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Interviews

Steve Cook on the value of biometric authentication for the KYC process

Wednesday 24 April 2019 | 08:03 AM CET

 “Banking and ecommerce are just some of the channels where biometrics are becoming standard in the areas of digital identity and KYC”

What’s new on the biometrics technology market and which method seems to have a greater potential?

Behavioural biometrics is one of the fastest growing of all the biometric sciences and there are many new fintech companies offering different types of solutions. Sometimes known as passive biometrics, it usually involves the customer not doing anything unusual during a user session.

Behavioural biometrics also provides an analytical tool to moderate risk. It actually monitors the user’s behaviour during the visit and detects anomalous activity. There are some 2,000 parameters that behavioural biometrics depends on and they give a clear indication of someone’s unique identity. These range from monitoring human motion gestures and patterns to keystroke dynamics and factors – such as speed, flow, touch, sensitive pressure, and even signature formats. They also use machine learning and AI as a continuous form of authentication.

Combining a number of biometrics in a step-up process or what is called multimodal biometrics would be used in cases where higher risk transactions are processed. This happens in order to prove someone’s identity, known as Strong Customer Authentication.

Some organisations prefer biometric authentication to be stored on the device, or as a server-based solution known as on premise, or as a SaaS cloud deployment known as software as a service model. The SaaS model is currently proving to be the most popular.

How does biometrics augment the KYC process in order to assure compliance?

Biometric technology forms one part of the KYC process and it can be used in the remote on-boarding channel when signing up new customers. Typically, the biometric data, such as your face, is captured together with an ID document, like a passport or driving license, via a smartphone’s camera. The ID document data can be verified separately through known third parties. The face data is compared with a live face capture and the photo ID for a comparison match. Then a risk score can be applied to the matching process.
It is important to state that it’s nearly impossible to prove that an ID document is 100% genuine through existing digital methods. NFC can read the biometric chip on a passport to obtain the original data and this can be verified.

However, some sophisticated fraudulent passports can still fool the system. Using the liveness functionality during the on-boarding session helps to prove the person is there in real time, but proving the true identity has to rely on other checks. Most Government databases are not accessible for commercial use in order to verify people, thus remote digital on-boarding does carry some risks. 

What benefits does biometrics for KYC management bring for banks?

For branch banking, biometrics can be captured within a store via a tablet and, generally, bank staff will use the device for on-boarding new customers with proof of ID. However, we are seeing this trend shifting away from traditional branch banking towards online and mobile.

Digital onboarding is proving to be extremely popular with the tech savvy generation known as the millennials. This generation is doing most things via their smartphone; whether it is retail purchases, social media, or gaming. Mobile digital banking is becoming more popular amongst the 18-35 year olds and it was predicted that by the end of 2018 it will overtake online, telephone, and branch banking combined.

In 2010, branch banking accounted for around 70% of all banking. By 2020, it could be as low as 15-20%, while digital banking will reach a staggering 80%. Today, bank branches are closing at a rate of around 60 per week in the UK alone. All the large banks have to adapt quickly to the new customer trends for more digital-only platforms. Many new challenger banks have launched innovative banking services via digital channels and are in direct competition with the more established branch banks.

Do you think biometric authentication will become a norm one day or a standard for automation of KYC procedures in sectors such as banking and ecommerce?

Biometric technology is already becoming the norm in many verticals: from aviation and automation to education, health, insurance, and retail. Banking and ecommerce are just some of the channels that we are seeing where biometrics is becoming a standard in digital identity and KYC areas.

According to Goode Intelligence, by 2020, 1.9 billion bank customers will adopt biometrics for a variety of financial services, including ATM cash withdrawals, proving identity for digital on-boarding, accessing digital bank services through IoT devices and mobile bank app authentication. Biometric authentication for banking purposes is going to generate USD 4.8 billion in revenue by 2023. I believe biometric authentication will become ubiquitous everywhere and we will be able to eventually say goodbye to the passwords.

About Steve Cook

Steve Cook is an independent biometrics and fintech consultant, helping banks, ecommerce enterprises and fintech startups to navigate the complex world of biometrics. He advises financial institutions regarding their deployment of biometric authentication and digital identity strategies; assisting in the process of vendor selection, biometric modalities and types of solutions. Steve has over six years’ experience in the biometrics industry previously with Daon and Facebanx. He now operates his own consultancy business Biometrics for eCommerce and he is currently providing services to a fintech startup FaceTec as well as a major European bank.

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