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Biometric technologies in the financial industry

by | Identity Verification

Remote identity verification remains a concern for banks as it often constitutes the first contact with their clients. Therefore, addressing these processes with guarantees is a challenge. On the one hand, clients want systems that are usable and fast, while safeguarding their privacy. On the other, institutions need to ensure that their clients are who they say they are to avoid fraud. Finally, some regulations require compliance with minimum standards for these remote verification processes.

In this context, the EBA (European Banking Authority) has recently issued new guidelines to unify how the remote onboarding processes of clients in the financial industry within the European Union should be, while the European Commission has reached an agreement to promote the new European digital identity (eID), which will allow citizens to open online bank accounts with an electronic wallet (not before 3 years).

Many questions, along with technological (and in many cases regulatory) advances, can be daunting for technology or compliance managers in the banking sector.

Finding the balance between digital security and customer convenience is paramount, and here, biometric technologies in the financial industry have become the spearhead of customer digital verification and economic innovation. From account opening to transaction authentication, financial institutions are adopting biometrics to provide more secure and efficient services.

But how are biometric technologies being applied in the financial industry, and how will they evolve within this constantly changing environment?

 

Facial Recognition: The new face of banking

It is precisely in the search for that balance, at the intersection between security and innovation, that facial recognition has emerged in recent years as a key tool in modern banking. This technological advance is not merely a convenience; it is a revolution that redefines the way banks interact with their clients.

The figures speak for themselves. According to a report from Allied Market Research, the global facial recognition market (valued at USD 5.150 billion in 2022) is expected to grow at a compound annual growth rate (CAGR) of 16.4% from 2023 to 2032, reaching USD 24.300 billion. Other studies, like that of Grand View Research, date that growth at a significant 14.9%. Either way, we can agree that it is a very high growth rate. This expansion is driven by the need for more robust identification systems and biometric technologies in the financial industry and the growing demand for mobile banking and online services.

Facial recognition is more than an additional layer of security; it is a way to get to know the customer without the need for physical interaction. At Mobbeel, we have integrated this technology into the opening of online bank accounts. Our digital onboarding solution, Mobbscan, ensures that the process is 100% automatic, allowing clients to open an account anywhere, at any time, with the guarantee that their identity is protected.

Beyond account opening with biometrics

But the implementation goes beyond account opening. In day-to-day life, face recognition allows clients to access their mobile banking apps, authorize payments, or withdraw money at ATMs with just a glance. This immediacy and ease of use are transforming customer expectations and raising the standard of what constitutes exceptional service.

However, with great power comes great responsibility. The implementation of facial biometrics brings with it concerns about privacy and ethics. Banks and technology providers must work within a strict regulatory framework, ensuring that biometric data is handled with the highest level of security and only for the intended purposes. The General Data Protection Regulation (GDPR) in the European Union, for example, sets clear guidelines on how biometric data must be collected and processed.

Our technology is designed not only to comply but to exceed security and privacy expectations. Each facial interaction is an opportunity to reinforce customer trust, demonstrating that their identity and assets are in safe hands.

There are weighty reasons why facial recognition is destined to become a pillar of biometric technologies in the financial industry. It is no longer a question of whether banks will adopt this technology but when and how. Those who move quickly to integrate facial biometrics will position themselves at the forefront of digital banking, offering not only enhanced security but also a user experience that is literally recognizable at first sight.

 

Discover how Banco Agrícola allows its clients to open the “cuenta fácil” account in seconds with our technology. Download the success story!

Delving deeper into the use of biometric technologies in financial industry payments

Biometric payments represent an innovation in point-of-sale technology based on biometric authentication. This technology allows funds to be deducted from a bank account using unique personal characteristics.

Biometric technology has been gaining recognition for some time now, especially in scenarios such as supermarkets, petrol stations and retail in general, making transactions easier and faster. In addition, retailers with online shops are starting to adopt biometrics for one-click payment processes. On the other hand, banks have also started a race to implement biometric verification to protect high-risk transactions, such as transfers or payment authorisations.

In the area of digital payments, consumers can now use biometric authentication, such as facial biometrics, to authorise online purchases securely. This form of authentication streamlines the payment process and adds a layer of security, mitigating the risk of fraud in digital transactions.

This trend has led to consumers primarily using mobile devices for their interactions with financial services. This transition has seen phones take a central role in everyday banking activities, including standard tasks such as accessing accounts, making transfers and managing online payments.

Voice biometrics in customer service: the voice you can trust

The voice is unique.

Or at least that is what we probably think every time we listen to Morgan Freeman or our favorite radio announcer. More than a simple means of communication, it is an auditory fingerprint, a personal distinctive that financial institutions are using to add an unprecedented layer of security and personalization in customer service.

Voice biometrics is consolidating itself as an authentication system that provides comfort and efficiency. It represents a significant advancement over traditional methods based on passwords and personal data or those used in most call centers, where the agent answering the call has to spend precious time asking questions to the person calling to verify their identity.

