Biometrics in Banking: Which Biometric System Ensures 100% Security

Four in ten Americans use face biometrics daily, with a 75% adoption rate among people aged 18 to 34. Biometric security is particularly popular in fintech and banking industries, along with healthcare, civil identification, and migration control. It opens a bunch of new opportunities for software providers who can now use biometric systems for user authentication more often. Keep reading and learn about the benefits RPM brings for businesses and patients, what types of RPM apps and devices are dominating the market, and what features you should consider adding to your RPM solution.

The implementation of biometric technology in fintech is challenging and requires specific expertise. Outsourcing is an optimum solution if you have never worked with biometric security for online banking. Binariks biometric banking software development services company has the necessary experience to complete such projects and shares some best practices below.

What is a biometric system in banking?

A biometric system is a piece of software that scans the physical characteristics of a user for identification and authorization. The main approaches include facial scan, fingerprint mapping, voice check, and retina recognition since they are the easiest to implement and use.

Relying on using these unique characteristics rather than a password that can be stolen, intercepted, or guessed, biometric systems became essential in banking and finance.

Biometric technology applies to mobile banking, online banking, ATMs, and in-branch banking. Altogether, this sector currently holds a vast share of the total biometrics market (source ).

Given the adoption of advanced transactional technologies and the increasing sophistication of fraud schemes, traditional security systems are no longer sufficient.

Biometrics in banking ensures solutions to two challenges. It makes it more difficult for fraudsters to gain unauthorized access to accounts and, at the same time, provides a more convenient identity verification process.

Below, you will learn more about various biometric payment system security methods and the adoption of biometric technology in banking.

The growing popularity of biometric security systems

As mobile devices become more advanced, the mobile biometric security and service market grows. iPhone X, one of the latest iPhone versions, has an embedded facial recognition feature called Face ID. The previous iPhone version supported biometric authentication in mobile banking through Touch ID with electronic fingerprint recognition. Following the smartphone biometric security market trends, many other device manufacturers also implement biometric security.

It means every modern smartphone user can install an app with biometric security software features. It also means the global biometric system market will keep growing. In 2028, it will reach a size of $87.4 billion, up from $33.2 billion in 2022, source .

And with regard to biometrics and banking in particular, the estimated value of this market is $5.2 billion as of the beginning of 2023 according to research . By 2030, this figure is expected to reach $15.2 billion, growing at a CAGR of 14.4%.

The adoption and usage stats also show an increasing interest in biometric security:

• 86% of people apply facial recognition to unlock their phones and other personal devices. 51% use facial recognition for login.
• 54% of individuals reluctant to use face biometrics are ready to adopt it for more protected data during shopping at a store, dining out, or traveling. 45% would do it to reduce time spent waiting in line.
• Airports (55%), banks (54%), and medical offices (53%) are the leading segments in terms of face recognition adoption.
• 53% of credit cardholders are ready to switch banks if their current provider doesn't support biometric authentication.
• The estimated value of biometrics for the banking and financial services market in the US was $1 billion as of 2021. This figure corresponds to a 22.84% stake in the global market.
• The face biometrics segment represents 22.8% of the global biometrics for the banking and financial services market. It is expected to grow at a compounded annual growth rate (CAGR) of 11.6%.
• The fingerprint biometrics sector is expected to grow at a compounded annual growth rate (CAGR) of 13.4%, reaching $6.2 billion by 2026.

These statistics show both consumers and providers are ready to switch to biometric forms of identification. Discover what approaches to biometric security for banking, neobanks, and other institutions are available in the following section.

Benefits of biometrics in banking

The popularity of biometric authentication in banking continues to grow, as this cybersecurity process ensures a more straightforward and reliable means of verifying customers' identities. Here are some of the major benefits of banking biometrics:

1. Enhanced security

Biometric authentication provides a high level of mobile banking security and mitigates fraud and error risks. It can be used to either replace or enhance traditional authentication methods like passwords and PINs.

Biometric traits are unique to each individual and, generally, cannot be transferred or shared digitally. So, it's almost impossible for fraudsters to gain unauthorized access to bank accounts.

2. Increased convenience

Biometric authentication for banking eliminates customers' need to remember complex passwords or worry about losing their physical security keys.

Instead, customers can seamlessly access their accounts by using their fingerprints, facial recognition, or voice.

3. Greater operational efficiency

Traditional banking processes often require customers to fill out multiple forms of identification. As biometric authentication methods do not imply this step, they allow for saving customers' time.

Besides, banks using biometric technology improve operational efficiency by reducing the need for manual reviews and investigations.

4. Reduced fraud

Biometrics has specific benefits in detecting and preventing fraudulent activities, such as identity theft or account takeover.

Biometric authentication detects anomalies in user behavior or biometric patterns, which may indicate fraudulent activities. In such a case, the bank is alerted in real-time and can take action immediately.

