Financial services

European Financial Service Providers and Banks Embrace Biometric Authentication

In Europe, financial services companies and banks are embracing biometrics, actively partnering with technology vendors and software developers to improve digital onboarding experiences, strengthen compliance functions and improve fraud prevention. fraud.

Biometric authentication techniques, which use a person’s unique biological characteristics such as fingerprints, facial features and voice, to verify that they are who they say they are, are fast becoming the go-to methods for verify his identity.

In banking, the use of biometric authentication systems appears to have increased since the onset of COVID-19, but the past year has seen an acceleration in the trend as financial institutions step up efforts to provide their customers a higher numerical priority. user experience and improve fraud prevention.

This month, Jumio, a provider of end-to-end identity orchestration, know-your-customer (KYC) and anti-money laundering (AML) solutions, announced that it has signed Nationwide Building Society as a new client. Based in the UK, the Nationwide Building Society is said to be the largest mutual building society in the world.

The partnership has brought Jumio’s technology into the UK mutual financial institution’s workflow, enabling it to leverage capabilities such as artificial intelligence (AI), machine learning (ML), biometrics and liveness detection to determine if an ID document is genuine and belongs to the user, thereby streamlining KYC processes.

Another announcement made in February 2022 concerned the partnership between Ondato, the provider of an end-to-end KYC management platform, and Satchel, a European electronic money institution (EMI) providing accounts, cards and other financial means to businesses and individuals. services.

The collaboration aims to strengthen Satchel’s KYC, AML and CFT compliance procedures by integrating Ondato’s automated identity verification services into its banking platform. Not only that, but it also aims to improve operational efficiency and add another layer of fraud protection to Satchel’s commercial and retail customers, EMI said in a post.

Finally, iDenfy, a specialist in identity verification and fraud prevention, said earlier this month that it had signed up with European Investment Bank as a new client. European Merchant Bank, a digital bank licensed by the European Central Bank (ECB), will use iDenfy’s selfie biometrics and related services to ensure compliance and security, the companies said.

iDenfy claims to have signed over 300 partners in various industries around the world since its debut in 2017.

Rise in Digital Fraud Drives Adoption of Biometric Authentication

These recent developments come amid a sharp rise in digital fraud caused by the COVID-19 pandemic and the resulting shift to digital channels.

A November 2021 report from the European Payments Council shows that social engineering attacks and phishing attempts have increased over the years as techniques evolve. Additionally, malware remains a major threat, with ransomware in particular increasing over the past year.

In 2019, fraudulent transactions using cards issued in SEPA and acquired worldwide amounted to 1.87 billion euros in 2019, estimates the ECB. 80% of this value resulted from cardless transactions or payments (CNP) via the Internet, mail or telephone, reflecting the recent increase in e-commerce activity.

Experts have identified large-scale remote working models and the increase in the number of customers using off-branch banking channels as the main reasons for the increase in fraud incidents in the banking sector, indicating that more needs to be done. more to protect customers in the digital age. .

In 2021, the global identity verification market was worth US$8.6 billion, a research firm estimates. Between 2021 and 2026, the market is expected to grow at a compound annual growth rate (CAGR) of 16.6% to reach US$18.6 billion.

Global identity verification market, Source: Research and Markets, December 2021

Global identity verification market, Source: Research and Markets, December 2021

During the forecast period, biometrics is expected to grow at the highest rate owing to the inherent growing demand from customers for seamless onboarding, compliance management, and fraud prevention.

Other market drivers include increase in digitization initiatives, increase in fraudulent activities and identity theft, and increase in digital identity use cases across different verticals.

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