November is Financial Biometrics Month at FindBiometrics. And, as far as breaking news goes, it started with a bang. On Halloween, the Treasury Department’s Office of the Comptroller of the Currency (OCC) announced plans to create a new Office of Financial Technology that will oversee activities in the area of fintech, setting a new tone for the month to follow (and beyond).
In a statement, Acting Comptroller of the Currency Michael Hsu noted that financial technology “is changing rapidly”, prompting the need for regulatory oversight. “The establishment of this office will enable us to be more agile and to promote responsible innovation, consistent with our mission,” he said.
With that in mind, it’s worth taking a look at what has transpired in the identity and biometrics segment of FinTech since that announcement, to get a sense of the major trends that might fall within the Office of Financial Technology’s purview – and a sense of the speed at which the sector really is evolving. A lot can happen in half a month.
Biometric Payment Cards’ Race to Commercialization
Setting aside the OCC’s big announcement, Financial Biometrics Month’s featured coverage started with a look at the nascent biometric payment cards sector, surveying important developments this year that illuminated market opportunities in the Middle East and Europe. Since then, the sector has seen a few more major announcements.
- First Abu Dhabi Bank, the largest bank in the United Arab Emirates, launched the country’s first biometric payment card in partnership with retailer Majid Al Futtaim. The card was developed by IDEMIA and features IDEX Biometrics’ fingerprint sensor technology. In a statement, IDEX said the launch confirms an “expected commercial acceleration in 2022” for the nascent biometric payment cards market, and said it points to “a market inflection in 2023.”
- Société Générale launched biometric payment cards for Moroccan customers who hold business accounts, explaining that the Société Générale Morocco Business Platinum Card is a response to “growing interest in securing financial transactions”. The bank first started experimenting with biometric card technology in 2018, in collaboration with IDEMIA.
- IDEX Biometrics established a partnership with an unnamed “issuer and processor of EMV compliant payment cards” based in the United Kingdom, the company has announced. The company added that its new partner is a well-established B2B solutions provider with a focus on banking and FinTech, and a portfolio spanning the UK, Europe, and North America.
- Fingerprint Cards established a partnership with Tag Systems that will focus on delivering fingerprint-scanning payment cards to the latter’s customers. While Tag Systems had partnered with Zwipe on a biometric payment card solution earlier this year, its new arrangement with Fingerprint Cards seems to be a separate business endeavor, with FPC announcing that their joint solution will combine its T2 fingerprint sensor module with “Tag Systems’ extensive payment card solutions and services, based on ST Microelectronics STPay-Topaz-Bio.”
- IDEX received its largest order to date for its TrustedBio fingerprint sensor solution for smart card and payment cards. Representing approximately $2 million in revenues for the company, the order is from its partner IDEMIA, and will see shipments of TrustedBio sensors in the first quarter of next year.
The developments further underscore the rapid development of the biometric payment cards market globally, though none of them concern the US market in particular. That could keep biometric payment cards under the radar so far as the Office of Financial Technology is concerned – at least until these developments start to reach American shores in a substantial way.
A Glimpse at Naked Payments
Biometric payment cards may represent the next big wave in payments technology for in-store shopping. But another one is building behind it in the form of naked payments – an approach to in-person transactions that lets the consumer pay with only a biometric scan. The consumer’s biometrics are linked to a payment account, meaning there is no need to present a card, cash, phone, or any other physical token in order to complete a transaction.
This technology is at a much earlier stage of development than biometric payment cards, but this month has delivered a couple of telling developments hinting at its promise:
- Chicago-based Keyo has rebranded and revamped its palm scanning authentication solution, announcing what it now calls the ‘Keyo Network’. It comprises the Keyo Wave biometric scanner, a Keyo Mobile App, Keyo Identity Cloud software, and a Keyo Partner Program & App Store.
- Three Flat White Specialty Coffee branches in venues for the FIFA World Cup in Qatar will accept biometric payments based on facial recognition that do not require the consumer to present a payment card, cash, mobile device, or any other physical token. PopID is providing the biometric technology in partnership with Visa and Qatar National Bank.
