With the rise of online banking, security has increasingly become a topic of concern. The nation's largest banks at Bank of America (NYSE: BAC), JPMorgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC) have already acknowledged that traditional passwords are both too cumbersome and insecure, and instead have turned to using biometrics, such as fingerprints and facial scans, to safeguard accounts.
Biometrics refers to metrics related to human characteristics. Because fingerprints and facial contours are unique to individuals, biometrics authentication is considered to be more reliable in verifying identity than knowledge-based methods, such as passwords. Such biometrics technologies implement complex mathematics to identify customers through their voice, face, and fingerprints and are believed to be impossible to reverse engineer once stored. According to an article by CSO, a news and research outlet on security and risk management, global revenues for biometrics core technology will reach nearly $11 billion annually by 2017, a compound annual growth rate of 19.69 percent.
Millions of customers at these banks already routinely use fingerprints to log into their bank accounts through their mobile devices. This feature, introduced only in the last few months, has enabled a huge share of American banking customers to verify their identities with biometrics. Millions more are expected to opt in as fingerprint scans become more commonplace among mobile devices.
Some of the recent moves by these banks reflect concern that hundreds of millions of email addresses, phone numbers, Social Security numbers and other personal identifiers have fallen into the hands of criminal hackers, demonstrating the increasing ineffectiveness of the currently mainstream identifiers used to protect these accounts. The USAA's vice president of enterprise financial crimes management Tom Shaw recently spoke on this issue, commenting, "We realized we have to get away from personal identification information because of the growing number of data breaches."
In addition to fingerprint scans that has already made its way into the common marketplace, banks such as Citi (NYSE: C) have experimenting with other forms of identification, launching voice biometric verification for customers in Singapore to not only provide a more security, but also cut user authentication time. According to Singapore's DBS bank, biometrics technologies are expected to cut the time customers spend on authentication by between 20 and 40 seconds. Citi has already implemented voice biometrics for consumer customers in Taiwan, with Singapore, Hong Kong and Australia following. The service will be available to all 12 of Citi's consumer banking markets in Asia-Pacific by 2017. Citi expects at least one million of its 15 million consumer banking customers in the Asia-Pacific region to use voice recognition technology for authentication in the next 12 months, and this figure to grow to three million within three years.
Though biometrics has been tested by big banks for decades, they have only recently become sufficiently accurate and cost effective to use in the scale required to be practical for everyday use. With many of the of the early prototypes, suboptimal lighting rendered facial scans obsolete, and even slight background noise would greatly affect the metrics being fed into voice recognition software. The current state of technology, in particular the ubiquity of powerful smartphones, has significantly decreased the costs of implementation of such technologies, as well as open up new possibilities. In retrospect, even five years ago, smartphones were not capable of providing reliable fingerprint scans and using fingerprint scans to gain access to bank accounts on the common consumers' phones was impossible. It may not be an exaggeration that the traditional banking password is about to expire forever.