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Biometrics: The new frontier of banking?

03 July 2015

Biometrics is an increasingly topical issue within payments, as our Senior Payments Advisor, Martin Quin, found when he recently attended the Biometrics Institute Asia-Pacific Conference in Sydney, receiving the lowdown on the future of biometrics.

Though you might commonly see biometrics used as you pass through the e-gate at the airport in official documents such as passports, there is a growing need for their use across other industries.

It’s difficult to copy the biometric traits of an individual, like fingerprints or facial geometry, making this a very secure method of ID. In her RealMe presentation, Mandy Smith, Head of Agency Service at Kiwibank stated “a person can have one, and only one, single unique digital identity”.

Biometric indicators such as voice, which rates as the second-most secure form of identification behind the iris, could be implemented to replace and improve the manual authentication currently used in telephone banking. At this time, only one bank in New Zealand employs voice biometrics as part of their customer confirmation process.

A 2013 survey on Identity, Crime and Misuse, presented by the Australian Institute of Criminology, revealed that the most serious occasions of misuse of personal information in the previous 12 months in Australia were of credit/debit card information (number one on the list at 52%) and bank account information (number three on the list at 31%).

The main reason (35%) for this information misuse was for the purpose of obtaining money from a bank account, followed by purchasing something (33%).

The ability for retailers and financial institutions to quickly and reliably establish a customer’s identity means greater trust and a better service experience. It can also mean a reduction in the increasing cost of ID fraud by providing access to more accurate data.

The use of biometric technology in the finance industry in New Zealand and Australia, is still in its infancy. To put our industry in greater perspective, in Japan, 80% of ATMs are equipped with vascular pattern technology now.

In New Zealand, there are still opportunities for organisations to collaborate and develop a streamlined biometrics database that can be used across multiple finance industry institutions. There are potential cost benefits in identification from this secure database rather than developing and maintaining multiple databases in isolation.

If this was available for financial services then this would also make it easier for customers to transact across multiple financial institutions or switch between them and not have to repeat Know Your Customer (KYC) processes with each organisation.

Food for thought.

“We need to keep pace with consumer needs and we need to redesign the process. It’s not just taking the analogue and replicating it to digital. You need to rethink the value proposition / business model from end to end” -  Mandy Smith, KiwiBank, on biometrics.

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