Usually, customers need to be authenticated before they can access their banks' services. The authentication mechanism may be token-based for electronic access, signature-based for branch services or PIN-based for other services.
Biometric authentication identifies customers by their biological traits. More specifically, biometric technology is an application that uses individuals' characteristics and traits to identify them and control their access to various systems.
Can biometric authentication be successful in banking? If yes, what are the drivers of success? And what are its advantages?
Although biometric verification and authentication is commonplace in immigration control and forensic studies, and multinational banks have used it to authenticate employees for years, customer-oriented biometric authentication is rare in banking, even in
advanced markets. The most quoted example is that of Japan, where almost a majority of ATMs is equipped with vein pattern recognition. While a string of ATM fraud incidents triggered the use of biometric authentication by Japanese banks, the main motivation
underlying the move was not to mitigate fraud related losses, but to allay customers' security fears.
Socio-technological challenges pose the biggest barrier to adoption of biometric technology by banks. Banks also need to consider the local culture and level of literacy in the target region. For example, they might like to use fingerprint authentication
in lieu of signature at branches located in areas with low literacy. But they might prefer to use iris recognition in other regions.
Although the use of biometric technology could shorten transaction time, improved security is its single largest "USP" or benefit. Banks and other financial services businesses increasingly recognize the importance of biometric technology in securing their
organizations and their customers against security breaches. The financial industry is also thinking of ways to employ this technology to combat money laundering, Internet fraud and identity crime.
While the security offered by biometric technology is an undeniable truth, the cost of biometric authentication must be evaluated vis-à-vis its projected benefit, before coming to a deployment decision.
Even so, banks seem willing to try biometric authentication provided their customers are comfortable with it. In order to make this happen, banks must first acquire a deeper understanding of biometric technology and its implementation to appreciate its advantages
and then pass on the same message to their customers. The use of biometrics might also get a boost from advances in mobile apps, although ironically the latter will also emerge as the main competitor to current biometric authentication techniques.