Biometrics Has Potential in Mobile Banking Apps
Analyst's Journal - October 9th, 2013
By Youa Yang
Apple finally delivered on its much hyped biometric capabilities in September when it released its new iPhone 5S with a built in fingerprint identity sensor, Touch ID. It had been rumored to be in the works for several years and the public was finally able to view how the finger printing technology works. Touch ID has some great benefits; it is a user-friendly way to let users get to their information quicker and it also allows a fingerprint to authorize a purchase from the iTunes or App store. These two capabilities have potential for the future of mobile banking apps.
This technology, while innovative and exciting, might be a long way from being adopted in the financial services industry with mobile banking apps. The financial services industry is rife with red tape and compliance restrictions; rightly so, because they carry great responsibility for protecting their customer’s information and money. With plenty of fraudsters and all the big data being compiled, one could argue that customer information is potentially worth more than the money in the bank. This responsibility prevents us from bringing technological innovations to market as quickly as we’d like to, even though there would likely be benefits both to the customer and the bank.
According to Barlow Research’s 2012 Annual Payments data, over two thirds of small businesses ($100K-<$10MM in sales) and 80% of middle market companies ($10MM-<$500MM in sales) are concerned about online security. However, when asked if they would adopt additional security measures, only 15% of small business online users and 19% of middle market online users agreed strongly that they would take the extra step. This leads us to the conclusion that security is top of mind for most businesses, but they place the responsibility on the financial institution or other vendors they use to safeguard them from exposure to fraud.
When it comes to mobile banking apps, financial institutions currently utilize three main methods for authentication. In Barlow’s Business Internet Banking Test Drive, we tested 10 mobile banking apps being offered to small businesses. The results show that prior to login, five banks (Bank of America, BB&T, Citizens, KeyBank and PNC) issued a challenge question, four banks (Bank of America, Citizens, PNC and U.S. Bank) used site key technology to authenticate their mobile users, Chase was the only bank to issue a security access code and three banks (Fifth Third, Regions and Wells Fargo) allowed us to log in with just a username and password. It should be noted that these results are our first-hand experiences with each of the mobile banking apps and therefore results may vary based on account type or other differing characteristics.
Until mobile fingerprint technology proves to be ironclad and passes the rigors of the compliance departments at financial institutions, the adoption rate may be slow. In its early stages, it’s possible that fingerprinting could become an additional layer of security, but is not likely to be a replacement. The ability to forgo a username and password when using a mobile banking app and to initiate/authorize a bill payment, wire transfer or funds transfer with just a fingerprint are very exciting possibilities.