Biometric ID: The Next Step in Bank Security

Banks go high-tech in their attempts to verify identity.

Banks are increasingly turning to biometrics and other alternative identification methods that mobile and online customers already are comfortable using.

Expect biometric authentication techniques to expand over the next few years. These include fingerprint, face and voice recognition technologies.

Many smart phones are already equipped with the cameras needed for face recognition. Apple’s September purchase of Polar Rose, of Sweden, upped the ante for the technology, which reportedly will be available soon through the iPhone. And other manufacturers aren’t far behind.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

Additionally, fingerprint recognition is readily available on laptops, and the required recognition software is compatible now with Microsoft’s Windows 7 operating system.

Some manufacturers are even embedding fingerprint scanners into mobile phones. Authentec, of Melbourne, Fla., offers a mobile phone print reader now, while Hitachi will have a mobile finger sensor product for phones next year.

“For years, biometrics has been rated high in consumer surveys, despite the absence of biometrics in the hands of consumers,” said Robert Vamosi, a risk and fraud analyst for Javelin Strategy & Research. “That trend is changing now with touch pads that can record fingerprints and built-in webcams for facial recognition on the laptop and mobile handsets that can recognize the owner’s face, touch or sound of their voice.”

Banks seem ready to try it once consumers are comfortable with the technology. Deutsche Bank and Citibank have been using biometrics for years for employee access, but banks have been slow to deploy biometrics for customer transactions. That may change.

Citibank is ready to roll out voice biometrics to Australian customers in the next three months. Look for other regions to follow, and for other banks to monitor the effectiveness.

Banks will also experiment with one-time passwords, which can be sent via text message or e-mail. These are good for a short period of time -- usually 30 seconds or a minute. They are effective but can be burdensome if they have to be retyped.

Security questions will continue to be a popular verification technique. Knowledge-based questions, which are based on information the customer supplies when registering, are seen as the most effective and easy to use by banking customers, according to Javelin’s research.

Image recognition is perceived as less effective as it becomes more widely used, the survey shows. Using a mutually agreed-upon image at log-in will still be used by financial firms for a few years, but look for it to be replaced as more sophisticated techniques become available.

Karen Mracek
Associate Editor, The Kiplinger Letter