Can Facial Recognition Make Banking Safer?

Forget passwords and PINs! A whopping 52 per cent of bank customers, according to a PYMNTS study, crave a more secure way to manage their money. Enter facial recognition technology: a powerful tool waiting to unleash a revolution in banking. This AI-powered system identifies individuals based on their unique facial features, offering a promising leap forward in transaction security, streamlining processes, and boosting customer satisfaction. From onboarding new clients to verifying transactions, facial recognition biometrics hold immense potential to transform the banking experience.

Banking has had to keep the digital pace with changing technology through its trail of transformation. One that has been especially prominent in the last decade with rapid digitisation and increased focus on agility in processes. As a by-product of the changing landscape of banking, concerns related to information security, adoption, and trust, loom.

Facial Recognition Technology In Banking

“Facial recognition is a breakthrough technology for banks. Not only does it make fraud detection and mitigation fast and effective, but it can do wonders to accelerate financial inclusion while providing a more secure and seamless customer experience,” states Valerie Lapteva, Business Development Director, APAC Region, RecFaces.

Online fraud, for instance, is increasing because of a shift towards online banking. Not to mention the hassles of remembering numerous passwords, stacking physical cards, and long waiting hours in the physical bank branches. All factors that hinder the user’s ease and sense of trust, proving to be a challenge to customer success in banking.

The essence of banking services is providing aid in financial management, frictionless access and security. With higher trust in the banking system, customers tend to invest time and resources in bank services for wealth growth. So, banks are increasingly emphasising the use of technology to help reduce fraud, facilitate customer convenience, mitigate losses, keep sensitive information safely stored, and contribute to the evolution of banking processes.

The Challenges To Physical Security 

Physical security in bank branches struggles due to high footfall, vulnerability to robbery and theft, security breaches and outdated surveillance systems. The pertinent threats of the loss of resources and unauthorised access to sensitive infrastructure create insecurity among the users. This calls for a more efficient access control and security system. Additionally, identity checks, record verification and authentication are key parts of the KYC protocol. While secure banking is facilitated through fingerprint biometrics, it is susceptible to manipulation, proximity, and hygiene limitations.

Facial biometrics-enabled systems hedge these limitations to provide a more coherent security solution. Customer identification can be cumbersome at the expense of security staff and dealing with it during busy hours. Facial recognition systems are quick to identify anyone walking through the doors irrespective of the crowd density. It also facilitates intelligent access control and management of accounts of staff members and customers. Allowing the set-up of account perimeters, access permissions, level of control, and blacklist, FRS is extremely useful in strengthening the physical security infrastructure. “Facial biometrics is an inseparable module of the zero-trust security model. It can strongly reinforce the banking ecosystem with a hard-to-compromise technology at every point in the physical and digital security channels,” observes Sukrit Varma, Global Marketing Partner, APAC and MENA regions, RecFaces.

How Convenient Is This For Your Customer?

Digitisation is gradually and rapidly taking over the banking processes. While mobile banking enables remote account access and real-time transactions, it inevitably adds to the hassle for customers in terms of maintaining passwords and account authentication. According to research by NordPass, a person must remember 70 to 80 passwords on average. Not to mention that physical ATM cards, passbooks and documents can be easily lost or stolen. In case any customer loses vital information, the re-authentication can be arduous. So, the inconveniences persist in the form of long waiting hours in queues, delays in issue redressal, and lack of personalised services. Such difficulties weaken the customers’ trust in the bank’s services, making customer retention challenging.

Facial Recognition System (FRS) adds to customer convenience. Solutions enabled with advanced facial recognition algorithms for accurately identifying user accounts, increasing the efficacy of in-branch processes, and streamlining customer onboarding and verification. Its liveness detection feature helps prevent fraud in the event of loss and theft of cards, SIM cloning and data leaks. It also permits creation of digital IDs that encrypt details like digital signatures, demographics, vaccinations, and customer profiles allowing smooth online and offline authentication. Introducing facial biometrics in the client identity lifecycle process enables quick account retrieval.

Here Comes Digital Security

Juniper predicts that by 2028, the value of transactions executed by digital wallets will reach $16 trillion. Mobile and neo-banking are picking up momentum to become the new normal. However, the adoption of digital banking comes with the pertinent challenge of online fraud. Due to its nature, digital banking is highly vulnerable to losses through fraud, identity thefts, embezzlement, spoofing and phishing attacks. Customer verification is another key part of the online banking regime to ensure legitimacy during the onboarding process. Without constructive protocols and solutions in place, the risks of synthetic identity fraud soar.

Facial recognition systems allow the storing of sensitive data in-house and regular automated updates to the account details, acting as a powerful step in the multi-factor contactless authentication regime. In multiple reports, people-approved facial biometrics can improve safety in banking. According to VISA, 53 per cent of total credit card users are willing to change their bank if the current bank refuses the application of biometric authentication in mobile banking. Facial biometrics cannot be easily duped. They provide an agile alternative to secure digital currency and wallets. With exceptional potential in account access control, identification, and verification, it also efficiently traces and records attempts of breach.

Transformation Through FRS

The biometric banking market is expected to be valued at $23.6 billion by 2032. This indicates the Compound Annual Growth Rate (CAGR) of 17.2 per cent between 2023 and 2032. Technology is as good as its usefulness to the users. According to the experts in the Deloitte Center for Financial Services, fraud on synthetic identity is expected to cause losses of up to $23 billion by 2030. Facial recognition with liveness detection is a game-changing security technology. High reliability allows more monetary transactions, encouraging banks to expand their business and provide more tailored services to increase banking inclusion. It reinforces security in virtual services and branch transactions while augmenting trust through an enhanced holistic experience.

PS: For this and much more on smart banking, join us on 22 – 23 May 2024 for the Africa Smart Banking Summit!