The use of biometric technology has become common in banking and other areas of the financial sector because it protects consumers – and there’s a good chance that your credit union or bank provides an option for biometric authentication. You'll likely recognize things like fingerprint recognition or facial recognition scanning which verifies your identity before providing you with financial services.
You may be wondering about biometrics in banking, including how they’re used to enhance security, how banks ensure your privacy and security when using biometric authentication and what the benefits of using biometric scans on your mobile banking app are. We’ll answer these questions in this article, and tell you where we think the future of biometrics in the banking sector will lead us.
Biometry is the science of measuring individual body characteristics, and biometrics are physical or behavioral characteristics measured in biometry. You’re probably already familiar with biometry in some form; for example, if you’ve ever used fingerprint recognition or facial recognition to unlock your phone, that’s biometric scanning.
Many credit unions and banks include a process for biometric verification for digital banking particularly for accessing mobile banking services. Every bank employs security measures to protect accounts, and the use of biometric data is an effective way to minimize the risks associated with mobile and online banking.
You may be wondering how credit unions and banks use a biometric system to protect their members and customers. The most common types of biometric authentication methods are:
Fingerprint Scans |
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Palm scans are more likely to be used to allow someone to gain access to a safe deposit box than in digital banking. Other types of biometrics that may be used more commonly in the future include iris scans and voice verification.
You should also know that biometrics may include behavior recognition. Many financial institutions use AI to scan for behavioral patterns and identify unusual or suspicious spending, for example. This can help avoid synthetic identity fraud.
Before biometric verification was an option, financial institutions and other companies relied on password protection or multi-factor authentication to keep accounts safe. We’ve all heard horror stories about people who reused the same password for multiple sites and who have experienced identity theft. Passwords can be effective, but they’re also susceptible to hacking.
Biometric information is more secure because it’s personal and individual. Nobody else has the same fingerprints as you. In fact, research by a Columbia Engineering alum even found that your fingers may not be identical to one another.
Adding biometrics to customer accounts allows credit unions, banks and companies that offer financial services to protect accounts and deposits from unauthorized access.
No technology is completely free of risks. Here are some of the potential vulnerabilities of implementing biometric security.
Any bank that stores biometric data should employ encryption and vet third parties to ensure that account holders’ data is kept secure.
Financial institutions use state-of-the-art encryption to store any personal data they collect, including biometric scans.
In some cases, the biometric data is not stored by the credit union or bank. Instead, your verification method, like your fingerprint scan or facial recognition scan may be stored only on your device. That means there’s no risk of a “middleman” intrusion. As long as your device is secure, your authentication scan is secure.
Transmission of biometrics involves converting the verification itself to digital code that can’t be used in place of an actual scan.
These things all help keep your identity authentication private.
Any financial institution that uses biometrics technology must adhere to regulatory requirements to protect consumers’ privacy and identity data. There are federal regulations that apply to everyone and individual states may also have privacy and data protection laws that must be followed.
One of the most important federal laws that applies to financial institutions and financial services is the Financial Modernization Act of 1999. It includes the Federal Privacy Rule, which lays out regulations for how financial institutions may collect and disclose personal financial data. It also includes the Safeguards Rule, which says that all financial institutions must protect customer information and prevent anyone from gaining access to personal financial information under false pretenses.
There are some important benefits to using a biometric authentication method, including some that apply to both financial institutions and bank customers. Let’s start with customers.
The use of biometrics protects consumers and financial institutions.
A biometric solution has become widely popular among credit unions and other financial institutions, as well as with companies in the financial sector. It’s clear that these entities are embracing biometrics, but how do consumers perceive them?
One recent study found that 72% of all global consumers prefer biometric verification to other forms of security, including passwords and PINs.
The preference is due in part to the widespread belief by two thirds of consumers that biometric authentication is easier and faster than using a password for identity verification.
Here are some other key statistics to consider.
These numbers clearly illustrate that consumers value and trust biometrics to protect their money.
There are many ways in which biometric technology could advance. Here are some of the innovations we expect to see in the not-too-distant future.
The use of biometric scans and technology has become nearly universal among the banking industry for a good reason. It protects account holders’ personal information and their banking transactions while making it easier for them to access what they need online or using a mobile app.
Want to learn more about security in digital and mobile banking at Addition Financial? Visit our digital banking page now!