Banks Place More Focus on Biometrics, But Still Have Concerns: Report

Financial institutions see biometrics as a priority for mobile banking authentication, but many are hesitant about depending on a technology at the whim of each handset maker.

Banks are particularly interested in fingerprint biometrics right now, likely due to the popularity of Apple’s Touch ID, which is “more or less required by customers nowadays,” said Sirpa Nordlund, executive director at Mobey Forum, which recently completed an industry survey on the technology.

Following Apple's approach, Google plans to enable its upcoming Android Pay wallet to accept fingerprint authentication from the Android handsets that support it. While Android platforms have historically been more open than Apple’s platform, it is also more diverse; few handset makers have fingerprint readers on their devices.

There is no standardized method of fingerprint authentication, Nordlund said. “This makes banks nervous...and increases the cost in a way that’s unknown,” she said.

But even though industry groups have yet to standardize biometric implementations, 58% of the respondents to Mobey Forum’s survey said they were willing to collaborate on biometric identification (a step up from just authentication). The biometric authentication and identification market is becoming increasingly competitive as consumers get more accustomed to the technology. But when it comes to identification, financial institutions, representing 59% of the 235 survey respondents, say the use of biometric identification shouldn’t be competitive.

The idea of using a centralized database of biometrics for identification is probably several years off, but 56% of respondents said they’re planning to implement fingerprint biometrics for authentication in the near future. Only 22% said they would implement voice biometrics in the near future.

Mobey Forum expected more banks to be focused on voice biometrics, especially within their call centers, said Nordlund.

“But fingerprint is so dominant and it obviously fulfills the [bank] solution’s criteria,” she said. “Banks...cannot operate in a vacuum; they need devices and sensors that are reliable and cost efficient, and have fast response times, plus they must think about power consumption.”

Seventy percent of respondents cited mobile banking authentication and transaction confirmation as the most important use case for biometrics in financial services. A number of banks have begun using biometrics for mobile banking logins, but many haven't begun using biometrics to authenticate high-risk payments.

“Fingerprint is being used as secondary authentication; it’s usually never working alone,” Nordlund said. But the technology could become the sole authentication method required for low-risk and low-value payments, she predicts.

While facial recognition wasn’t a main biometric of interest for the survey respondents, USAA rolled out voice and facial recognition technology to its entire user base in February. More than 400,000 customers, five of which are over 90 years old, have begun using these technologies to authenticate themselves within the mobile banking app.

Some banks are also looking into behavioral biometrics, a person’s unique way of handling their mobile device, to authenticate users. Behavioral biometrics make the process of authentication invisible to the consumer, thus decreasing friction.

These rollouts will increase in the coming months, since banks are warming up to new technology. It's about convenience first, an innovation image next and then enhanced security, Nordlund said.

“Five years ago, when a bank thought about doing something new they thought it needed to work cross-channel, but biometrics doesn’t really work that way,” Nordlund said. Thinking about the indirect benefits of biometrics, banks are finding a balance between cost and return on investment across a single channel.