Biometrics - The Future and Impacts on FinTech
With the globalization and a massive population growth on the plate, the invisible identity has been a headache worldwide. Literally millions of people without the identity proof are not only refraining from getting the government benefits, but also impacting the economy on a greater scale.
Aadhaar (Foundation) also considered as the “Most Sophisticated ID program” in the world, is the pioneer of the biometrics identity proof especially for a country that has 1.2 billion populations established in 2009, by the Government of India and carried out by Unique Identification Authority of India (UIDAI). With a home to 460 million people who has mobile phones and expected to reach the 1 billion consumers by 2020, India is on the crest of a wave to digitization.
Digital technology provides a low-cost way for people in developing countries to send money to each other, buy and sell goods, borrow and save as long as the financial-regulation environment is supportive.” – Microsoft co-founder and former CEO Bill Gates.
With Apple introducing the biometrics technologies like Fingerprint identification and now facial recognition on its latest X series phones, biometrics is not only a day-to-day part of consumers’ lifestyles but also opening a whole new doors to biometrics industries and consumers’ financial operating methods.
Companies like FIDO Alliance pulling out all the stops to make the biometrics systems standardized and more secured introduces the world to the new era of FinTech with easier, secured and adaptable approach of Biometrics Finances. From major fishes like Lloyd Banking Group plc, CiTi Bank, to a gulf country like Bahrain adapting the concept of Biometrics explains the dominance of Biometrics approach for the finances and its major impact on the economy.
According to the report by FICO, there was about 39% rise in the Debit card compromised at USA ATMs and merchants in 2017. The tiresome process of entering long and complicated passwords and initials at every transaction along with the risk of compromising the security of the consumers’ accounts played a major role in accepting the Facial Recognition, Fingerprint scanner, IRIS Sensor and Voice recognition as a method of authentication at a Banking sector.
A developing country like India, after facing the Demonetization, November 8, 2016 opened whole new window of opportunities for Biometrics sectors as it witnessed the highest jump of digital transactions in the history of India. With majors like Amazon, Google, Paypal and Uber, targeting one of the largest economies of the world, India, the digital transaction became an integral part of common people’s lives. Demonetization was not only the birth of the digital money but also sowed the seeds for success for banking sector, investors making it a win-win situation for both the biometrics industries and the consumers.
Companies like Faircent, Kissht, Simpl, EarlySalary in India did wonders and played major role in changing how Indians operate their money. With aspects like approval of loan, exchange between lenders and borrowers, faster and safer cash withdrawals, to paying the bills online or even withdrawing an early salary, biometrics systems proved to be the bang for the buck.
Role of Banks in India:
Biometrics technology has spread its wings in Banking by making operations such a money at fingertips(literally), instant zero balance account selfie by Federal Bank and providing the cash withdrawal at rural areas with an initiative by banks like DCB Banks, Federal Banks, HDFC Bank, ICICI Bank, State Bank of India. What seems impossible just a few years ago has come to the life, as when the Federal Bank approached a whole new concept of opening an account by downloading an app with zero balance by just scanning the Aadhaar/PAN card to it and clicking a selfie for the verification, once that’s done, the application can be used as a passbook. Banks like HDFC, is taking it a notch further by providing the services of instant authentication and cash withdrawal in rural area of India by carrying a hand-held Biometrics Fingerprint scanners or a Micro ATM. This would be the biggest achievement for any Bank in the world as India is a country of 121 crore citizens with 83.3 crore people still living in the Rural area, making it 70% of the population.
India adding one more feather to its cap, recently rolled out a project by introducing India Post payments Banks which replaces Debit/Credit Card with a QR(Quick Response) card with unique ID code and biometrics authentication, delivering the service of cash withdrawal or opening an account by a postman at your doorstep(literally).
In India, Aadhaar is the real MVP when it comes to Identity Authentication, KYC and fast financial Transaction. Biometrics Technology not only restricted itself to authentication, it actually provided the money at a touch of a fingerprint which has been linked to Aadhaar and Bank database.
Aspects of Biometrics Technology with FinTech:
Know Your Customer (KYC):
With Biometrics authentication, customers are enduring a safer and quicker way of transactions. With the data being stored locally on the server and encrypted to avoid Identity thefts, customers’ embraces more secure and innovative approach to their finances.
Separating all the individuals’ identities and keeping their finances safe is a top priority for any finances company/Banking sector. Introducing the Biometrics Technology for the same proved to be more than efficient when it comes to creating the huge database for the clients with the utmost discretion.
With Capitalization and the widespread Private Sectors, managing employee records and their payroll played out like a child’s play with POS System and Biometrics Records.
To limit the costs, embracing the approach to Biometrics Technology to authenticate instead of cards proved to be more fruitful than the traditional cards, cutting down the frauds and increasing the safety.
Security Thefts and Solutions:
The opportunities and the possibilities that Biometrics Technology offer to the Financial Market are vast and can prove to be the key to the bright tech-savvy future to the upcoming generations. With the technology such as Biometrics spreading like a wildfire, the major concern that remains is the Security of Identity. One of the research conducted by the IBM Security, nearly 4000 adults ranked security/privacy of Identity over convenience. People still feel hesitant to provide biometrics authentication when the money is involved as it could be severely challenging task if the one’s biometrics is compromised. Sometimes, using the Biometrics can turn out to be the grave theft to identity theft as if credit cards or other account details are stolen, they can be replaced. Hence the two way authentication and data cryptosystem come into the picture. Two way authentications follows more than one authentication method to make sure the identity is not stolen. The later one offers a more sophisticated solution by generating encrypted key/templates for each biometric entry stored by a secure and prompt algorithm.
As the millennial's accepting the Biometrics Authentication and transaction on a major scale, the Biometrics Sectors are also working on providing the best security assurance and standardize the biometrics devices and setting up a globally recognized program to prevent any kind for theft to the identity of a customer. However, the efficiency or lifespan of this technology will depend on the ability of the system designers to provide robust, low error rates and highly tamper-proof services.