Financial brands should consider adopting biometrics data-protection technology to avoid losing customers to a lack of convenience and security as usernames and passwords fall out of favor.

With security one of the biggest hurdles to driving mobile payments adoption, brands must ponder whether to follow the example of MasterCard and other financial institutions and embrace biometrics to safeguard customer data on smartphones. Consumers’ willingness to trust their primary financial institution with their biometric data actually empowers brands to set the speed for biometric adoption – not technology companies such as Apple.

“In developed markets, laggards will have poor user experience that extends their customer’s fear of compromise,” said Bob Reany, senior vice president of authentication services for MasterCard, Purchase, NY.

“We have seen a willingness of consumers to use biometrics technology to both feel safer and get what they want, quickly,” he said. “In the end, laggards will lose customers to convenience and safety.”

Pilot program
As the growth of biometric-enabled mobile devices makes it easier to integrate biometrics into the banking authentication process, adoption is expected to accelerate in the next few years.

Biometrics grabbed the spotlight when MasterCard, the multinational financial services corporation, launched a pilot program with First Tech Federal Credit Union to use biometrics such as facial and voice recognition as well as fingerprint matching to authenticate transactions.

Setting biometric tools for mobile banking.

The technology also found favor with Mountain America Credit Union, which said it was letting users of its mobile application log in by swiping a finger or use a phone’s camera to image unique eye patterns. In one technology, an image sensor scans a fingerprint, while in the other an analysis is made of the map of blood vessels in the whites of the eyes.

A recent Telstra study found that consumers’ lack of trust in passwords alone means that mobile banking and commerce have to move quickly in implementing more secure methods of authentication.

“Our research found that a great deal of customers are in favor of using biometrics such as voice, fingerprint, iris and facial recognition, and a small portion would even be willing to share DNA to make the process more secure,” said Alison Caldicott, senior communications advisor for global enterprise and services with Telstra.?

“This puts the onus on the financial institutions to put in place more stringent security measures and those that fail to adapt could soon fall behind.”

Many developing countries are using biometrics as part of their national identification programs. These will also be used for payments. 

“It is an eventuality, not a question of if, but when,” Mr. Reany said. “The increased safety and improved user experience is just vastly superior to the old forgot-my-password-based systems. 

“They already have started and the smartphone penetration is a key enabler for biometrics technology for payments.”

Touch ID is penetrating the banking sector after seeing commerce success.

The adoption of biometrics in banking depends on what timeframe one has in mind.

“We do not expect the majority of financial institutions to do away with passwords in the next year, or even the next five years,” said Kyle Marchini, research specialist for fraud and security with Javelin Strategy and Research.

“At the same time, the growth of biometric-enabled mobile devices is making it much easier to integrate biometrics into the banking authentication process, so we expect adoption to accelerate over the next few years.”

While tech companies like Apple have been the catalyst for bringing biometric data safeguarding technology to the public, financial institutions such as MasterCard actually hold the key to bringing consumers on board.

“Right now, the driver for financial institutions in biometric integration seems to be convenience rather than security and that will probably be true as long as passwords exist as a fallback,” Mr. Marchini said. “In call centers, voice recognition has typically entered through interactive voice response as a means of streamlining the customer response process and from there it moves into authentication.

“Fingerprint biometrics on the smartphone follow a similar story,” he said. “It is simply easier to scan a finger than to type a password on a phone.”

That said, security concerns continue to be a top impediment for mobile banking adoption. Prominent inclusion of options such as fingerprint scanning or facial recognition can help to allay consumer fears.

Security conscious
For the security-conscious consumer, biometrics allow a simple, secure authentication channel which can be backed up by a password which would otherwise be too unwieldy for a mobile device. This makes the technology a valuable way to encourage customer engagement in a financial institution’s mobile channel.

MasterCard is exploring ways to make payments safer and simpler.

“We need standards,” Mr. Reany said. “We are working on standards for evaluating devices, ensuring protection of data and establishing trust of stakeholders. We also need consumer education in some segments. 

“Younger and tech-savvy users have no issue, but some geographic groups need to understand that no one will get their fingerprint or picture,” he said. “That personal information never leaves the mobile device and sharing it should not be feared.”

Final Take
Michael Barris is staff reporter on Mobile Commerce Daily, New York