a given wallet address, and not necessarily the individual who is using it.
Biometric identity verification offers a perfect solution, enabling crypto wallets and exchanges to ensure that their users are legitimate, while also allowing their users to perform transactions anonymously across various blockchain platforms. And even more innovative approaches are emerging.
This past summer, an ambitious blockchain startup announced plans to build a decentralized financial network in which each participant would be verified using facial recognition technology (provided by FaceTec) to ensure that they are a real individual and do not have duplicate accounts. The plan is to have this collective of verified individuals comprise the blockchain network itself via their individual accounts, leveraging biometric technology that doesn’t require them to share any personal information in the performance of this role.
Similarly, a Silicon Valley startup with some big backers announced earlier this year that it was developing a crypto platform designed to deliver a universal basic income to all participants, with a biometric iris scanner playing a critical role in “ensuring both humanness and uniqueness of everybody signing up”, as the startup explained in a job posting related to the project. It isn’t a selfie-based system, but it’s another illustration of the interest in biometrics for what might be called ‘pseudonymous identity verification’ – making sure that the end user is a real and unique individual, without necessarily digging into personal information.
This is tentative stuff, in the very early days of development. But it points to a potentially game-changing role for biometric technologies in the payment systems of the future, especially those that will be conducted over blockchain platforms. Today, financial services providers are rushing to embrace biometric technologies for their ability to verify identity; in the future, biometrics may play an equally important role in ensuring pseudonymity. What’s clear enough now is that selfie-based approaches are in the foreground, and interest in biometrics in financial services and the crypto space is intensifying.
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November 18, 2021 – by Alex Perala