How Biometrics And AI Are Improving Banks’ Customer Experiences
Digital Banking

Deep Dive: How Biometrics And AI Are Improving Banks’ Customer Experiences

Passwords are increasingly vulnerable in today’s day and age. Hacks and data breaches have become all too common, with fraudsters turning to “brute force” attacks and plugging in commonly used passcodes to gain access to users’ accounts.

There is a growing need for stronger authentication methods as the number of attacks continues to climb. Unfortunately, FIs are often caught between balancing more stringent security tools and offering the seamless experiences consumers crave. Modern customers are much more likely to grow frustrated by lengthy processes and switch to other banks, after all.

As such, FIs must seek more innovative authentication procedures that take less time and draw less ire than weak password and PIN systems. This means banks must make security an engaging part of their customer experiences rather than a clunky friction point, and many are doing so by turning to AI and biometric authentication tools.

Biometrics and the Benefits for Security 

While passwords are often arbitrary and static, biometric authentication methods are based on customers’ personal data. It’s much harder for fraudsters to access and use verification measures that rely on customers’ iris, voice or facial scans rather than passcodes. Additionally, many biometric authentication features are proving capable of more quickly identifying legitimate customers.

Facial recognition has several banking applications, including allowing customers to log into their accounts by providing simple scans. Millions of smartphones are equipped to handle the technology, and verification via the method often takes mere seconds. There is also growing interest in liveliness detection, which requires users to perform defined actions during authentication that are much harder for potential fraudsters to mimic.

What’s more, banks are relying less on stored data for verification and are instead combining biometric authentication with in-cloud biometric identity-as-a-service technology to prevent bad actors from obtaining information. This fraud protection method gives FIs greater agility when searching for fraudsters and boosts flexibility for consumers. A growing number of devices are equipped with biometric authentication technology, meaning an increasing number of mobile banking customers can use these tools to access their accounts.

More customers are using smart speakers and other internet of things (IoT) devices to interact with their banks, too, but even these technologies present unique challenges. Requiring users to recite their PINs aloud can jeopardize their security, for example. Biometric methods could help FIs adapt to these new communication channels, however. Customers’ voices could first be authenticated through smart speakers, requiring additional mobile-enabled biometric measures  should potential transactions be flagged.

Biometrics could potentially alleviate the need for physical identification documents in the face of more complex transactions like mortgages or loan applications, as well. Banking customers could authenticate themselves in person with their fingerprints for their loan applications, for example, though this use case still requires some changes to traditional know your customer (KYC) and compliance regulations for banking.

Biometrics and the Future of Fraud

More consumers are starting to adopt biometrics as authentication tools, but that does not mean the technology is a cure-all for fraud and customer frictions. Bad actors are already turning to new methods to circumvent these measures. Many cybercriminals are also using AI to crack biometric offerings, even as banks turn to the same technology to enhance their defenses.

In addition to AI, banks and fraudsters are both using neural networks and other behavior-based learning systems to protect or breach financial systems. FIs apply neural networks to authenticate customer behavior for identification, while cybercriminals use the same tools to mimic legitimate user behaviors. This means FIs will need to bolster the tools they use to fight fraudsters’ increasingly sophisticated attacks.

Biometrics and other innovative security measures may never totally eradicate fraud, but their emergence in the digital banking space will likely continue to affect consumers’ perceptions of online security for years to come.

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Latest Insights:

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The September 2019 AML/KYC Tracker Report provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

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