Exploring the Possibilities of Biometric Security in Fintech

In today’s time, the most precious thing about a human being is money. When it comes to matters of money, transactions, and finance, security is always paramount. There has been an extensive adoption of security measures to ensure that no fraudulent activity takes place. For example, bank representatives ask us for biographical data and passcodes. Similarly, a user has to confirm their identity with signatures and PINs. Microsoft revealed that 44 million user accounts were exposed to account takeover due to weak passwords. Google revealed that most users reuse passwords on multiple sites, leaving them vulnerable.

Biometric authentication technology has emerged as a potential solution to this issue. In this article, we will see what biometric payment technology is and how it can transform the landscape of digital payments. But first, let’s understand biometric technology.

What is Biometric Technology?

Biometrics is the statistical and mathematical measurement of unique physical or biological characteristics for identification purposes. In cybersecurity, the definition of biometrics refers to the use of unique biological features for digital authentication and access control.

Many companies in the fintech industry are using it to enhance security and improve the user experience. Here are some of the companies that are leading the way in the application of biometric technology:

Apple

Apple was one of the first companies to popularize biometric authentication with the introduction of its Touch ID fingerprint scanner in 2013. Since then, the company has continued to innovate in this area, adding facial recognition technology with its Face ID feature in 2017.

Mastercard

Mastercard has been experimenting with various authentication methods, including facial recognition and fingerprint scanning. The company has also launched a pilot program that uses heartbeat to authenticate users.

Paypal

Paypal has implemented biometric authentication in its mobile app, allowing users to log in and make payments using their fingerprint or facial recognition.

However, the fintech industry is adopting biometric authentication to confirm the identity of users and prevent fraudulent activities. Biometric authentication is expected to become increasingly important in the fintech industry. The numbers speak for themselves: according to research, the global value of fintech biometrics will rise from $332 billion in 2022 to $1.2 trillion by 2027.

Applications of Biometrics in Fintech

A survey published by Visa showed that 65% of consumers feel more comfortable using biometrics in banking for safeguarding their payment details—ruling out traditional security methods entirely at this point. The necessity for strict identity verification due to the accelerating adoption of transactional technologies has made biometric use in banking crucial for financial institutions.

Identity Verification

This is one of the most important applications of biometric technology in the fintech industry. Such authentication can help fintech companies verify the identity of their customers more accurately and efficiently than traditional methods.

Payment Authentication

Fintech companies are increasingly using biometric authentication for payment verification. For example, users can verify their identity using biometrics like voice, facial recognition, or fingerprint scans, which improves both convenience and security.

Access Control

Fintech companies leverage biometric technologies such as facial, fingerprint, and iris recognition to restrict access to sensitive data, applications, and physical areas. By employing biometric access control, companies can ensure that only authorized personnel can access confidential information.

Fraud Detection and Prevention

Biometric authentication can help fintech companies detect and prevent fraud by confirming the user’s identity. Behavioral biometrics can analyze user behavior and detect unusual spending patterns or anomalies, which can signal potential fraudulent activity.

Biometrics in the Banking Sector

Biometric verification for bank accounts is increasingly becoming a fundamental part of the banking and FinTech industries, as it offers an increased level of security and convenience compared to traditional methods. Here are some key benefits to consider:

Biometric authentication in mobile banking applications provides a secure, reliable way to bank on the go. This method is a welcome alternative to usernames and PINs, as it offers stronger safeguards against fraud or erroneous access attempts. Moreover, biometric traits are impossible to reproduce digitally, creating an environment of heightened security for users’ financial accounts.

Biometric technology in banking offers powerful protection against fraudulent activities like identity theft or account takeover. It works by detecting abnormalities in user behavior or biometric traits, which may indicate malicious intent. On notification of such incidences, banks can take swift action to mitigate any potential financial damage.

Enhanced Accessibility

Biometric authentication in mobile banking offers customers a more convenient solution than traditional passwords and physical security keys. Instead, customers can utilize their fingerprints, facial recognition, or voices to quickly and smoothly access their accounts. This removes the necessity of remembering complex passwords or the risk of losing physical security keys.

Types of Biometric Authentication

Biometric authentication systems compare physical or behavioral traits to stored, confirmed, authentic data in a database. The most common types of biometric identifiers are: fingerprints, facial, voice, iris, and palm or finger vein patterns. Here are some types of biometric authentication:

Fingerprint Recognition

This method is highly secure and convenient, requiring only the user’s fingerprint to verify their identity. Fintech companies have implemented this technology in applications such as mobile banking, payments, and ATMs.

Fingerprint scanners have been gaining traction in places like Poland, where 2000 ATMs at bank branches and supermarkets use finger vein recognition technology, and multiple Japanese banks for access control of safety deposit boxes inside branches. In the near future, more companies will likely be using fingerprint authentication systems on mobile devices and in physical locations.

Iris Recognition

This advanced technology uses a person’s unique iris patterns to verify their identity, making it highly accurate and secure. Fintech companies use it in applications such as mobile banking, payments, and access control.

Earlier adopted primarily in airports for security screening purposes, iris scanning is now becoming more widespread, with numerous programs set up at ATMs within the financial sector, such as the Bank of America and the National Bank of Qatar. Furthermore, some countries even use technology for convenient border crossings without passwords.

Voice Recognition

Voice recognition technology authenticates a person’s identity using their voice. Fintech companies leverage this technology in customer service applications, such as phone banking and chatbots, and for biometric payments, where users can make payments by speaking a passphrase.

Research suggests that $8 billion in digital voice assistants will be implemented globally by 2023, with over $80 billion in spending on voice commerce opportunities. Voice recognition was first introduced in banking as early as 2014 and is now quickly gaining popularity within sectors spanning consumer electronics, medical diagnostics, and finance services.

Facial Recognition

Such technology uses a person’s facial features to verify their identity. Fintech companies are using this technology in applications such as mobile banking and online payments. Facial recognition technology can also be used to prevent fraud by identifying individuals on watchlists or blacklists.

this technology can be used in online transactions, such as with Apple Pay, Selfie Pay, and AliPay, which offer facial biometric authentication in online banking for added protection. USAA was the first major bank to adopt facial biometrics back in 2015.

Signature Recognition

The most common form of signature recognition involves static (offline) or dynamic (online) processing. Static recognition involves capturing a handwritten signature as a graphic image and comparing it to an existing copy. Dynamic processing collects data regarding time, rhythm, pressure, and other details when a touchscreen device provides a signature.

Biometric technologies have redefined the way we look at security. With fintech solutions transforming the banking industry, users will continue to enjoy the benefits of top-notch security. Biometric technology gives a reliable solution to customers by protecting them from fraudulent activity. Biometric technology seems to be the new frontier in fintech safety. Moreover, biometric technology is being continuously worked on to provide even more secure solutions.