The use of biometrics is everywhere. From buying a coffee to opening a bank account, there are more ways than ever to encounter the technology.
In a post by RegTech firm PassFort, the company outlined things readers may want to know about the use of biometrics in one key area of RegTech – KYC compliance in onboarding.
Biometrics refer to the measurement and analysis of behaviour and physical characteristics of individuals. It may include things like fingerprints, retina scanning, voice recognition and DNA matching.
Biometrics can make digital onboarding vastly more efficient for financial services companies, and easier for customers to access products. This blog explores 5 things you might want to know about the use of biometrics in KYC compliance.
According to PassFort, biometrics are primarily used for identification purposes or access control to different platforms and technology. The company added that while biometric information can be held in databases, data is increasingly gathered locally and used at the point it is needed.
PassFort said, “Banks use biometrics for KYC compliance when onboarding new customers, they form part of the series of checks to verify a new customer’s ID. Use is increasing because biometrics offer greater security and reliability than many traditional strategies, like physical documents that might be hard to review and possible to fake.”
While biometric data is at risk of being stolen or lost, it is easy for individuals to share. This, PassFort claims, creates convenience during onboarding and can make the process go more smoothly for the consumer.
The firm added that as well as being used at onboarding, biometrics are commonly used for mobile banking – with customers having integrated features on their banking app to complete transactions and we’ve already mentioned they can be used to authorise payments when making purchases.
Additionally, the rise in biometrics is an important development for financial services and consumers in terms of the convenience in the digital economy, PassFort remarks. With more and more financial activity taking place online and in the cloud, compliance process, the business stresses, need to follow suit.
PassFort said, “With digital-first and digital-only banks increasing in popularity, biometrics enable customers to onboard remotely and securely. The compliance process is quick and efficient, and the customer can act independently, without the need to produce physical documents or visit a branch. The use of biometrics also means banks can build a picture of trust and risk; onboarding individuals while assessing threats and managing the risk of fraud.”
What are the benefits of risk of biometrics in onboarding? PassFort claims the benefits include improving efficiency and increasing conclusion. On the downside, there is also the threat of data being stolen as well as some believing that it encroaches on privacy.
The company also mentioned that the banking sector is increasing reliant on biometrics, while the FinTech sector more broadly is rapidly adopting biometrics for KYC compliance and other digital processes.
PassFort said, “One of the important things to know about biometrics is that they are used everywhere now anyway – it’s not a next generation technology, it’s a here and now thing. Biometrics aren’t just for the uber new cryptocurrency economy, but for everyday banking.
“Many institutions had to hit the accelerator on digital transformation of their customer onboarding journeys following the pandemic. Now is not the time to get left behind again. If individuals are willing to use their thumb to pay for a coffee, it’s time to think about harnessing that for KYC.”
Read the full post here.
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