Financial Data Fuels Personalized Experiences — And Consumers Are Willing To Share It
August 8, 2023 | 1 min read
Convenience and ease-of-use are fast becoming the primary way that financial institutions can attract and retain customers. But security and mitigating risk are two very real concerns when it comes to incorporating new technological solutions that might be more convenient for users. That’s why it seems that most of today’s security measures are cumbersome and add friction to an otherwise seamless banking experience. According to a report by Deloitte “the majority of individuals aged 16-24 view security measures, such as passwords, as an annoying extra step before making an online payment.”1When it comes down to it, there’s a fine balance between convenience and security, and unfortunately, current security measures compromise the user experience and don’t effectively protect users.
One secure and convenient alternative for financial institutions is biometrics solutions. Today, there’s a positive attitude towards biometrics with 56% of consumers trusting this method as a secure means to make payments. And it’s estimated that the market will continue to grow, reaching $24.59 billion, with an anticipated 2.6 billion biometric payment users by 2023.2
And it’s no surprise that large tech companies are leading the new wave of biometric security. “Ever since Apple launched its Touch ID and Samsung introduced its fingerprint scanner, using physical characteristics as a form of authentication to access user data has proven to be very successful.”2However, the financial industry has still lagged behind in adopting some of these methods. And most financial institutions are far behind fintech innovators and big tech companies in the race for delivering a seamless and frictionless digital experience.
However, even if financial institutions are slow to adopt new technologies, the rate of innovation is only expected to increase. In A World Beyond Passwords, Deloitte states “while fingerprints had taken a long time to gain traction, the technology had taken off during the past three years. The company interviewed 4,000 people and said that 31% of 18-24 year olds were using the fingerprint scanners on their phones, compared with 8% of those aged over 65. Deloitte predicts there will be one billion smartphones with fingerprint readers in use by the end of 2017 and that the technology will spread to cheaper models.”3
The race for convenience and ease-of-use continue to gain traction as the main differentiator for customer loyalty and adoption. And the financial landscape is booming with big banks making large strides in incorporating fingerprints, voice, retina scans and other technologies as safety features in their customer experience solutions. Whereas medium to small financial institutions are still somewhat slow to adopt and embrace these new measures of security.
Biometrics has the power to minimize security risks, greatly improve the customer experience, and can be “the way to secure payment methods, online/eCommerce payments and a wide range of financial applications.”4Furthermore, with rising regulatory pressure, biometrics can be the way to protect customers’ financial data more easily and securely.
What’s more, the latest open banking initiatives and new regulatory frameworks, such as PSD2, are set to increase the pressure on financial institutions to ensure robust protection of customer data and funds. In addressing these challenges, biometrics can play a central role in the quest to combine security with usability.
Since Apple introduced the fingerprint [and facial recognition] into the iPhone, some consumers have been enjoying the convenience and security of using their fingerprint [or simply their face] to authenticate their payments.4Now steps are already being taken to trial biometrics in card payments. One such development is the recent introduction of the biometric EMV card with fingerprint recognition technology.
Here are a few ways that biometrics can be used in banking:
In Branches: Financial institutions can use fingerprints and finger vein biometrics to identify customers more quickly. This is especially suitable for cutting down waiting time and creating a better in-branch experience.5
In Banking ATMs: With biometric authentication, customers can use their facial recognition or fingerprints to access their account details without the need to swipe a card or put in a password.5
In Mobile Banking: Customers could use voice recognition through the microphone on their mobile phone to complete banking transactions.5
Financial institutions can use biometrics to improve the customer experience while ensuring security measures. Incorporating biometrics into digital technologies not only removes friction, it also shows customers’ that the financial institution is tech-savvy by offering a modern banking experience.
But what does the future beyond biometrics look like? According to Deloitte, “one of the most intriguing possibilities in new access controls is risk-based authorization, a dynamic system which grants access depending on the trustworthiness of the user requesting admission and the sensitivity of the information under protection.”6This process uses advanced machine learning to assess a user’s trustworthiness based on multiple behavioral factors. For example “using sensors such as the camera, accelerometer, and GPS functions, smartphones can gather a wide range of information about users, including typical facial expressions, their habitual geolocations, and how they type, walk, and talk.”6When these factors are added together, they create a much more complex and holistic profile of a user, making the identification process more reliable and secure. Furthermore, “with such capabilities, a user’s phone, or another device, can constantly calculate a trust score – a level of confidence – that the user is who he claims to be.”6
At MX we build products and solutions that are flexible enough to adapt and scale as the digital-ecosystem evolves. That means, no matter what the future holds—from today’s fingerprint and face recognition to handwritten signature and gate identification—our technology is capable of growing with you. We partner with forward-thinking financial institutions to help them leverage their data to provide a superior digital experience across all their channels with unmatched security and convenience.
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