Biometrics – the good the bad and the ugly

A biometric is a form of identity based on a physiological (fingerprint, face, eye iris or retina) or behavioural (speech or signature) characteristic. There’s no special training required for a consumer to use them, they can’t be lost unlike conventional access methods and are unique to every individual.

If you’ve ever experienced airport retina scanning or have a fingerprint identity on your smartphone, you’re already part of the world of biometrics. Apple, closely followed by Samsung, brought touch ID to the consumer market place and demonstrated how user friendly biometrics can be. Once, this was all considered the stuff of science fiction films but biometrics is now changing the way we do every day normal tasks, including our finances, and is reinventing the customer experience.

The application

In developing countries, fingerprint technology can be used in banks and lending for document signing when a signature isn’t possible. This in turn can lead to greater acceptance rates, investment in economy and fraud prevention from stolen or fabricated identities. In the US, eye verification is used in banking by analysing the pattern of blood vessels behind the whites of the eyes through an app allowing consumers to service their account password free. Closer to home UK banks like Atom have adopted voice and facial recognition as part of their verification process and this summer HSBC’s 15 million customers will be able to bene t from the largest roll out of biometrics in the UK. Using voice and touch ID, customers will be able to perform daily account activities such as checking balances and transferring money with this opt-in service.

A recent survey by YouGov revealed 37% of consumers felt traditional passwords are now an outdated security measure. The average person has 19 passwords for various logins but only 1 in 3 make them strong enough. The same research revealed that a third of people use the same password for almost every account and worryingly over half don’t regularly change their passwords. With this in mind it’s easy to see why the efficiency and simplicity of biometrics has led to fast consumer adoption and familiarity. Smartphones play a key role in the implementation of this new kind of access facility. It’s no surprise they are increasingly becoming the foundation of the financial channel with 91% of millennials using their Smartphones to access their bank account regularly, and over half using it to make a purchase this month alone (BBVA). It’s technology we are familiar with and the function of pressing your finger to unlock your phone is so accustomed to so many, it’s no great stretch to make the transition to doing the same for your bank account.


Whist biometrics is a huge leap in the fight against money laundering, fraud and identity theft, at the heart of it is still a technological application with the potential to be hacked. Biometrics is still in the early stages of revolutionising the financial industry with the certainty of backup facilities still requiring further investigations. Current research shows that many consumers are still attached to the multi-stage, password system as it makes the process ‘feel’ more secure. Similarly, many may feel vulnerable exposing such a unique aspect of themselves, with no guarantee of how it could be used or potentially abused in the future. If a biometric database, rich in access to consumer data, is ever compromised what happens? The data can’t just be reset like a password. As biometrics creep into consumers daily lives, we start to rely on it more, especially when big trusted brands like Apple champion it in their software.

Biometrics in lending

When you apply for your loan, application documentation is sent to your email and instead of a signature you use your fingerprint. The whole process can be completed online, securely and fast, so there’s no need to wait for documentation in the post that could be lost or intercepted. Once you’re up and running there’s no resetting or remembering your password and no need for the 20 questions regime if you require a call centre environment, as voice recognition can confirm your identity almost instantly.

The fraud prevention element of biometrics is highly effective and once established, the process can prove cost effective for lenders. In April this year, app developer China PING AN TianXiaTong (PING AN) created a facial recognition that takes 6 minutes to create a lending application and claims to be the fastest lending platform in China. The technology used is programmed to act like the human brain successfully performing facial recognition more accurately than the human eye.

So will this new faster, more efficient part of the application journey lead to a greater uptake in lending?

It’s likely to become another part of the multi-layered security of the future, but is an exciting innovation that’s pushing the financial industry to deliver a better service at all levels.

By Richard CARTER, Chief Executive, Nostrum Group


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