How Biometrics in Banking is Redefining Security and User Experience?

In today’s rapidly evolving digital landscape, ensuring robust security measures is paramount for the banking industry. Traditional authentication methods, such as PINs and passwords are increasingly susceptible to cyber threats and identity theft. To address these challenges, biometrics in banking has emerged as a more secure and reliable solution. 

In the banking industry, biometric authentication has gained traction as a means to strengthen security measures and streamline the user experience through advanced fintech app development services.

Whether it is a fingerprint scan on a mobile device or facial recognition at an ATM, biometric authentication offers a seamless way for consumers to interact with their banking services. 

In this comprehensive blog, we will further explore the role of biometrics in banking sector, the benefits of biometric technology in banking, and use cases of biometrics in banking, among others. 

What is Biometrics in Banking?

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

To log into an application or perform some operation with the help of biometrics in banking, an individual has to use their biometrical data to verify their identity. The system will scan the data with scanners suitable for the given data type. 

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. 

How Does Biometric Authentication Work in Banking Sector?

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

Once a scanner is activated, it captures the biometric data for identity verification. The connected software then automatically converts the scans into digital format and matches them against an existing database. 

If the data samples coincide, it allows access to the system, if not, then the user is denied access or a system operator sees a corresponding message. This way, biometric data replaces other identification methods like passwords further improving the future of payment industry.

Biometrics in banking systems work 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 a relevant biometric security tape.

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 customers’ input biometric data is compared with the data that is already stored in the system to verify their identity.

What are the Advantages of Biometric Technology in Banking?

As per the reports, the estimated value of banking and biometrics, in particular, was $5.2 billion as of the beginning of 2023. By 2030, this figure is expected to reach $15.2 billion, growing at a CAGR of 14.4%.

Biometrics for banks offers various benefits as the popularity of biometric authentication for banking continues to grow. Some of the prominent advantages of biometrics in banking are:

Increases Convenience

Bank biometric verification eliminates the customers’ need to remember complex passwords or worry about losing their physical security keys. Instead, consumers can seamlessly access their accounts using their fingerprints, facial recognition, or voice. 

Enhances Security

Biometrics in banking 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 or PINs. 

Biometrics traits are also unique to each individual, and generally cannot be transferred or shared digitally. 

Fraud Reduction

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

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

Greater Operational Efficiency

Traditional banking processes often require consumers to fill out multiple forms of identification. However, with the latest disruption in traditional processes where developers attempt to understand how to build a banking app, biometric authentication in banking does not imply this step and allows consumers to save time. 

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

Types of Biometric Security Implemented in Banking Industry

While implementing the banking biometrics, you will most likely use the following mentioned below. Overall, biometric data falls into three groups:

• Morphological: Characters 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 or 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. 

Notably, biometric security in the banking sector is usually based on morphological characteristics. The two primary biometric modalities are fingerprints and facial recognition. Along with them, financial institutions can also use finger or palm veins or iris scans.

Explore the Key Features of Biometrics in Banking

To implement comprehensive biometrics in banking systems, it is important to embed some standard features. Here is the core functionality for reliable biometric identification:

Transaction Data Signing

This feature of biometrics in banking verifies transaction credentials by generating a one-time confirmation code. It is crucial for large monetary transfers, online personal detail changes, or other high-risk transactions. 

Multi-Factor Authentication

The registration procedure cannot include biometric scanning only since it increases the vulnerability. Therefore, it is important to request additional verification steps like a phone number, DoB, or, password check. 

API for Quick Deployment

Before identifying the prominent features of biometric security for digital banking, it is significant to comprehend the role of API in fintech and banking. API for fintech and banking can be defined as a set of protocols for seamless and effective communication between the bank’s server and the client’s devices. 

If you develop a custom biometric bank security system to supply it to third-party organizations, build an API. It would further simplify the implementation, allowing other banks to deploy biometric scanning quickly. 

Mobile Security

Before opting for biometrics in financial services, it is important to follow the essential steps to enhance mobile security. It is essential to implement must-have mobile security precautions like advanced obfuscation, anti-hooking, anti-debug, jailbreak, and rot detection. Since neobanks are largely used on mobile devices, fighting off potential threats is essential. 

Examples of Biometric Security Systems in Banking Sector

To integrate biometrics in banking system, you must first decide what data to collect. Since not all biometric identifiers are equally easy to capture and process, there are a few considerations when making this decision:

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 development services and machine learning services help measure speech modulation, accent, tones, and frequencies to create a reference template known as the 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 or eyes to generate a face template with convolutional neural network technology. 

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

Finger Print and Palm Print

Biometric recognition systems scan and digitize an orientation of ridges on human fingerprints to create biometric templates. They store the templates on datasets for comparison or quick search. A person being identified needs to either put the finger on a platen or hold it over a scanner for contactless reading. 

Iris Recognition

As the advanced technologies affect the future of fintech, Iris recognition for biometrics in banking is one of the most preferable options. 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 the scanners to distinguish one person from another. 

Finger Geometry

The biometric scanning captures the surface, shape, 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. 

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. 

How to Make Biometrics in Banking More Secure?

The trusted approaches to follow to ensure the secured integration of biometrics in banking and financial landscape. 

• For a secure channel, you can opt for multiple means of authentication. You can combine biometric scanning with a non-biometric approach or use multiple biometric security approaches. 
• Another way to make biometrics in banking more secure is to prefer cloud systems. It is important to cooperate with biometric security providers who can keep data secure with cloud development services and encrypt it to prevent unauthorized access. 
• Hire an experienced software development company to connect the system. Implementation of biometrics in banking systems for scanning requires narrow skills that most product teams lack. Professionals will save you from mistakes that can compromise data security. 

Use Cases of Biometrics in Banking Industry

Biometrics in banking has become more prevalent for the authentication of customers and to secure their assets. Banks are well-served by implementing biometric authentication in banking measures as it helps enhance customer service. The applications of biometrics in banking entail:

ATMs

Biometrics in banking ATMs has gained traction in multiple developed countries, with the two most popular authentication methods being PINs assisted by biometric traits like facials and fingerprints. Therefore, it is no surprise that more banks embrace biometrics in their ATMs.

Mobile Banking

The use of mobile banking is increasingly on the rise and shows how the technology has transformed the payments industry. However, there is a lack of security in these platforms because of an increasing number of fraud cases. 

To combat this, facial biometric authentication in online banking can be employed to access banking services such as KYC monitoring and transaction identification. 

Customer Onboarding

Financial organisations can streamline their customer onboarding process with biometric technologies. The Know Your Customer (KYC) verification that is inherently part of the onboarding processes is often left for the consumers to perform in person. 

Biometrics in banking offers reliability and security while allowing banking organizations to cut down on the time spent onboarding customers. 

How Can We Help in the Integration of Biometric Technology for a Successful Banking App?

Biometric data is another fintech trend that will shape the banking and financial industry in 2024 and beyond. 

It has the potential to change how banks and financial services companies operate in the coming years, offering a path to not just enhance security but also promote sustainable banking practices by streamlining processes. 

Appventurez, as a software development services provider specializes in Fintech engineering and providing biometric security services. Our skilled team implements biometric authentication in banking products while also adding new features or developing an app with biometric scanning from scratch.