Biometric Authentication Banking (Why It’s Essential In Secure Banking)

As technology advances, securing transactions in banking is becoming critical. Biometric authentication techniques can be the perfect solution to combat digital threats. Let’s discuss how biometrics make the banking world safer. Ready to explore the use of biometrics in banking and finance while evaluating how secure it is for institutions in the sector to implement?

Anonybit’s solution, the Genie, a privacy-preserving identity management platform based on decentralized biometrics, can help with this process efficiently and effectively. It provides a valuable tool that could be used in the banking and finance sector.

What Are Biometrics In Banking?

Biometric authentication is a security measure that leverages people’s biometric characteristics to check the user’s authority and identity. These characteristics can include:

• Fingerprints
• Facial characteristics
• Voice 
• Iris
• Palm

The technology records and stores the data on these characteristics in a mathematical form known as a vector template. Traditionally, the templates were stored either in a database or on a device, but recent advancements are allowing for full decentralization for maximum user privacy and data protection. 

The Process of Biometric Authentication in Banking

To log into an application or perform some operation with the help of biometrics in banking, a person has to use their biometric data to verify their identity. Typically, biometrics will be captured for enrollment as part of a digital onboarding process. In digital onboarding, users have to provide an ID for verification and present their selfie to ensure that the person who is presenting the card is the cardholder. This same selfie can later be used for biometric authentication for all kinds of applications, like passwordless login, transaction verification, ACH validation, help desk authentication, and more. When it comes time for authentication, the selfie is presented again and matched against the original record from the account origination process.  If the match is successful, the user will get permission to proceed with their actions.

Benefits of Biometric Banking

Biometric authentication is a highly secure and innovative method with many benefits. 

• In contrast to traditional methods like passwords that can be guessed or ID cards that can be lost or stolen, biometric authentication in banking uses people’s unique characteristics to differentiate them and protect their data. Biometrics are also much more convenient and can enable self-service operations, saving the enterprise significant operational costs from password resets and help desk authentication times.

Market Growth

The market for biometrics authentication currently holds much of its share in banking, such as:

• Mobile banking
• Online banking
• ATMs
• In-branch banking

By 2024, biometric authentication will secure $2.5 trillion worth of mobile payment transactions. This represents a massive increase of nearly 1,000% compared to the $228 billion transacted in 2019. Advanced transactional technologies address endemic fraud issues, and traditional security methods no longer suffice. Hence, biometric technology in banking systems is crucial for safeguarding against data breaches and other threats.

The Need For Biometric Authentication In Banking

With the rise of advanced transactional technologies to combat fraud, conventional security measures are no longer adequate. As a result, integrating biometric technology into banking systems is paramount for protecting against data breaches and other security threats. Balancing 

Security and Convenience

One of the main security challenges that banks face today is verifying the identity of individuals accessing online banking services, which criminals can exploit. As banks make digital services more accessible and user-friendly, they naturally create opportunities for fraudsters to exploit this open door and engage in fraudulent activities.

Adopting biometrics aligns with the industry’s goal of providing customers with secure, convenient, and user-friendly banking services. 

Banks need biometrics to:

Comply with Regulatory Requirements

Biometric technology effectively allows banks to fulfill their KYC and Anti-Money Laundering (AML) requirements. Financial institutions often use biometric identity verification during the account opening process to check their users’ identities before granting access to their services. Due to its high level of security, biometrics also serve as a strong safeguard, helping banks reduce the risks associated with financial crimes and money laundering, which often accompany fraudulent activities.

Prevent Fraud

Biometric identity verification strengthens identity assurance for regulatory compliance and is a strong defense against fraud. It ensures that transactions aren’t fraudulent, and, importantly, it does so more efficiently than traditional methods used by banks to verify the account holder’s identity. This efficiency is particularly significant given the rising prevalence of account takeover (ATO) incidents. According to the latest statistics, in 2023, 46% of passengers used biometrics at airports, a substantial increase from 34% in 2022. Furthermore, biometric authentication is projected to secure $2.5 trillion of mobile payment transactions by 2024, representing a staggering 1,000% increase from $228 billion in 2019. These figures underscore the growing importance and widespread adoption of biometric verification in various sectors, including finance and travel.

Banks combine biometric verification with other authentication measures, such as PINs or passwords, device identification, or hardware tokens, to create a multi-factor authentication (MFA) system that is more resistant to these types of attacks and other fraud. 

This multi-layered approach adds an extra level of security by requiring both something the user has (like a device) or knows (like a password) and something the user is (their biometric trait).

Provide Convenience

Banking services and their users need speed. When a financial service provider faces a delay during the customer identity verification process, it leads to a poor user experience. Biometrics are the key to helping banks provide swift and frictionless authentication to establish customer trust and streamline banking processes.

Anonybit’s Decentralized Biometrics

At Anonybit, our decentralized biometrics system design helps companies prevent data breaches and account takeover fraud. With a decentralized biometrics solution, companies can enable passwordless login, wire verification, step-up authentication, and help desk authentication. We are on a mission to protect companies from data breaches, account takeovers, and synthetic identity fraud.

