Travel through an airport and you will see facial recognition

in widespread use and in some countries fingerprinting is

also being used to recognise individuals. But within the

financial services industry the use of biometric technology is used

only sparingly despite being around for many years. UK firms like

Nationwide were doing experiments some 20 years ago with

fingerprinting but they came to very little, mainly as a result of the

high costs of this extra security when compared with existing

solutions such as chip and PIN.

Peter Jones, business manager for security solutions EMEA at

Hitachi, suggests the challenge is to show that the technology is

being used in a constructive way to improve customers’ lives.

“Security alone is not a sufficient driver for the adoption of

biometrics,” he says, especially in those countries where chip and

PIN technology has been regarded as enough of a deterrent to

criminals.

Where biometrics has been implemented there have been

obvious drivers, often specific to that particular market. In Japan,

for instance, an increase in fraud and the liability shifting from the

customer to the bank prompted the deployment of biometrics

onto 80,000 of the country’s 180,000 ATMs. To tempt customers

to use this more secure technology the banks enabled them to

withdraw larger amounts. Anthony Duffy, director of retail

banking at Fujitsu, agrees that customers need to see the benefits

of using biometrics and suggests Japanese banks also worked at

convincing people that there was some cache in using biometrics

and also greater speed of transactions.

Fujitsu has worked with Bank of Tokyo Mitsubishi and Ogaki

Kyoritsu Bank as well as Brazil’s second largest bank Bradesco,

which has introduced the Palm Secure biometric solution into

many of its ATMs at its branches and as standalone units in

shopping malls. “The extra security has helped them to provide

B I O M E T R I C B A N K I N G

P A G E 2 4 F E B R U A R Y 2 0 1 4

A good fit?Glynn Davis takes a look at the drivers for

the adoption of biometrics in the banking

sector

24-25_ED-biometric.indd 1 05/02/2014 10:32:57

more services on its ATMs and (effectively) operate them as part

of its branch network,” says Duffy.

Other concentrations of adoption are in Central and Eastern

Europe such as Poland and Turkey where the driver has been

financial inclusion, according to Jones: “We’ve worked with

smaller banks and they’ve seen it as a driver to target the

un-banked. It’s seen as a tool for inclusion.”

In 2010 PBS Bank in Poland pioneered biometric technology

on some of its ATMs that enabled benefits claimants to collect

their money by simply keying in an ID number and placing

their finger on the reader. It was a similar story in Turkey with

Isbank, which deployed the same technology onto 3,000 ATMs

and in branches.

The common element to these implementations is the use of a

central database that holds the individual’s biometric record,

which Jones says is important because the objective has been to

create a card-less experience for these un-banked customers.

It has been different in Japan where Duffy says the model has

typically involved customers having a high-end chip card that

holds their biometric details – this must match their actual finger

vein or palm vein when presented to the ATMs reader. Taking this

route is partly down to the regulators disliking the banks holding

separate data on their customers.

Both Fujitsu and Hitachi agree that the most secure forms of

biometrics use vein recognition – with the former’s solution, palm

vein, while the latter has developed a finger vein solution. They

believe this is more secure than fingerprinting, voice and iris

recognition as these can all be scanned and recorded and

therefore be potentially used illegally by fraudsters.

For Duffy it is a case of using the relevant solution for

each separate scenario – dependent on the level of security

required. “You have to balance the benefits versus the cost,” he

says. Neil McEvoy, managing director at Consult Hyperion, agrees

and suggests biometrics should be used as part of a mix of

security measures. “If it is an account balance request then it

could be done by voice recognition whereas if it is for moving

money then it could be voice and fingerprint recognition as

well as a question being asked of the customer. You can go up to

the serious security for some transactions and biometrics will be

part of this.”

James Goldhill, associate director at Transform, believes care

has to be taken as consumers have seen contactless introduced

and that this has led to an element of mistrust as there is a “fear

security is being compromised for ease of use.” He says it needs

to be clear that where riskier transactions are undertaken then

higher levels of security should be expected – and this is where

biometrics would fit in well.

Opening the door

As McEvoy sees it, a number of factors are working in favour of

biometrics that will result in its widespread adoption by financial

services firms – especially in the area of smart mobile devices:

“The previous model of PINs and passwords is breaking down as

we often use the same for all log-ins and (smart) technology is

moving towards ubiquity.”

Possibly playing a major role in this is Apple with its iPhone 5s

that uses fingerprint recognition to access the device. “Apple

will open the door and the banks, Visa and MasterCard will

then see that customers are using this technology,” he says,

adding that should the US firm open up its API (Application

Programming Interface) to third-party app developers then

biometrics will be much more widely used and will inevitably

enter the mainstream.

This all adds up to a positive future, according to McEvoy:

“We’ve done biometric work in the dim and distant past and we

were sceptical about it but not now. In two or three years time it

will be used a lot more. And in five years’ time there will be full

roll-outs.”

Goldhill reckons in countries like the UK, where deployment of

biometrics to ATMs would be very costly, it seems sensible that it

will more likely be initially introduced onto mobile devices. “As

individuals we buy our own phones so deployment is a lot more

practicable,” he suggests. However, he does not expect it to

happen overnight, particularly in the UK: “The High Street

banks have had conversations about biometrics but we’ve

not even seen the pilots yet. It’s all quiet here, possibly because

it is only one of many things that the banks are dealing with at

the moment!”

Jones suggests one of the problems is the legacy infrastructure

and outdated mindsets in some mature markets which make it

difficult to see any major decisions being made on biometric

implementations. “The emerging countries are OK with the leap

whereas (in the UK) we’ve a bloated banking infrastructure.

Other markets in Central and Eastern Europe are fast moving and

the banks are not constrained,” he says.

He adds that the first moves in the UK will be within corporate

banking whereby the bank provides a terminal to its business

customers who then access it via biometric technology. There

could also be internal implementations as Duffy reveals that

Fujitsu is talking to a number of banks about introducing

biometric log-ins for laptops on the trading floors where hot-

desking is a feature.

Another example of this internal use of biometrics can be seen

at Sber Bank in Russia that uses the technology on the entry

points to some of its buildings thereby limiting access into

sensitive areas to specific individuals only.

When these tentative steps by some financial services firms are

combined with the examples of serious implementations by

banks in some other countries, then it is clear biometrics has

come a long way since it first emerged a couple of decades ago

and it will undoubtedly be widely adopted around the globe. But

such are the major differences in the financial infrastructures of

individual countries that the speed of take-up of the technology

will vary wildly country-by-country.

F E B R U A R Y 2 0 1 4 P A G E 2 5

24-25_ED-biometric.indd 2 05/02/2014 10:32:57