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September 2, 2019

Why trust, not technology, will be the key to unlocking the next biometrics revolution

By Nick Caley

Biometrics are not new. However, the challenge now facing retail banks is novel. They must take advantage of the enhanced customer experiences and security afforded by biometrics while educating consumers about the use of their data and balancing privacy with personalisation.

The potential benefits of biometric authentication are huge but, despite the slew of technological advances entering banking, the gap in consumer trust remains a major barrier to innovation.

Biometrics have benefited both consumers and banks

As far back as the 19th century, polymath Sir Francis Galton was proclaiming the benefits of fingerprints as an incomparable validator of identity. Yet, it is only in recent years that it has been adopted by mainstream consumers. The growing usage of biometrics has been driven by advances in consumer technology, increased regulatory requirements such as those mandated by PSD2, and a sharp rise in fraud.

There are clear signs that biometrics are now consumers’ preferred authentication method. One survey suggested that 85% of banking customers preferred biometrics over passwords. Perhaps surprisingly, this trend extends to older consumers as well, with 68% of those aged over 71 preferring biometrics. The potential for biometrics to simultaneously improve customers’ experiences, reduce the need to remember multiple passwords and strengthen the safety of their information, is obviously being felt and appreciated.

The benefits for banks, facing pressure to apply Strong Customer Authentication (SCA) under PSD2 before the September 14 deadline and being challenged by nimble, digital-first fintechs, are also being realised. Most obviously, improvements in digital banking authentication have enhanced risk management, and led to greater accuracy, making fraud less likely – effectively addressing SCA concerns. Voice biometrics have led to tangible improvements in customer service offerings, realigning them with consumers’ expectations, and reducing costs by taking up less time of call centre staff. In short, biometrics are saving banks time and money as well as combating fraud.

Enter continuous authentication – and a privacy minefield

However, we are still in the very early stages of the biometrics revolution. There are many more benefits to come as we move towards the next phase of adoption. Continuous authentication, whereby behavioural characteristics, contextual clues like GPS and interactions with a device are continually captured and evaluated to build a profile to authenticate a user, could unlock immense value for banks and their customers, amplifying the benefits outlined above, while extracting more value from legacy systems, reducing friction and improving security.

Building on recent hardware and software innovations, next-generation technologies such as behavioural biometrics could make the dream of continuous authentication a reality and allow financial institutions to embrace a more dynamic form of authentication and risk profiling.

The data collected would be a boon to banks. In addition to the savings in time and money and fraud prevention, banks can build more comprehensive customer profiles. This will provide banks with a wealth of opportunities and information to personalise their offer as well as streamline and automate KYC and AML processes. For example, it should be easier to capture an individual customer’s intention at critical moments in their daily activities. With the increased connectivity of 5G, combined with an array of connected devices, there is a significant opportunity to enhance customer experience. Such real-time data-driven insights into the customers life moments provide marketing teams with an ability to offer the most relevant incentives in a true value exchange.

For consumers, continuous authentication promises more personalisation, increased choice, security and convenience, with behavioural biometrics working in the background to protect them without introducing unnecessary friction. However, behavioural biometrics will not – and should not – replace valid security prompts designed to authenticate and authorise transactions that require the full confidence of the customer. Therefore, new solutions must augment legacy methods, injecting the right amount of friction, while still improving user security and experience.

But as we push towards a world of continuous authentication, it comes back to the ever-present question of trust: can banks convince consumers to embrace the value of these new solutions? If banks want to reap the rewards of the next revolution in biometrics, they must lay the foundations of consumer trust now.

The foundation of consumer trust is transparency

Confusion around data collection could stall innovation and limit consumer acceptance, despite the benefits these technologies can bring. Consumers are taking a greater interest in their data and, without education, the levels of data necessary to enable greater personalisation and continuous authentication, could sound inconsistent with banks’ promises over privacy and personal data.

The lessons from GDPR and PSD2 provide an instructive starting point when addressing these concerns. Banks need to make consumer consent a central part of their data sharing and management strategy. By putting customers in control now, providing centralised visibility and clearly educating them as to how and what information will be collected using continuous authentication, banks will be able to lay the foundations for consumer trust when the new dawn of biometrics does eventually break.

If recent privacy scandals have proven anything, it is that transparency is vital to building and retaining consumer trust. For banks, there is a real opportunity to make the most of the unique situation they find themselves in: continuous authentication using behavioural biometrics, supplemented by existing techniques, has the potential to be a gamechanger for consumers and banks in terms of convenience, cost and security. However, to unlock these future benefits, banks must start laying the foundations today.

Nick Caley, Vice President Financial Services and Regulatory, ForgeRock

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