To achieve this goal, we offer security solutions such as:

• Secure storage of biometrics and PII data
• Support for the entire user lifecycle
• 1:1 biometric authentication and 1:N biometric matching to prevent duplicates, synthetics and blocklisted identities 

Anonybit eliminates the tradeoffs between privacy and security. Prevent data breaches, enable strong authentication to eliminate account takeovers, and enhance the user experience across the enterprise using Anonybit. 

Book a free demo today to learn more about our integrated identity management platform.

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• Biometric Identity Theft
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• Can Biometrics Be Hacked
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4 Best Use Cases Of Biometrics In Banking

1. Customer Onboarding 

Identity verification is the initial and pivotal phase in the registration procedure for a remote consumer. Financial institutions employ this method to verify that they deal with legitimate consumers at the outset. This enables them to promptly identify and exclude potential fraudulent,duplicate or blocked identitites  in addition to assisting compliance efforts (by demonstrating that they know their consumers).

2. Customer Authentication 

Legitimate onboarding does not negate the risk of account takeover fraud, identity theft, phishing, or any other fraudulent activity gaining access to the account. Using biometrics, it is possible to verify that the user persistently attempting to access an account is, in fact, the same person who created the account.

Risk-Based Re-Authentication in Anonybit’s System

Re-authentication is feasible after an individual’s identity has been verified with the utmost certainty through a relatively lax process and a straightforward liveness check. This can be used when an authorized user is added to a consumer’s account, a new line of credit is requested, a password reset is requested, a new device is configured, or an existing device is returned.

Enhancing Security with Convenience

Financial institutions may choose to enhance the level of authentication by requiring an additional biometric scan to verify the consumer’s identity, performing the above-mentioned changes. This capability empowers financial institutions to provide consumers with the necessary flexibility and convenience.

Vault Access Scenario

Imagining a financial account as a vault, biometric security functions as a personalized key, allowing only the account owner to access and manage their financial assets securely.

3. Cardless ATMs 

ATM banking is another strong use case for biometric, mobile out-of-band authentication. Banking customers today can complete transfers, check their balance, and report a stolen card with a few swipes on a smartphone, regardless of location. People still need ATMs to get cash, so account withdrawals and other banking activities must be secure. 

That’s why many financial institutions have enabled an intuitive form of multifactor authentication (MFA) known as cardless ATMs. Customers must log into their online banking account while at the kiosk and then use their mobile device as a physical token by placing it against an NFC reader.  Requiring biometrics in addition to the device ensures strong, two-factor authentication.

Beyond Cardless ATMs

Cardless ATMs reduce the risk that a lost or stolen card can be used for unauthorized withdrawals. But it’s far more secure and convenient if the initial login uses out-of-band biometric authentication like a face scan. It also means that a lost or stolen phone won’t be enough to withdraw cash since the physical face or fingerprint is still needed to authenticate the transaction.  

Server-Centric Biometric ATMs

Other banks have begun testing biometric scanners directly on kiosks that use a server-centric architecture. For example, the National Australia Bank (NAB) is collaborating with Microsoft to embed biometric authentication into ATMs, according to ZDNet. This method is also a highly secure banking authentication method and reduces the risk that someone will circumvent a device authentication process. 

4. Online banking and customer support 

Smartphones can also be used out-of-band to authenticate browser-based online banking biometrically. This allows users who do not have an HD camera or fingerprint sensor on their laptop or desktop computer to authenticate biometrically.  

Securing Customer Support Interactions

Biometrics are also useful for validating customer-support interactions. During a phone call, an agent can use biometrics to verify the customer is who they claim to be or issue an out-of-band biometric authentication challenge to that customer’s smartphone. The same applies to support over chat. A customer can perform a facial recognition scan during the session to authorize activity.

Biometric Authentication for Online Purchases

The same logic applies to e-commerce and making online purchases and payments. Touching a fingerprint sensor or looking into a camera to authorize a charge is highly secure but still convenient enough not to degrade the “one-click” buying experience popularized by big retailers. In-store palm biometrics have become popular.

Related Reading

• Biometric Authentication Methods
• Biometric Data Privacy
• Biometric Data Breach
• Biometric Spoofing
• Device Based Verification
• How Is Biometric Data Stored
• Biometrics In Healthcare
• Biometric Data GDPR

Biometric Authentication Banking: 3 Major Benefits For Banks & Customers

1. Continuous Security 

Fingerprints take the lead on precision security. No two fingerprints are alike, so fingerprint authentication has an inherent security and permanence compared with many other forms of identification. Common identity scams become much more difficult to execute with biometrics. Face recognition is also relatively secure, as is palm biometrics.

2. Fast, Convenient, Contactless Banking Via the Body

Banking customers are not only comfortable with biometrics; they are beginning to prefer the approach: 58 percent of survey respondents said they would choose biometrics over passwords more than half the time. 