A frictionless user experience

The innovation in this area is palpable in the case of the insurer Santalucía, as in 2018, they were pioneers in Spain adopting our voice biometrics authentication technology to allow their clients to identify themselves when calling their call center for any incident. The success of the project lies in its ability to offer a frictionless user experience. With a simple registered phrase, clients are authenticated quickly and safely, which represents a significant improvement both in customer experience and operational efficiency. This system not only reduces the agent’s workload by eliminating the need to authenticate the client manually but also reduces the risk of fraud and identity theft.

Santalucía’s clients can now expect faster and more personalized attention, which reinforces loyalty and trust in the brand. “At Santalucía, my voice is my password!” is more than a slogan; it is a testimony to the company’s commitment to security and innovation.

 

 

Discover how we helped Santalucía decrease fraud, their costs, and offer a better experience to their clients in their call centers. Download the success story!

The new standard for voice biometrics in bank-customer interaction

The technology behind voice biometrics is complex, as, like facial recognition technology, it is based on artificial intelligence. But its application is surprisingly simple. Through advanced algorithms and machine learning, the system analyzes hundreds of unique characteristics in the user’s voice to verify their identity. This not only makes it extremely difficult for an impostor to duplicate or falsify these features but also allows for almost instantaneous identification. Additionally, the technology is prepared to detect attacks of fraudulently generated voices by artificial intelligence such as voice deepfakes.

However, beyond comfort and security, voice biometrics has the potential to reduce the costs associated with customer service significantly. By reducing the average call handling time and improving the accuracy of authentication, banks and fintechs can offer better service while optimizing their resources. Basically, a win-win for both parties.

Mobbeel’s focus on integrating voice biometrics into the financial sector is clear: to provide solutions that not only improve security but also enhance the customer experience. With increasing adoption in the industry, voice biometrics is setting a new standard for bank-client interaction. It is a clear example of how technology can be used to build stronger and safer relationships between financial institutions and their clients.

 

OCR and NFC: optimizing ID documents validation

Beyond biometrics, document validation is another fundamental pillar in onboarding processes that directly influence financial security. In this context, both OCR (Optical Character Recognition) and NFC (Near Field Communication) technologies help banks and fintech process personal identification information. These technologies not only speed up the digital onboarding process but also guarantee a high degree of accuracy and regulatory compliance, both in account opening and in keeping identification documents updated and in compliance with CDD (Customer Due Diligence).

The ability of OCR to transform images and printed text into digital data is a qualitative leap in the management of identity document information. It allows the automatic capture and validation of information and its integration into the bank’s systems. This process is crucial for document authentication in account opening and online transaction execution.

NFC, chip and identity

On the other hand, NFC technology is finding increasing use in the authentication of identity documents through mobile devices. By allowing wireless communication between a chipped identity document and a smartphone, NFC enables a faster and more secure identity verification, as different security controls are applied that prevent the information from being read by contact without the user’s consent (information privacy), validate that the information read from the chip is authentic (information authenticity), and that the chip itself is authentic (chip authenticity).

The challenge of using NFC technology to capture information from ID cards and passports lies in the need to use mobiles with NFC reading capability and for the documents to also have the chip incorporated. In addition, usability also suffers because the chip varies in position depending on the manufacturer and it is easy to lose communication during the reading process.

MobbScan, for example, integrates both technologies to offer a document verification solution that is both accessible and robust. Users can scan their identity documents using their mobile device’s camera, and the information is captured and verified instantly thanks to OCR processing, or for projects where security takes precedence over usability, use NFC communication, facilitating a safe and error-free digital onboarding.

Additionally, with increasingly strict regulations, such as the Payment Services Directive (PSD2) in the European Union and global KYC (Know Your Customer) standards, accuracy and reliability in identity validation are more important than ever, and the adoption of technologies that capture identity documents with guarantees substantially improves operational efficiency and customer satisfaction.

 

Let’s review some of the use cases with biometric technology in banking

Digital customer onboarding

The process of digital customer onboarding or enrolment has become a critical component for financial institutions. Using biometrics, especially facial recognition technology, customers can open bank accounts from anywhere, and banks can confirm their identity without the need for a physical visit to a branch. This process eliminates red tape and ensures high-security standards from the first contact.

Customer re-authentication

When customers perform sensitive actions, such as logging in from a new device or making a high-value transfer, banks can ask them to complete a biometric verification to reconfirm their identity. This process mitigates the risk of unauthorised access to bank accounts.

Mobile banking access with biometrics

Customers can access their bank accounts using biometrics instead of relying on passwords or the biometrics built-in mobile devices. 

Resetting passwords with facial biometrics

The password reset process has been simplified and secured through the use of facial biometrics. Instead of relying on security questions or verification codes, customers can verify their identity using facial recognition in mobile banking applications.