The Keyo news is notable as a signal about the maturity of naked payments as a technological sector. Founded in 2017, the company ended up erroneously pitching its solution as one that was compatible with Amazon’s newly announced biometric payment system in 2020. Now, CEO Jaxon Klein acknowledges that in those early days the company’s team was “probably a bit naïve in the beginning to underestimate the true complexity of this undertaking.”
But here the company is, officially announcing a major rebrand as Amazon continues to expand the availability of its own palm-scanning payment system across more retail outlets in the US.
PopID, meanwhile, is about to get some time in the spotlight on the world stage, thanks to the prominence of the World Cup. The naked payments deployment will represent a potentially significant marketing opportunity for the California-based startup, which is also involved in Mastercard’s Biometric Checkout Program
Both developments suggest that biometric payment tech is ready for its formal introduction to consumers, even if it isn’t close to being ready for mainstream adoption.
e-Commerce Banks on Mobile Biometrics
As for online payments, November has brought announcements that point to the potential mainstreaming of mobile-based biometric authentication in digital commerce:
- Banked, a London-based FinTech company, raised more then $15 million in a Series A “extension round”, the company has announced. The funding round was led by Insight Partners, and featured contributions from Citi, National Australia Bank Ventures, and Rapyd, a new commercial partner. Banked offers a payments platform designed to let users perform transactions without needing to create an account or provide login information; instead, they pay via their existing bank at checkout, and confirm the purchase through biometric authentication via that bank’s mobile app.
- OwnID launched a WordPress plugin that enables sites with WooCommerce stores to let customers use passwordless authentication via the recently launched Passkey system that was jointly developed by Apple, Google, Microsoft, FIDO, and W3C. The OwnID plugin is free, and supports up to 10,000 logins per month. Consumers who shop on WooCommerce sites that embrace the solution will be able to log into their accounts through a biometric scan on their personal device, with no need to enter password credentials.
While it’s too early to say how much of a disruptor Banked will turn out to be, the OwnID launch is part of a larger project that looks very likely to be impactful. A growing number of organizations are embracing the passkey concept, with PayPal having become perhaps the most high-profile e-commerce player to do so near the end of October. That suggests much greater prominence for mobile biometrics as the technology takes the spotlight on the e-commerce stage, if this momentum continues.
Behavioral Biometrics Secures Banking’s Back-end
Meanwhile, behavioral biometrics technology continues to see increasing adoption on the back end of digital banking. Broadly speaking, this tech is designed to find patterns in user behavior – often with respect to things like keystrokes and mouse movements – and to scan for abnormalities that might signal fraud. A growing number of financial services organizations have recognized the value of this technology as a passive, background layer of security, and the first half of this month alone has brought three major deployment announcements:
- UnionDigital Bank, the online banking subsidiary of Union Bank of the Philippines, partnered with CallSign, whose technology revolves around the use of behavioral biometrics to create a unique end user profile based on things like typing patterns and how they hold their mobile device.
- Lexington, Kentucky-based Members Heritage Credit Union signed on to use Access Softek’s Access Digital solution, which supports digital banking with strong security features including biometric authentication and a real-time fraud detection system based on analysis of user behavior.
- Baxter Credit Union announced it will use behavioral biometrics technology from BioCatch to help fight fraud. “This partnership with BioCatch via Lumin gives us the tools we need to stop attacks in real-time and ensure our members and employees can work together in a safe and secure system,” said the Senior Director of BCU’s Account Protection Team, Stacy Bausch.
The breadth and pace of deployments is all the more notable in consideration of the relative novelty of behavioral biometrics as a technology. And much the same can be said about mobile-based biometric authentication, naked payments, and fingerprint-scanning cards. Will any of these technologies end up being regulated to some degree by the new Office of Financial Technology? It’s too early to say. But it’s clear enough that so far as identity and biometrics-related FinTech goes, these are some of the most important trends of the moment, and they are all showing strong momentum going forward.
November 17, 2022 – by Alex Perala