• Using biometrics removes the need for customers to remember passwords. This is particularly important as security-conscious consumers may have dozens or even hundreds of unique passwords. 
• It’s also faster. Customers may not have to wade through several two-factor authentication security practices, as biometrics can serve as one factor. 
• Biometrics also means more accuracy. There’s less risk of legitimate users being locked out of accounts after surpassing the number of entry attempts. 
• It’s simple. There’s no need for a password manager or an encrypted list of passwords; just the touch of a finger or a selfie will do. 

3. Biometrics Keep Banks in the Know with Continuous Innovation

Intelligence protection helps financial institutions prevent fraudulent activity. New security functionalities are constantly being developed, and banks that wait too long to enter any territory risk being left behind as consumers migrate to institutions with cutting-edge security and convenience.

For example, biometrics in banking may be widely used for authentication, but biometric-based payment isn’t yet the sector’s baseline. Visa rolled out three face recognition payment hubs at the 2022 World Cup in Qatar as part of its mission to bring contactless payment to one of the world’s biggest sporting events.

Top Biometric Authentication Methods Used In Banking

1. Facial Recognition

Facial recognition relies on convolutional neural networks (CNN) to create a face template based on the user’s facial features, such as the eyes, nose, and mouth. This template is compared to newly scanned data at each attempt, granting access if a match is found. This technology is becoming increasingly popular due to its convenience and effectiveness.

2. Signature Recognition

Signature recognition can be static or dynamic. Static recognition compares signatures to stored templates, while dynamic recognition focuses on the writing process, including patterns, timing, and pressure. This method enhances security by analyzing the unique characteristics of each user’s signature.

3. Fingerprint/Palm Scans

Every individual has a unique fingerprint ridge, making fingerprint scans highly secure. After recording a user’s fingerprint ridge data as a template, the system requires them to place their finger on the scanner for verification. This method is efficient and reliable for secure banking transactions.

4. Voice Recognition

Voice recognition involves collecting data on speech patterns and voice characteristics such as pitch, accent, and speed. Used for security, voice search, and smart device commands, this method offers a unique and efficient way to verify user identity.

Implementing Biometric Authentication In Banking: What’s Most Important?

Multi Factor Authentication

When implementing biometric authentication in banking, it is important to consider multi factor authentication. While mobile biometric authentication is a popular method of confirming a person’s identity, it should not be the sole method used. Problems with scanning may occur, requiring users to use alternative methods. Multi Factor authentication ensures that users can use different methods to confirm their identity.

Integration of APIs

Integrating APIs is also crucial when implementing biometric authentication in banking. By partnering with other companies, you may need to build a financial API that allows them to easily use the mobile biometric authentication method you have in place. This integration will streamline the implementation of your services and facilitate collaboration with other companies in the financial sector.

Mobile Security

With the rise in mobile users, banking services increasingly shift to mobile platforms, necessitating robust security measures. Implementing advanced mobile security measures such as:

• Debugging protection
• Root detection
• Anti-hooking

Transaction Data Signing

Transaction data signing plays a vital role in authentication by generating encrypted codes to confirm user actions. This method is particularly crucial for sensitive operations, such as large-sum transfers or requests for personal data changes. By incorporating transaction data signing, banks can enhance the security of their biometric authentication processes.

Regulatory Compliance

Compliance with finance and banking industry regulations is paramount when implementing biometric authentication in banking. Following FFIEC, PSD2, and NIST regulations ensures that biometric authentication processes adhere to industry standards and best practices. Failure to comply with these regulations can result in legal and financial repercussions for banks.

Implementing biometric authentication in banking requires careful consideration of:

• Multi-Factor authentication
• API integration
• Mobile security
• Transaction data signing
• Regulatory compliance

By incorporating these key components, banks can enhance the security and reliability of their biometric authentication processes, ensuring a seamless and secure banking experience for their customers.

Related Reading

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• Biometrics Privacy Concerns
• Biometric Identity Management
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• Decentralized Biometric Authentication
• Biometrics Integration
• Biometric Security Solutions
• Future of Biometrics

Book A Free Demo To Learn More About Our Integrated Identity Management Platform

At Anonybit, we help companies prevent data breaches and account takeover fraud with our decentralized biometrics technology. With our decentralized biometrics framework, companies can enable passwordless login, wire verification, step-up authentication, help desk authentication, and more. 

Comprehensive Security Solutions for Companies

We aim to protect companies from data breaches, account takeovers and synthetic identity on the rise, privacy regulations, and digital transformation. To achieve this goal, we offer security solutions such as:

• Secure storage of biometrics and PII data
• Support for the entire user lifecycle
• 1:1 authentication and 1:N matching for lookups and deduplication

Balancing Privacy and Security with Anonybit’s Integrated Platform

Anonybit eliminates the tradeoffs between privacy and security. Prevent data breaches, reduce account takeover fraud, and enhance the user experience across the enterprise using Anonybit. Book a free demo today to learn more about our integrated identity management platform.