How biometrics will improve lending security

Biometric authentication systems have a strong case for use in finance and lending. Grant Crow from SmilePass explains how the now widely-available technologies can help fight costly fraud.

Lenders today face big challenges in differentiating between genuine customers and identity fraudsters.

Not long ago, MCO Capital was shut down by the Office of Fair Trading, after it failed to stop fraudsters taking out loans using more than 7,000 stolen identities.

And it’s not just lenders feeling the pain, last year, the Financial Conduct Authority reported that over £3.5 million was lost by consumers to fraudsters posing as lenders, while queries to the body’s consumer helpline almost increased by almost 50%.

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Additionally, financial fraud — which can too often be carried out using basic information, such as a name, a date of birth and an address — can ruin peoples’ credit ratings and cause real personal turmoil.

However, biometric technologies are set to help lenders – and the people using them – in their mission to solve and combat the reality of such costly fraud.

From fiction to reality

Biometric authentication used to be a thing people dreamed of, something conjured up for James Bond films, in much the same way people think of flying cars. However, the reality is biometric authentication systems are now cheap and widely available— in part, thanks to devices such as smartphones. When Apple released its facial recognition last year, it helped to open peoples’ eyes to the promise of biometrics.  Today there are many ways of authenticating customers using biometrics: from face-scanning (selfies) to fingerprinting, from iris-scanning to vein readings.

Lending is difficult to do securely, but biometrics has the ability to revolutionise the security process — and there has never been a better time to adopt such systems.

A report by IBM titled the Future of Identity Study, which compiled data on user perception for apps related to finance, discovered that 70% of people ranked security as a top priority over privacy and convenience, while the percentage of people who want to have direct contact with their lenders reduces every year: 77% in 2014 to compared to 18% in 2017. Quite clearly, there is no time like the present.

 Find the right solution

Biometric security is not 100% secure, it’s ‘spoofable’ and people do go to some lengths to do so by using photography, theatre makeup, moulding and more. Poor biometric solutions will be hacked this way.

For lenders that wish to be extra secure, there are ways around this. For example the technology we use at SmilePass tests for photographs and makeup when facial scanning, and there is also liveness detection which means getting the subject to blink, smile, wink or strike a certain pose to confirm they are real and present. While no biometric solution can claim to be 100% unhackable, robust liveness detection goes a long way to closing the door on hackers.

We also advocate the use of multi-modal biometric authentication. This would involve a consumer using a variety of biometric data entry points — such as facial-recognition, fingerprint or voice together to confirm they are who they say they are without any doubt. For fraudsters, such a series of biometric authentication would be pretty much impossible to replicate. But security on this level will undoubtedly give consumers a sense of confidence in their chosen lender, which would lead to better public perception for such lenders.

False positives are also much discussed by those who want to shoot down the security levels of biometric authentication, but this is usually a result of companies using outdated hardware. Biometric security is a technology that becomes increasingly stronger when combined with deep learning and accumulative data and newer biometric companies are using deep learning to teach systems to be more accurate

A completely revolutionised process

Biometric authentication has the ability to completely revolutionise the process of consumer lending. Whether an online lender or not, the whole process can be digitised and consumers can complete tasks remotely.

Such new digitised systems would ultimately lead to a more streamlined process, which would also make for a smoother customer experience — so there are many benefits beyond just cutting financial losses, to fraud. Removing the need for annoying passwords and paperwork will change the entire customer journey.

Initially, however, some consumers may have reservations about providing such sensitive biometric data; but tighter security — surely of high concern to most people wanting to take out loans — should quickly dispel those concerns.

Essentially, fighting financial fraud is important to everyone but the fraudsters, but biometric technologies are available to really stamp them out.

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