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You are at your local store and are just about to make a payment with your payment card. However, you suddenly realise you don't remember your PIN number. People in the queue behind you look annoyed while you frantically try to remember your four-digit code.
This kind of scenario occurs countless times every day across the globe, causing friction and frustration for customers and businesses alike. However, a new generation of biometric authentication methods are emerging which could make this kind of experience a thing of the past.
The use of biometrics in banking has grown dramatically in recent years, and a new generation of biometric payment systems is set to accelerate the change.
What is biometrics in banking?
Biometric banking systems check ‘what I am’ characteristics about an individual to verify their identity, whether they are making a purchase, logging onto their online account or applying for a loan. These systems use factors such as fingerprint, iris scanners or facial and vocal recognition to identify the individual. They can replace or even enhance traditional identification methods such as PIN numbers, passwords or paper ID. Biometrics in banking is already widely used, especially for logging into internet and mobile services.
7 benefits of biometric payment
Here are seven key benefits of using biometrics in banking:
Biometric payment technology makes it fast, easy and effortless for consumers to identify themselves. Biometric cards with fingerprint scanners mean that the individual only needs to be physically present to make a purchase – no other information is needed.
#2. No PIN number required
As with our example above, remembering PIN numbers can be difficult -especially for credit or debit cards that we use less frequently. Biometric payment does away with the need to remember these numbers altogether and saves consumers the stress of remembering multiple PINs for different accounts.
#3. No limit on contactless spend
Contactless card payments are normally set at a relatively low limit in order to minimise the risk of fraudulent purchases if a physical card gets lost or stolen. However, with biometric card payment technology only the owner of the card can actually use it. This means there would no longer need to be a limit on contactless payments.
#4. More secure
Using biometric payment methods offers greater security to both customers and banks thanks to the uniqueness of individuals’ biometrics features. The card compares the user’s finger presented on the scanner with the reference data securely stored inside the card before authorizing a payment. If the card is lost or stolen, it cannot be used even for low value contactless payments.
#5. Reduce administration
Banks must cover significant administrative costs when using traditional identification methods. Whether it is posting out PIN numbers, producing home card readers, or verifying the identities of new customers, proving customer identity is expensive. On the other hand, using biometric banking means financial services institutions can significantly reduce their paperwork burden and optimise processes.
#6. Preferred by customers
Research shows that more than half of consumers say they would prefer to use biometric cards for payment if they were available. This may mean that customers would choose a bank that offered this facility over one that stuck with chip and PIN or signature.
#7. Rapid customer onboarding
Did you know that 40% of customers abandon the onboarding process when applying for new bank accounts? A smooth onboarding process is essential when attracting new customers. And this is where biometrics in banking helps. With a fingerprint or iris scan, the customer can quickly verify who they say they are and begin to use your services right away.
The future is bright for biometric payment
As consumers become increasingly accustomed to using biometric data to identify themselves, we can expect that fingerprints, iris scans, facial recognition and other methods will become the norm for purchases both in person and online. The banks which offer this option to customers, both in digital and card devices, will stand out as innovators, while also benefiting from reduced costs and enhanced security.
To learn more about biometric banking, download Thales’ new white paper which delves into the technology underpinning biometric cards.
Related article: 4 innovative ways to pay