Biometrics - Based Authentication Gaining Traction With Financial Services

by Ketan Shah, Associate Director - IT & Business Development, Angel Broking

We feel that acceptance of biometrics- the application of statistical analysis to biological data- is going to change the way we transact today. In the Indian context, the potential of biometrics-based transactions is immense. There is a huge database available with the government’s UIDAI (Unique Identification Authority of India) with fingerprints of citizens. While serving as unique identity proof for all citizens, this database can be used for all authentication purposes, crime detection and security-related applications. It’s only a matter of time that organizations realized the potential of biometrics and get maximum mileage out of it. We strongly believe biometrics has huge potential for financial services where a single unique identity of all participants is a pre-requisite for the huge number of transactions that take place every single nanosecond.

In this direction, we launched a client on-boarding method through the innovative D-KYC (Digital Know Your Customer) process, which uses customers’ biometrics as their digital signature, a marked departure from the practice of a multitude of signatures required for account opening.  In D-KYC, a client’s thumb impression serves as digital signature and also enables the firm to procure the client’s personal information from the UIDAI database, saving customer from making multiple signatures on account-opening form. The integration of the back-end with the UIDAI database enables real-time authentication and also allows for speedier, paperless account-opening process.

The idea behind using biometrics is to enable the customer to open accounts from the comfort of their homes/offices without them having to travel to the brokerage’s branch- and that too with minimum amount of paperwork. The D-KYC process is absolutely hassle-free for customers. The sales team can simply carry biometric devices to the client’s location and they can open accounts almost instantaneously using the E-KYC application. With a fully-verified brokerage account, the client can start trading within 1 hour flat. Given the ease of operation and elimination of variations in signatures that the biometrics-based KYC process promises, we believe the physical KYC will soon become history across the industry as more and more players understand the benefits. 

Having realized the potential of equity as an asset class, more people are looking to participate in the equities market, but the lengthy and cumbersome account-opening process forces many to stay away. For them, the biometrics-based platform is going to encourage them to take the plunge, where they can open a paperless account in just one hour. As per the most recent numbers, as many as 100 crore AADHAR cards have been issued by the UIDAI and the equities penetration in the country is at a paltry 2 percent, which clearly shows a huge potential. Many first-time investors are waiting to open their equities trading account to participate in the India growth story, and if the entry to the investment journey is made stress-free, we are sure most fence-sitters will actually enter the market.

We believe that all the transactions where wet signature is required can be replaced with the biometrics-based authentication. Of course, it will require appropriate regulators’ approvals, but we are sure it can bring immense comfort for the customers, while ensuring better security. Thus the biometrics-based process is far more secured and identity is confirmed without any ambiguity. The traditional wet signature verification process is also very subjective. Institutions like banks struggle with the signature-matching process. Any error in the signature verification process can end up in disputes and litigations, which can be addressed with biometrics-based authentication in financial service industry.

Today, a user accesses so many internet sites and applications that it becomes practically difficult to remember all the passwords. Biometric-based authentication can actually eliminate the need of memorizing passwords. It can also address issues related to identity theft as it is easier to steal someone’s password, but difficult to steal
one’s fingerprint.

Many physical security solutions have also started incorporating biometrics-based authentication processes. I remember around a decade back, all these solutions used to come with password-based activation/deactivation- and that too only numeric in nature. Anyone could capture/guess the numerical passwords and could misuse that. Now with biometrics-based authentication, it is nearly impossible for anyone to replicate the same and hence, it is far more secured and meaningful.

A number of organizations have already started using biometrics in various processes, be it customer authentication or employee or vendor authentication. Other than the KYC, biometrics is also being used for managing employee records and maintaining attendance records. The application of biometrics is viewed seriously by many organizations and we feel it will gain traction with financial services in the coming months.