Core types of biometric security

To implement biometric security, you need to collect unique biometric data, be it fingerprints or the shape of an ear. Overall, biometric data fall into three groups:

• Morphological: Characteristics related to the structure of the body. These are physical traits like eye, fingerprint, or face shape scanned with specialized software.
• Biological: Characteristics of genetic and molecular levels. It may be DNA, blood, or anything else obtained from the body fluids.
• Behavioral: Characteristics that are based on unique behavioral patterns like walking or speaking.

While implementing biometrics security in your company, you will likely use one of these types. Note that bank biometric verification and identification are usually based on morphological characteristics. The two primary biometric modalities are fingerprints and facial recognition (source ).

Along with them, financial institutions can also use finger or palm veins and iris scans. As for behavioral biometrics, voice recognition became the most popular one in banking according to a source .

How does biometrics technology work in banking?

Biometric security systems have hardware scanners powered with custom software that processes collected data. The look of the system depends on the type of data collected and greatly varies. It can be a tiny scanner in a phone or a separate professional device.

Once a scanner is activated, it captures biometric data for identity verification. The connected software automatically converts scans into digital format and matches them against an existing database. If the data samples coincide, it allows access to the system. If not, the user is denied access, or a system operator sees a corresponding message. This way, biometric data replaces other identification methods like passwords.

So, to sum it up, biometric technology works through a three-stage process source :

• Enrollment: A customer's biometric data, such as fingerprint, facial features, or others, is captured in a form that would depend on the relevant biometric security type.

• Storage: The collected biometric data is encrypted and protected from unauthorized access. The system converts the taken image, video, audio recording, etc., into a code language graph.

• Comparison: The customer's input biometric data is compared with the data that is already stored in the system to verify their identity.

Biometric security for banks has significantly improved security and made banking transactions more convenient for customers.

Components of biometric systems

All biometric systems, regardless of authentication method, typically consist of three primary components:

1. Biometric sensors or devices that capture unique physical or behavioral characteristics such as fingerprints, iris scans, voice patterns, facial features, etc.
2. Computer hardware, including servers and workstations, that process and store the biometric data collected from the sensors.
3. Biometric software that converts scanned biometric data to a graph or coding. Then it analyzes the data and finally compares it with stored records to authenticate the user's identity.

Together, these components provide a secure and accurate way of verifying an individual's identity in various applications, including banking.

Examples of biometric security indicators

To integrate a biometric system for corporate or private use, you must first decide what data to collect. Some biometric security indicators are easier to capture and process than others. So here are the main options to consider:

Voice recognition

How a person sounds depends on a combination of distinctive physical characteristics like the length of vocal cords and throat shape. Artificial intelligence and machine learning measure speech modulation, accent, tones, and frequencies to create a reference template known as a voice print. The voice model enables the software to identify the person during subsequent interactions.

Facial recognition

Face algorithms capture the appearance of facial features like the nose, eyes, or mouse to generate a face template with convolutional neural networks (CNN) technology.

Facial recognition is among the most popular types of biometric verification systems of biometric security for banking. A face image can be captured by a standard smartphone or camera, making this method convenient and affordable.

Fingerprint and palmprint

Biometric recognition systems scan and digitize an orientation of ridges on human fingerprints to create biometric templates. They store the templates on a dataset for comparison or quick search. Even though you can record fingerprints using paper and ink, modern apps use scanners. A person being identified needs to either put the finger on a platen or hold it over a scanner for contactless reading.

Iris recognition

Iris recognition is a preferable option for airport security scanning management. This subtype of eye recognition is based on reading the iris and runs on biometric security software. The iris has unique patterns of colored tissue that allow scanners to distinguish one person from another. A modern camera can capture these patterns even from several feet away and request thometric security software to perform the comparison.

Finger geometry

This biometric scanning captures the shape, surface, length, width, and thickness of each finger as well as the distance between the fingers. The latest finger geometry systems use three-dimensional imaging for maximum accuracy of the generated model.

Gait recognition

Gait is a way of walking and running peculiar to every human. It varies depending on the size and appearance of the body, movement speed, stride length and width, angles, and other details recorded by a camera. The style of gait can be used for one-to-one verification, diagnostic testing, sports science, medical research, etc.

Signature recognition

Signature recognition can be static (offline) or dynamic (online). During static recognition, the algorithm captures the graphic image of a handwritten signature to compare it with the previously saved copy. For dynamic processing, a person leaves their signature using a screen-sensitive device. The software evaluates the time, rhythm, pressure, and other characteristics in real time for verification.

Besides the listed approaches, you can also identify a person with DNA, ear shape, retina, eye scleral vein, typing patterns, hand geometry, odor, heartbeat, and other biometric characteristics. This section only focuses on the most common ones.

Biometric systems in online banks and neobanks

Biometric verification systems in banking are the primary use case. If you work in the banking industry and start digital transformation, biometric security is definitely an upgrade to consider.

Out of 11,000 financial institutions in the US, 15 to 20% combine selfie photo imaging with document verification for user authentication. European finance organizations also enhance security and governance through biometric banking solutions. The Dutch online bank Knab used iProov technology to identify customers and authenticate transactions. In 2019, HSBC became the first bank to implement voice recognition for serving customers. Rocker, American Express, Isbank, ING Bank, Noris Bank, Bank of America, and Tangerine Bank also use biometric verification.

