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Strong Customer Authentication: The Potential and Peril of Biometric Authentication

As I strode quickly off the plane I had taken back to the US and towards customs recently after an international trip, I reached into my satchel. Like the rest of humanity, I did not want to spend any more time in the airport than necessary, so I extracted my passport and scanned for an open machine to start the scanning process.

Instead of prompting me to submit my documentation, however, the kiosk asked for a form of biometric authentication — facial recognition. Once the system took my photo, my relevant information appeared on screen for my confirmation. No document to submit, no questions to be answered. I was home in record time, the friction of the reentry process greatly reduced thanks to this new innovation. But who was storing my biometric data, I wondered? And how was it being secured?

With the arrival of PSD2 and its call for Strong Customer Authentication (SCA) this September, there is potential for a similar wave of innovation to sweep across the financial industry. Strong Customer Authentication seeks to enhance security for transactions by requiring two out of three forms of authentication: (1) something the customer knows, (2) something the customer has, or (3) something the customer is.

It is this last element that is emerging with the adoption of PSD2. It is widely recognised that customers have difficulty in choosing and adequately protecting their passwords (“what the customer knows”) and asking customers to carry a second factor for authentication such as a hardware-based device likely increases the overhead for a transaction (“something the customer has”). (Mobile phones, while ubiquitous, have recently been revealed to be too easily spoofed to be a useful second factor.) Thus, the biometric authentication of customers (“something the customer is”) becomes a valuable addition to the security arsenal, and it is already being implemented by various vendors.

Biometric authentication holds great promise for increasing security as well as reducing the friction of transactions. Being able to pay for something at a glance is a powerful tool when used responsibly. But it also elevates the responsibility to secure the data that facilitates this ease of use.

These biometric markers are fundamentally different than passwords. Passwords may be reset and changed at a moment’s notice to reestablish security controls, but biometric markers are not easily modified. Once they are made public, they are rendered useless — and a persistent threat for the exposed individuals. The recent breach of a facial recognition database shows the dangers of not providing adequate security controls around this information, and it is more than just simple reuse of photos: the use of artificial intelligence and deep fakes to recreate voice and video increases the potential impact of a breach.

As always, security is best applied in layers with identity at its core. Identity provides the key for ensuring that only the proper people or entities have access to this data, and only at the necessary time. Using well established identity standards such as FIDO ensures that identity-based policies are appropriately enforced to protect this most sacrosanct of customer data.

The Strong Customer Authentication that comes with PSD2 promises to increase financial transaction security while also providing a pathway to a more frictionless customer experience. Organisations that want to serve their customers well will embrace the ease-of-use that biometrics may provide, while ensuring that they serve their customers well with security protections for those unchangeable markers. And by protecting “something that the customer is,” financial institutions can demonstrate something they are: a partner to be trusted.

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Comments: (1)

Maximiliaan Van De Poll
Maximiliaan Van De Poll - Cybernetica - Tallinn 26 September, 2019, 07:09Be the first to give this comment the thumbs up 0 likes

Thanks for the post, Mike. 

There are pros and cons to biometrics, certainly. Can't be phished, but can't be changed, etc. One additional con, is that biometric data can't reliably encrypt or decrypt information (such as a private key) consistently, while a PIN can. The correct signature being produce being the verification the PIN was correct, so no need to store it anywhere. 

There's a lot to discuss on this topic. It's certainly an interesting space that I'll be keeping an eye on!

Thanks again.