Biometric  Banking  The  future  of  banking  

 

     

The  traditional  technologies  of  chip-­‐embedded  cards  and  pins  are  outdated  and  easily  replicated;  there  is  a  need  for  a  more  secure  and  convenient  way  of  accessing  your  funds  and  bank  information.  The  advent  of  Apple  Pay  (2014)  as  well  as  the  implementation  of  Biometric  authorization  (Fingerprint  and  Vein  Geometry)  within  Barclays  (2014)  represents  an  opportunity  for  Australian  Banks  to  adopt  this  new  technology.    

 Biometric  technology  is  becoming  cheaper  in  both  application  and  usage,  especially  since  it  is  now  embedded  into  smartphones,  such  as  Apple  Pay  (2014).  Its  development  has  been  the  result  of  a  demand  from  customers,  particularly  Gen  Y  for  a  more  intuitive  method  for  authentication  over  passwords  and  pin  codes.    

This  is  supported  by  a  2012  KPMG  report  on  banking  behaviour  of  Gen  Y,  which  forecast  that  this  demographic  will  hold  70%  of  financial  assets  in  2030.  It  also  found,  that  banks  need  to  make  greater  use  of  the  invisible  security  concept  to  improve  the  customer  experience  and  enhance  risk  management.  Kristina  Craig,  Associate  Director  at  KPMG  noted  that  fintech  partners  are  being  used  by  global  banks  in  the  biometrics  and  behavioural  profiling  fields.  This  is  pertinent  given  that  KPMG  are  the  current  auditors  for  ANZ  and  Suncorp.        

A  key  driving  force  for  this  change  is  smartphones,  which  have  disrupted  many  other  industries  including  communication,  cameras  etc.  So  it  only  makes  sense  that  it  would  challenge  the  way  that  we  use  our  money  –  utilizing  technologies  like  Near  Field  Communication    (eg.  Paypass/  or  Paywave)  to  streamline  everyday  life.      There  are  number  of  different  biometric  technologies  that  have  varying  levels  of  uptake  including  fingerprint,  heart  beat  scanner,  vein  geometry,  voice  analysis  and  facial  recognition.  The  most  popular  of  these  technologies  being  fingerprint  biometric  scanners  (particularly  with  Gen  Y).    The  greatest  challenge  for  the  Australian  banking  sector  is  not  deciding  whether  to  implement  biometric  banking,  as  Apple  Pay  will  go  global,  but  whether  you  want  to  be  ahead  of  the  pack  or  playing  catch  up.    

Global Trends

Types  of  Biometric  Scanners  available  

Facial  recognition:    This  is  one  of  the  most  flexible  methods  as  it  can  be  done  without  the  person  being  aware  that  they  are  being  scanned.  This  system  analyzes  facial  features  like  the  distance  between  the  eyes,  width  of  the  nose,  position  of  cheekbones,  jaw  line  and  chin  etc.  This  technology  is  better  suited  to  branch  verification,  as  it  has  not  been  implemented  into  smartphone  devices  to  any  great  degree  and  would  represent  a  large  up-­‐front  cost  in  R&D.    

Fingerprint  Identification:    The  fingerprints  of  any  person  remain  the  same  throughout  their  life  and  no  two  fingerprints  are  ever  the  same.  To  ensure  accuracy  it  requires  clean  hands,  free  from  injuries  to  the  prints,  as  this  would  prevent  proper  identification.  The  major  benefit  is  the  ubiquity  of  the  technology  currently  with  the  support  of  Apple  and  Samsung  through  its  implementation  into  their  flagship  phones.  In  Australia,  Westpac  and  St  George  Bank,  have  integrated  Touch  ID  into  their  respective  apps  in  2014,  giving  them  first  mover  advantage.    

Vein  Geometry:    This  technology  provides  the  liveliness  factor,  in  that  the  reader  only  works  on  a  living  person,  it  analyses  veins  with  blood  flowing  in  the  fingers.  In  2014  Barclays  (UK)  partnered  with  Hitachi  to  provide  two  factor  biometric  scanners,  combining  fingerprint  and  vein  geometry  to  provide  accuracy  exceeding  a  1  in  1,000,000  chance  of  replication.  This  technology  is  very  powerful,  however  it  requires  dedicated  readers  to  be  implemented  in  store  and  on  ATMs.  This  is  a  proven  technology  that  has  been  successful  overseas,  in  countries  including  Japan  and  UK.      

Voice  Analysis:    This  method  of  security  biometric  can  be  implemented  and  tested  without  the  person’s  awareness.  Though  it  is  easier  to  forge  by  using  a  soundtrack,  it  cannot  be  replicated  by  trying  to  reproduce  another  person’s  voice.  It  is  currently  being  used  by  NAB  (introduced  in  2009),  which  has  more  than  150,000  customers  who  have  enrolled  their  voiceprints  to  help  correctly  identify  them  when  contacting  the  bank’s  call  centre.    

Heart  Beat  Scanner:    This  method  uses  an  embedded  electrocardiogram  (ECG)  sensor  to  recognize  the  unique  cardiac  rhythm  of  users.  This  ECG  sensor  is  able  to  match  the  wearer’s  ECG  against  a  stored  profile  in  order  to  authenticate  the  wearer’s  identity.  The  market  leader  in  this  technology  is  Bionym,  which  recently  released  the  Nymi  wearable  wristband  (2013),  it  has  an  inbuilt  NFC  chip  that  is  able  to  make  mobile  payments,  unlock  electronic  devices,  and  provide  authentication  for  online  bookings.  The  advantage  of  this  technology  is  that  it  is  more  difficult  to  replicate  than  fingerprint  identification,  which  can  be  left  behind  on  surfaces.    

 

471  Million  Forecast  number  of  global  smartphone  users  by  2017,  up  from  43  million  in  2013  –  JWT  Intelligence  

It  is  clear  that  the  Australian  market  is  both  ready  for  and  in  need  of  the  improvements  that  biometrics  can  bring  to  the  banking  experience.  The  research  suggests  that  in  the  medium-­‐long  term  Gen  Y  will  be  the  key  target  demographic  for  banks  and  they  will  want  invisible  security  (KPMG  2012).  

Additionally,  there  are  many  challenges  fast  approaching  the  banking  sector,  including  Apple  Pay  and  similar  payment  platforms.  It  is  about  rising  to  these  challenges  and  meeting  a  more  tech  savvy  customer  with  the  tools  and  structures  to  satisfy  their  needs.    

It  is  therefore  recommended  that  Australian  banks  should  implement  biometrics  into  their  banking  experience.    The  best  method  being  the  two  factor  authentication  of  fingerprint  and  vein  geometry  due  to  its  intuitive  nature  and  proven  record  in  the  UK  with  Barclays.  In  the  short  term  it  would  be  prudent  to  leverage  existing  technologies  in  smartphones,  such  as  Apple  ID  through  integration  with  existing  apps.      

The  Future  of  banking  We  cannot  solve  our  problems  with  the  same  thinking  we  used  when  we  created  them  –  Albert  Einstein