For a biometric authentication system, banking software providers prefer biometric data that is easy to collect through a mobile sensor or camera. Hence, facial, voice, and fingerprint recognition is the most frequent solution among neobanks.

Key features of biometric security for digital banking

To implement comprehensive biometric security in mobile banking, you must embed some standard features. Here is the core functionality for reliable biometric identification:

• Multi-factor authentication: The registration procedure cannot include biometric scanning only since it increases vulnerability. Therefore, you should request additional verification steps like a phone number, DoB, or password check.
• Transaction Data Signing: This feature verifies transaction credentials by generating a one-time confirmation code. It's crucial for large monetary transfers, online personal detail changes, or other high-risk transactions.
• Mobile security: Implement must-have mobile security precautions like advanced obfuscation, anti-hooking, anti-debug, jailbreak, and root detection. Since neobanks are largely used on mobile devices fighting off potential threats is essential.
• API for quick deployment: If you develop a custom biometric banks security system to supply it to third-party organizations, build an API. It would simplify the implementation, allowing other banks to deploy biometric scanning quickly.
• FFIEC, NIST, and PSD2 compliance: Since the fintech industry is strictly regulated, you must ensure the biometric banking system you develop meets the law.

What to consider when picking a biometric security system for online banking?

Neobanks rarely invest in custom biometric system development. It would be too time-consuming and require substantial investment. Instead, they select one of the ready-made solutions available on the market. How to make the right choice? Consider these things:

User interactions

Start by understanding your target user, their behavioral patterns, and preferences. You should research what mobile devices they use and ensure the hardware supports biometric security features. Such analysis would allow you to pick a biometric data scanning solution that offers the best usability.

Data storage

Choose who will manage biometric database storage and where it will be stored. You can implement on-premise storage if the provider supports such an option or keep data in the cloud. Cloud data management is usually preferable since it provides more flexibility and cost-efficiency.

Cost

Ensure the selected system meets an investors' budget. Mind that any third-party system will charge monthly or quarterly fees, so it's a long-term expense you must plan. You may also switch to more advanced functionality after some time, which involves an increase in expenses.

Security and compliance

Ask the software provider about the security measures they take to protect personal data from breaches or misuse. Also, double-check whether the system complies with FFIEC, NIST, PSD2, and other industry-specific regulations like ISO/IEC JTC 1/SC 37.

What are the risks of biometric security?

Despite higher security than standard authentication methods, biometric banking systems have vulnerabilities. Each time a new solution appears, attackers develop new strategies to trick it and access personal user data.

The problem with biometric scanners is that there are ways to fool them. A research group at the University of North Carolina at Chapel Hill used 20 photos of volunteers downloaded from social media to create 3D models of their faces. These models allowed them to breach four of the five tested systems. The same problem relates to fingerprints and other biometric data that can be cloned.

There is also deepfake technology enabling new kinds of attacks. Deepfakes, computer-generated video or audio representations of a user, can be challenging for biometric systems to detect.

Finally, biometric software generates and gathers highly confidential information, so security stakes are higher. If you fail to protect data, you can lose tons of personal information. When government computers were hacked in 2015, attackers stole the fingerprints of 5.6 million government employees .

Therefore, an optimum approach to using biometric security technology is to combine them with other authentication approaches. Read more about this and other best security practices in the next section.

How to make biometrics more secure?

Fortunately, you can fix the vulnerabilities of biometric security systems to minimize the chance of data breaches or fraud. Here are the trusted approaches to follow:

• Require multiple means of authentication. You can combine biometric scanning with a non-biometric approach or use multiple biometric security approaches. For example, consider combining iris scans with fingerprints for systems that require ultimate security.
• Prefer cloud systems. Local storage may make you feel more control, but in reality, it's less secure than the cloud. Therefore, you should cooperate with biometric security providers that keep data in the cloud and encrypt it to prevent unauthorized access.
• Hire an experienced software development company to connect the system. Implementing biometric scanning requires narrow skills most product teams lack. Cooperation with professionals will save you from mistakes that can compromise data security.

How Binariks can help

Binariks is a software development services provider specializing in fintech engineering and providing biometric security services. As a banking software development company , we can implement biometric authentication in banking products. Binariks team can complete the integration for you, add new features, or develop an app with biometric scanning from scratch.

We have worked on a web-based fingerprint sensor system and other projects for customers worldwide. Compliance with ISO and core fintech regulations makes every solution we work on secure and reliable.

Final thoughts

Biometric data is another fintech trend that will shape the banking and financial industry in 2023 and beyond. If you seek ways to enhance user verification and authorization, it's one of the best solutions to implement biometrics in banking.

Since integrating such a security system is tough, you should use professional assistance. Binariks can connect the biometric software for you and help with other engineering tasks. Contact us to discuss your project and get an estimate.