Banking is essentially about trust. Customers entrust banks with their savings and want to transact securely. One of the ways to build trust with customers is through innovation like biometric verification. Biometrics refers to technology that is utilized to verify a person’s identity through their biological attributes like fingerprints, voice print, retina and facial structure, and DNA.
Identity theft in South Africa has motivated banks to rethink the way they authenticate customers. One such bank is Capitec, which from the initial launch of its branches incorporated biometrics as part of the account opening process with fingerprint scanners and by taking webcam photographs of customers. Other South African banks have followed suit by rolling out biometrics across their branches. For example, in Absa / Barclays Africa customers now provide their signature using a digital Wacom tablet that digitally stores their signature. Standard Bank and Investec have also launched biometric mobile banking solutions that utilize Apple’s TouchID technology.
Matt White, senior manager in KPMG’s cyber security practice for KPMG in the UK, comments on the news that passwords will likely be replaced by a new generation of identity verification devices that read body functions such as heartbeat, glucose levels and vein patterns. He says:
"Passwords have been around for so long that they are an integral and accepted part of user transactions. Replacing passwords with biometric alternatives such as fingerprints provides better security, however it doesn’t completely eliminate the risk posed by cyber criminals.”
The largest benefit of Capitec, and other banks, introducing biometrics has been the increased security level biometric fingerprint identification has provided to both the banks and its customers. Identification document fraud in South Africa is high, where criminals use counterfeit drivers’ licenses and birth certificates to commit identify fraud. The biometric fingerprint scanner detects potential fraudsters at the point of sale. Banks indicated that they have seen a decrease in this type of fraud at branches with biometric systems in place.
The use of biometric identification also protects customers against fraudsters taking up illegal credit by using a customer’s stolen, lost or counterfeit identification documents. Once in the system, biometric data allows customers to transact at the bank branch without identification documents – reducing the risk of potential theft or losing their valuable documents when commuting to and from the branch. Customers will also no longer be accused of compromising their PIN numbers through third parties.Investec has indicated that they will soon use voice authentication, instead of using the typical call center verification questions, like identification number and mother’s maiden name, which in some instances are easy for fraudsters to obtain through social media.
Biometric systems are cost effective relative to the amount of fraud that they could prevent. The use of biometrics by banks will also reduce paper consumption costs seeing that all documentation would be electronically stored.
Ease of use
Standard Bank recently launched a biometric mobile banking solution for clients. The biometric systems make it easier for customers in that they require less documentation to transact. It also makes customer authentication in branches and other channels less tedious.
Customer experience is enhanced as banks are able to identify and verify customers quicker with biometric systems when customers interact and transact with banks. Biometrics also streamline the application process, reducing the normal time it would take to open a new account, compared to the old manual customer authentication.
The South African Home Affairs National Identification System (HANIS) launched in 2011 and enables the biometric identification of citizens based on biometric information stored on their system. This allows South African banks to verify customers through a second layer of biometric information to ensure that customers are who they claim to be according to their identification documents. Capitec, Absa and FNB are some of the first banks to go live with this service which enables them to verify and authenticate customer identify and limit identity fraud.
The credit bureau TransUnion is working in partnership with OneVault to build a national voice bank in South Africa. OneVault to date has 30 000 voice prints. Voice biometrics also enable organizations to store the voiceprints of known fraudsters. Dutch bank ING Netherlands has released the voice-activated payments through its mobile banking app, providing a quick and easy alternative to entering a PIN. UK high street bank Barclays is also introducing voice recognition for users of its telephone banking service. The retail bank is rolling out voice biometrics technology from Nuance – already used by customers of its high-roller banking arm – to its 12 million retail customers.
Capitec is piloting biometric fingerprint scanners at cash-recycling ATMs and success of the pilot will determine if the program will be rolled out across South Africa.
Know Your Customers (KYC) as a regulatory requirement along with authentication through biometrics could in future see financial institutions playing a wider role in authenticating customers for other organizations that would like peace of mind that customers are indeed who they say they are.
*The information contained in this article is based on the professional experience of the author.
Mark E. Straub,
Global Financial Services Customer Lead