Biometrics: Banking, fraud and financial inclusion

A conversation with Stan Swearingen, CEO, IDEX.

Why should the retail and banking sectors put identity first to ensure a user-friendly customer experience?

Payment cards have been in use since the 1950s. For decades we relied on signatures as a form of security, until 2006 when chip and PIN cards were introduced to the UK. Yet PINs are notoriously vulnerable, with many people using obvious numbers or even writing them down. This is why phones have been using fingerprint technology since 2004, with Apple taking it mainstream with the iPhone in 2013. Due to its highly unique nature, a fingerprint is extremely secure and therefore ideal for securing payments. But getting a fingerprint sensor on a card has – until now – been a challenge. Cards are thin, lightweight and have no power source. This is where our innovative fingerprint recognition system comes in. The technology is now ready to be attached to the every-day payment card we all use across the globe.

Our focus at IDEX Biometrics is, and always has been, very much focused on who you are and making payment authentication personal to the user. Biometric authentication places consumers at the centre of innovation, rather than being victims of it. By working seamlessly with current contactless POS systems used in retail and banking infrastructures, consumers needn’t learn anything new when using this technology, or have to remember anything, they simply use their own unique identity.

How do the retail and banking sectors balance privacy and security against convenience?

Biometrics, including fingerprint recognition, is a field increasingly recognised as holding the key to card fraud prevention and security within the payments sector. Financial Fraud Action UK (FFA UK) reports that in 2016, fraud across payment cards, remote banking and cheques totalled an astonishing £1.38 billion, the overwhelming majority (80%) of this fraud involved payment cards.

The second Payment Service Directive (PSD2), requires everyday transactions to become subject to two-factor authentication in an attempt to combat fraud, including contactless payments. Biometric authentication for card payments is set to play a key role in this authentication process, and will help shift payment authentication methods away from what we know or can remember, to who we are and what we can physically prove. In turn, this will remove the ability to easily share or have ‘PINS’ fraudulently stolen and deliver greater security levels to combat fraud.

Thanks to IDEX’s biometric smart card innovation, people making card payments will no longer have to compromise security for convenience as consumers will have the ability to enrol from the comfort of their own homes. With the £30 transaction cap becoming a thing of the past, along with the need for a PIN or signature, biometrics will be even more convenient than cash, further moving us towards a cashless society.

How could biometric card solutions be implemented on a global scale? 

IDEX’s “off-chip” finger-print technology allows card manufacturers to simply add a very thin finger-print sensor to any card, meaning there is no need to invest in any new infrastructure. This means costs are kept to a minimum, allowing the technology to be deployed at low cost. This combined with the ability to enrol from the comfort of your home means that the use of biometric payment technology will be accessible to all. As a result, we anticipate that each banking customer may deploy as many as 100,000 biometric cards to their account holders by the end of 2018 and that biometric bank card adoption will go into many millions from 2019.

How does the security of enrolling biometrics straight onto cards differ to doing so onto a central database?

The latest advancements in IDEX’s biometric technology, means that uploading your fingerprint to these payment cards will not only be straight-forward, but also incredibly secure. Card users will be able to enrol straight onto the card by simply placing their finger on the sensor (with the aid of a small device that comes with the card) to upload their print to the card’s highly secure EMV chip. There is no need for an external computer, smartphone or internet connection. Once loaded, the fingerprint never leaves the card, thus eliminating multiple attack points. With cyber security and data breaches becoming an ever-prevalent issue and threat to the payment industry, we have seen a number of banks fall victim to these attacks including the likes of TSB, Barclays and HSBC. In order to combat this issue security has been paramount in the development of our cards. There is no need for fingerprint data to be held centrally and potentially be at risk of breach, it will be held securely on each individual card thanks to the enrolment technology we have developed.

How could biometric technology provide a stepping stone to address financial inclusion?

Currently, 1.5 million adults remain unbanked in Britain today. This is for many reasons, from immigration issues, to illiteracy as well as mental health. Those living with dementia are also at risk of losing their financial independence as their short-term memories decline. A fingerprint sensor on the card can take the place of a PIN or even signature, meaning sufferers are able to stay financially independent for longer.

In addition to this, many people do not have passports or access to other forms of identification, biometrics could be the solution to this. Fingerprint recognition means that there is no need for other types of identification to authenticate payments. Solving this intractable problem isn’t going to happen quickly, but advancements in biometric technologies will go a long way towards bridging the gap for financial inclusion.

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