Using Facial Recognition and Mobile Capture to Fight Fraud

Biometrics are not new to digital security. As more and more aspects of daily life have gone online, banks, financial institutions and other companies have sought more secure verification processes. Facial recognition is the latest and best of these. According to Apple, the chances of somebody else opening your phone with their fingerprint are 50,000 to 1. With facial detection tech, that becomes 1 million to 1.

Online fraud and money laundering remain a threat and technological advancements have seen eKYC emerge as a way to incorporate technology such as facial recognition into the traditional KYC process to provide an additional layer of security. Face detection tech and mobile capture can be used in branches or remotely to verify identity, make customers’ money more secure and create an enhanced user experience.

How does facial recognition technology work?

Essentially, face detection tech works by identifying facial features and vectors and matching them to an individual. Remember when voice technology first appeared and you had to repeat yourself over and again for it to capture subtle changes in your voice? Facial recognition does the same thing but instantly and from one scan.

What are the benefits of facial recognition?

There are several benefits to using facial recognition in the BFSI sector:

Enhanced security: Fraudsters can hack PINs and passwords but replicating someone’s face is a whole new challenge.
Instant verification: ID can be checked instantly without the need for questions or inputting details.
Remote onboarding: Some consumers prefer to transact all their business remotely. Facial recognition technology enables financial institutions to offer this facility in a secure environment.
Paperless and cost-effective: By reducing the resources required to carry out identity check, you cut costs and free up time for employees to use elsewhere
Eliminates human error: People make mistakes. Technology is far more reliable for ID checks that are essential for regulatory purposes and to protect the integrity of banks and financial institutions.

How are banks and financial institutions using facial recognition technology?

The digital transformation has seen banking go remote – and that means customer service needs to be remote too. Mobile banking apps are now pretty much standard for making transactions or checking account balances. But forward-thinking institutions are leveraging facial recognition for customer service to meet customer expectations and increase security.

Security questions required for online banking were once considered a secure process. But the truth is that they are often fairly predictable which means fraudsters are able to get around them with relative ease. Face detection tech ramps up the challenge for fraudsters while providing customers with a more efficient user experience.

Other uses include advanced ATM security. It can even allow for cardless withdrawals. When an ATM camera captures the customer’s face, it identifies them and requests the PIN for a second layer of security. Once again, this improves security and customer service in one.

Security of mobile devices is also enhanced via facial recognition as it embeds the information in the device and avoids the lag associated with cloud-based processing. The devices need only send small, encrypted templates to the database for identity verification to take place. So, mobile banking security is quicker and safer. This advancement also opens up a world of opportunities for offering a wider range of services remotely.

Some banks are even implementing a fully integrated security system based on facial recognition technology. eKYC can be used across multiple connected devices in branches, and traditional CCTV or ATM cameras replaced with facial recognition cameras that will identify known fraudsters or criminals and alert branch security.

Digital Onboarding

Traditionally, onboarding has been a laborious task for bank staff. It’s arguably the most important part of their role, given that a mistake at this point could be hugely damaging. It also relies on individuals to spot small errors in very complex forgeries amid all the other pressures they face at work.

Digital onboarding using facial recognition releases some of the pressure from employees while beefing up the KYC process both in that moment and for the future of the customer. In the branch, when a customer opens a new account, staff simply take a picture of the customer’s face using a tablet, which is subsequently added to the account as part of the usual Know Your Customer protocol.

The bank can instantaneously check on the legal and financial position of the new customer for a fast process that aids both the KYC process and customer experience. With face detection tech deployed, the customer is then able to apply for future products such as loans, credit cards or overdrafts without having to revisit the branch.

Even better, mobile capture or video-conferencing can be used for facial recognition. Customers who want to open accounts from their PC or mobile device can so easily from anywhere in the world. All they need is an internet connection. They can upload photos of ID cards or their passport and use their webcam to capture facial vectors. These can be processed immediately by the system using an encrypted template and identification can be verified in an instant.

Face2Pay

Face2FacePay is a new, modern, innovative company looking to simplify the way smart payments are made and supposed to save time for customers at checkouts. It is being used in China and Brazil, with future pilots planned for the Middle East and Asia.

Touch-less technology will help speed up transaction times, shorten lines in shops, heighten security and improve hygiene in businesses. But it raises concerns relating to customer privacy, data storage, crime risk and bias.

How will it work?

By linking the biometric authentication systems of a third-party facial recognition company with payment systems. Where providers go through independent laboratory certification. Customers can use their bank’s mobile app or will have to install an app which will take their picture and payment information. This information will be saved and stored on the third-party provider’s servers.

At the checkout, the customer’s face will be matched with the stored data. And once their identity is verified, funds will be deducted automatically. In order to reduce fraud smiling at the camera or simply waving while camera is still detecting your face are commonly used options.

Similar authentication technologies are used on smartphones (face ID) and in many airports around the world, including “smartgates” in Australia.

Customers’ data would be stored with the relevant biometric service provider in encrypted form, and removed when the customer “indicates they want to end their enrolment”. Obviously, privacy protection is a major concern, especially when there are many potential third-party providers involved.

On the bright side, customers will have a choice as to whether or not they use the biometrics checkout system. However, it will be at retailers’ discretion whether they offer it, or whether they offer it exclusively as the only payment option.

Customers who want the convenience of this checkout service will have to consent to all the related data and privacy terms. And as reports have noted, there is potential for integrating the feature with loyalty schemes and make personalised recommendations based on purchases.

Accuracy Problem

While the accuracy of face recognition technologies has previously been challenged, the current best facial authentication algorithms have an error of just 0.05%, according to tests by the National Institute of Standards and Technology. In some countries, even banks have become comfortable relying on it to log users into their accounts.

Conclusion

Know Your Customer Protocols are fundamental to financial security systems and anti-money laundering techniques. As online fraud becomes increasingly intricate and uses technological advancements to increase the threat to customers’ financial affairs, it’s essential that banks and financial institutions leverage the same tech innovations to counter that threat and protect their users.

As an added bonus, embracing face detection tech in this way also allows the BFSI (banking, financial services and insurance) sector to elevate its offerings and provide better banking options, particularly for those customers who prefer to conduct their financial affairs remotely.

Facial recognition is the future of BFSI. eKYC is the future of KYC. Financial institutions now have greater capacity than ever before to deliver high-quality, secure banking services without compromising on data protection and ID verification.

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