Article

The PIN is passé; biometric is BIG

It's not just about mobile payments — ATM transactions and POS payments rely on the PIN, but could easily adapt to biometric authentication.

August 7, 2015

by Andy Brown, Product Marketing Manager, Alaric Systems Ltd. 

One of the biggest changes set to affect the banking and payments industries in the coming years is the rise of mobile payments. Whether it is transferring money to a friend, making a contactless purchase in store or settling a bill with a contractor, a new generation of mobile services means that users have more choice than ever when it comes to making payments.

At the same time, they expect these solutions to be as convenient as possible, and one technology that's increasingly gaining traction is the use of biometrics to authenticate a user, rather than traditional methods such as the need to enter a PIN.

Biometric identification technology is hardly a new innovation. Fingerprint scanners have been included on some laptops for decades, and even in the banking sector, they're hardly a novelty — Citibank has allowed customers in Singapore to pay by fingerprint since 2006. But what has changed is the quality of the services, their proliferation, and consumers' familiarity with the technology. As a result, demand to be able to use such solutions in transactions is growing.

A mainstream technology

Perhaps one of the biggest catalysts for this change has been Apple, which became one of the first major mobile device manufacturers to incorporate fingerprint technology with its Touch ID function, introduced on the iPhone 5S. As well as letting users unlock their device without the need for a passcode, the sensor has been integrated into the Apple Pay service, allowing users to confirm their identity through the feature.

Other smartphone manufacturers have been quick to follow Apple's lead when it comes to fingerprint recognition technology, with the likes of Samsung, LG and Sony all offering similar features.

But it's not just fingerprint sensors where biometric technology has a role to play in mobile devices. For instance, many users may also be familiar with facial recognition features, which use a device's front-facing camera to analyze the features of a user and only unlock the gadget if it recognizes the person holding it.

In a world where security is more important than ever, biometrics are set to become increasingly popular as they are seen as a more reliable method of authenticating a user's identify. A survey of banking customers from Intelligent Environments found 40 percent do not think a PIN is a safe way to access ATM services. While a password or PIN may easily be guessed or cracked, a fingerprint, iris scan or voice print are unique to their owner and — in theory — much harder to bypass.

Payment services taking notice

So what does this mean for the banking and payment sectors? Recent research by the Mobey Forum indicates that there is a strong future in the mobile payments market for biometrics, with many businesses making this a priority.

More than a fifth of financial institutions polled already offer biometrics to their customers, while a further 65 percent plan to introduce such services in the near future. Fingerprint sensors were found to be the most popular option, with more than half of respondents naming this, while 21 percent are focusing their attention on voice recognition.

The main reason for this is their ability to make authenticating a user's identity during the login or payment process easier, which seven out of 10 respondents said was a priority.

It's not just mobile payments of course. ATM transactions and point-of-sale payments rely on the PIN at present but could easily adapt to biometric authentication.

However, the survey found several remaining challenges that may hinder widespread adoption of biometrics technology, such as privacy concerns and a dependence on technology providers to deliver the underlying hardware.

Therefore, it's likely to be the case that cooperation between banks will be essential to the success of the technology. Sirpa Nordlund, executive director of Mobey Forum, said: "Successful financial solutions need to be easy and convenient; a collaborative approach will ensure consumers are presented with stable and consistent services, driving adoption."

The PIN has been central to the payment industry for a generation or more, but its days could be numbered. 

Article reprinted with permission from Industry News.

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