Identity verification in branches

In bank branches, identity verification has been optimised through the use of tablets by employees during the customer onboarding process. Suppose the new customer decides to visit the branch to open a bank account. In that case, employees can use tablets equipped with biometric technologies for the financial industry that integrate document capture and facial recognition to verify the customer’s identity as a new customer.

This onboarding process eliminates the need to fill out forms and make photocopies of paper IDs.

Facial biometrics at Automated Teller Machines (ATMs)

Customers can make secure transactions without the need for a physical card or PIN. The system instantly verifies identity by placing the customer’s face on a biometric reader, allowing access to ATM functions such as cash withdrawals.

Remote attendance and voting at shareholders’ meetings 

Biometrics also finds applications in the facilitation of shareholders’ remote general meetings. Through biometric verification, shareholders can participate in these meetings from any location using their facial identification. This ensures the authenticity of participants while facilitating remote voting on important decisions for the institution.

We cannot forget the digital signing in banking

Digital signing represents one of the most significant advances in the digital transformation of the financial sector. In an increasingly connected world, the ability to sign documents electronically not only optimizes processes but also reflects a commitment to innovation.

For banks and fintechs, adopting digital signing is an essential step towards a more ecological and sustainable operation. By reducing dependence on paper, financial institutions not only save on printing costs but also avoid managing that paper and its storage.

The essence of digital signing lies in its simplicity and security. Allowing customers to sign documents from anywhere at any time, financial institutions are breaking down geographic and temporal barriers, facilitating more efficient transactions. This not only enhances the customer experience but also streamlines the contract lifecycle, from negotiation to execution.

 

In an era where environmental consciousness is ever-increasing, biometric signing emerges as an answer to more ecological practices.

 

Moreover, Mobbeel’s biometric signing meets the most stringent regulatory requirements as it is regarded as an advanced electronic signature under eIDAS regulations. eIDAS aims to protect both consumers and financial institutions, and biometric signing offers a solution that respects legality and ensures integrity, facilitating document signing in face-to-face processes across both native and web environments. This is crucial in an industry where trust and legality are fundamental pillars.

Digital signing is a key component of modern banking. Its adoption reflects a commitment not only to efficiency and sustainability but also indicates a forward-looking financial institution, ready to adapt to an ever-evolving world.

 

Trends in biometric technologies in the financial industry

The global banking biometrics market is poised to witness significant growth between 2024 and 2031, emerging as a potent catalyst for innovation and bolstering banking security. The evolution of mobile phone cameras has paved the way for advanced facial recognition, revolutionizing verification through selfies. This increasingly popular method offers seamless authentication, obviating the need to remember PINs.

Simultaneously, voice verification is gaining traction as a secure method for creating audio templates to safeguard customers’ identities. From the consumer’s standpoint, managing banking transactions becomes even more effortless, as users can access and operate from any voice-enabled device. This growing demand for convenience is a key driver for the adoption of biometric authentication.

Technological advances in artificial intelligence and machine learning are also constantly improving the accuracy and efficiency of biometric technology. Adaptive algorithms quickly adjust to user behaviours, providing secure authentication.

Moreover, in emerging countries, biometric technologies are playing an essential role in terms of inclusion in the financial industry. Biometric authentication offers a more accessible way for people to open bank accounts, apply for loans and access other essential financial services.

Biometrics in banking: a secure and efficient future

Looking towards the financial industry’s horizon, it is clear that biometric technologies are not just a fleeting trend, but a necessary evolution towards more secure, efficient, and customer-centric banking. From facial recognition to digital signing, these technologies are redefining the interaction between banks and their clients, offering a balance between unwavering security and an exceptional user experience.

Facial recognition and voice biometrics are transforming authentication and onboarding, providing a level of security and convenience previously unthinkable. Moreover, the integration of identity document capture technologies based on OCR or NFC exemplifies how accuracy and regulatory compliance can coexist with ease of use. Digital signing has established itself as a mainstay of digital transformation, not just for its operational efficiency but also for its commitment to sustainability, eliminating paper and its subsequent management and storage.

At Mobbeel, we aim to lead this transformation, understanding that our responsibility goes beyond offering products; we are committed to creating a financial ecosystem that is secure, efficient, and accessible to everyone.

The digital future of banking is bright and promising, marked by unprecedented technological advancement. We are committed to leading this change, providing biometric technologies that not only meet the financial industry’s current needs but also define the future of personal identification in digital environments.

 

Contact to us if you want to learn more about our biometric solutions tailored to the financial sector. We’re here to help you lead the change towards a promising future.

Financial Services Brochure

Identity verification dossier for the financial industry.

Companies in the sector are already using our technology for identity verification solutions for banking and fintech, including digital onboarding KYC/AML processes, as well as signature or biometric authentication processes. Want to learn more? Download our dossier!