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Using Fingerprints to Bank the Unbanked

Our identity proves more than just who we are – it is also our key to obtain access to financial services, government benefit programs, healthcare, and other services. Access to these services are crucial for anyone but can be especially beneficial to low-income individuals seeking assistance. However, these individuals (especially those in developing countries), often lack personal dependable ID infrastructure. This prevents them from accessing important day-to-day services that many of us take for granted, like having a bank account. Realities like this are just one more brick in the wall that keeps low-income populations from upward mobility.

How can we combat this problem?

Biometrics are becoming a growing trend in developing countries to extend ID verification, as it is convenient, secure and only requires an individual’s characteristics to prove who they are – not endless paperwork or identity cards, which is a further challenge for some regions with high illiteracy. Advances in biometric identification in recent years have allowed for the uptick in biometric use. Examples include Aadhaar UID in India, NADRA in Pakistan, Biometric voter registration in Tanzania and others in Nigeria, Kenya, Bangladesh, Zambia and more.  For example, during a disastrous period of flooding in 2010, the Pakistan government used its already established biometric citizen registry to confirm identities through fingerprint identification and disburse donations to more than two million affected families to help them rebuild their homes and replace lost property.

There has been significant progress in biometric adoption, but it still has a long way to go. Today’s biometric approaches typically require widespread deploy of costly biometric readers, which can be challenging to deploy and maintain in low-resource environments.  Portable fingerprint scanners can be less cost effective than traditional means of verification (e.g. presenting a physical ID), especially if they are distributed at the scale required for use in national programs. In addition, fingerprint verification can sometimes prove to be challenging if, for example, an individual is a field worker who has rough or work-worn hands.

But new solutions are emerging which are now not cost prohibitive: namely, smartphones, which contain all the sensors needed to capture biometric data, including cameras and fingerprint readers (that is, Touch ID technologies). Basic phones and even Android smartphones have spread rapidly to many parts of the developing world, so they are already readily available. By using existing smartphone technology for biometric authentication, identification programs can be accessed via the mobile internet, downloaded as an app, or integrated into existing apps.

Increasingly, contactless biometric methods, using just the smartphone’s camera to take a picture of your fingerprints, are quickly gaining traction – a boon for developing markets, as nearly all smartphones have a camera and a flash, which is all that is needed to authenticate. Moreover, contactless biometric methods are significantly more reliable than other mobile-based solutions, as they can be used in any environmental condition. They can also work around issues like detecting fingerprints of individuals who may have rough hands from working with their hands and detecting individuals of different races. This type of authentication is more reliable than other methods, like facial recognition, which can be easily spoofed.

In addition to capturing fingerprints, this next-generation biometric technology needs to ensure the utmost privacy and security for end users.  Solutions should be built with the Biometric Open Protocol Standard in mind. This, in addition to Visual Cryptography, will ensure the utmost security for users. Visual Cryptography is a form of encryption that uses a unique approach that breaks up the biometric image into two or more different pieces, with the pixels randomly distributed between the mobile phone and server. Even if one of the systems is compromised, no useful information can be acquired.

There is so much opportunity for quick and impactful advancement here, so we’re throwing our hat into the ring, too. We were recently awarded a grant from the Digital Financial Services Innovation Lab, supported by the Bill and Melinda Gates Foundation, to develop and field test biometric authentication technology on unmodified Android smartphones, improving the way populations in developing countries can access and enroll in financial and government programs. We may have a bit to work on, but the industry as a whole is getting close to providing a low-cost, easily deployable identity management solution for low-income individuals all around the world. Soon, populations all over the world will enjoy easier access to financial accounts, government benefits, and healthcare records, and – slowly – start to knock out the bricks from the opportunity divide.  



Comments: (3)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 07 September, 2017, 15:26Be the first to give this comment the thumbs up 0 likes

Aadhaar UID in India definitely has helped many people in India get the ID required to qualify for a bank account. However, whether they actually get a bank account or not depends upon whether the bank wants to give them a bank account. Until the government mandated the no-frills PMJDY bank account, very few of these newly-ID'd people got a bank account. While they've now got a PMJDY bank account, for reasons I highlighted in Calling B.S On Banking The Unbanked, moneylenders and blade companies are still their first port of call of such - and many more people - when they need a loan or wish to make a fixed deposit. And, quite frankly, I haven't seen much empirical evidence showing that banking the unbanked alone has led to upward mobility.

A Finextra member
A Finextra member 19 October, 2017, 16:32Be the first to give this comment the thumbs up 0 likes

Hi Ketharaman - Absolutely agree: the final decision to enable the banking of any individual is down to the institution. However, taking away the reasons not to onboard will be a key to success – and highlights the challenge still being faced. Identity has long been a reason 'not to onboard' and, with the explosion of digital capability, we now have an unquestionable process to validate people. The education of banking / saving and creating upward mobility is a huge task, so taking an item like identity out of the reasons 'not' to gives us the first stepping stone on that path.


Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 19 October, 2017, 19:42Be the first to give this comment the thumbs up 0 likes


I don't refute the "first stepping stone on that path" argument. But it's very easy to spend billions on a myriad of stepping stones without achieving the end result. Therefore, we should also explore in parallel other means to achieve the same end. It's quite possible that an approach other "banking the unbanked" turns out to be cheaper and more effective at achieving the "upward mobility" result.