Interest in using biometrics in mobile financial services (MFS) and m-commerce industries, collectively MFC, has exploded since the launch of ApplePay and TouchID. And although biometric technology in the financial services sector is mainly used for payment authentication, there are a plethora of other potential uses for biometrics. Wearable tech linked to biometric information, for example, could facilitate sales of services and goods to well segmented and targeted audiences. In this Mondato Insight we ask, how can biometrics revolutionize the way we interact with retailers and financial institutions?
A large range of biometric solutions can be used for authentication, starting from facial, eye (iris, retinal, vain), fingerprint, palm vein, fingerprint vein, voice, hand geometry, to heartbeat and handwriting. And since the launch of ApplePay in September 2014, biometric authentication providers have seen increased demand for their products, according to Chris Barnett, EVP Global Sales & Marketing for EyeVerify in a recent interview. Biometrics is gaining traction because “users and financial institutions do not have to chose between security and convenience anymore” as “biometrics take care of both.” Beyond Apple, heavyweight stakeholder MasterCard has been trialing various technologies, aiming to create a great user experience, which “comes second only to security,” as explained by Bob Reany, SVP Product Strategy in a recent interview.
Yet despite the big strides and recent popularity, the use of biometrics for financial services authentication is still nascent, according to Adam Dolby, VP Business Development at Encap Security, “The different technologies have their strengths and weaknesses, and we are going to see big changes in the next few years.”
Biometrics have many more use cases besides authentication, and this can be capitalized on when they are inserted into a wearable device, such as a smart watch or wristband. For example, biometric wearable tech is currently focused on measuring physical characteristics such as heart rate, posture, brain waves and breathing patterns, with the provision of a more accurate and complete health record of each user being possible in the near future.
Biometrics are, however, reaching beyond the health sphere, with the latest generation of wearables attempting to look into our mental state. Researchers at Telefonica Research in Barcelona, Spain have reported the development of an algorithm that can tell how bored you are based on the use of your smartphone. A person’s level of boredom, paired with their location, could be used to push users content or different offers, promotions and products/services. This use is clearly not farfetched, given that Apple has already applied for a patent to use users’ moods to serve targeted content.
A person’s physical activity in a given period paired with external data such as weather could also provide very useful information for both retailers and users. If someone has undertaken strenuous exercise in warm weather conditions, this could result in a reminder to drink more liquids, with suggestions as to where. And the more consumer touch points there are, the more information about them that can be collected, which allows companies to provide more targeted and relevant services and products.
The advertising industry will benefit not only from the ability to send targeted advertising based on biometric data, but also from their use of biometrics to measure the impact of advertisements. Marketers can already measure the excitement levels of live audiences, and use these data points to present advertisements at the suitable moment. Affectiva, for example, whose clients include Coca Cola and Unilever, record individuals’ facial expressions as they watch an ad. “We can then see frame-by-frame, moment by moment, what these facial expressions reveal, measure them and provide analytics,” says Gabi Zijderveld, Affectiva’s Vice President of Marketing and Product Strategy.
Although the opportunities for targeted sales based on biometric data are significant, the biggest hurdle may be in how to entice customers to wear the devices: “People will not wear a band just to buy something. We have to migrate into things people want to wear: clothing, jewelry, watches,” said Bob Reany. And this may explain the wearables debut in this season’s London Fashion Week: Visa and British designer Henry Holland collaborated to present a payment ring that integrated contactless technology. Preloaded with £500, these rings could be used to buy clothing featured on the catwalk.
Privacy and Security Concerns
Although biometrics may be a bonanza for retailers and marketers, data security and privacy present serious consumer concerns. The challenge with data privacy is incentivizing consumers in sharing this data while making them aware of the value of information they are sharing. Younger generations raised with social media are in particular more open to sharing personal data and may not seem concerned with privacy, but it is clear that these users need to be informed of both the repercussions of sharing this information and what it is exactly they are receiving in return.
Another major issue is the security of the biometric data, as we set out in a recent blog. Companies are storing an algorithm, not a picture of user, but they still need to take the appropriate measures to guard it. Biometrics have only recently begun to be used for financial services, and most of the known use cases have been for non-financial transactions. “Once we introduce money into the picture, it creates a reason for people to want to access the data. And no matter how much you educate your customer about biometrics, a breach can undo all your hard work” said Adam Dolby.
Despite concerns and teething issues, biometrics are here to stay. Companies monitor the way customers use technology and “[we are] innovating accordingly to help them succeed financially,” says Brett Pitts, head of digital at Wells Fargo. In the future, biometrics will be “terrific experiences for our customers that will allow them to complete complex interactions while completing other important activities in their lives.” This is echoed by Bob Reany of MasterCard, who believes that “we will not think about biometrics” but rather that “it will be super embedded in our lives,” and thus beyond ensuring that the transaction is frictionless for the user, service providers such as MasterCard will see “a person as human being, not as a collection of devices.”
The future of biometrics for authentication will give customers multiple options, for in the near future, most devices will have finger and Eyeprint authentication options, and “that is not a mutually exclusive choice,” according to Chris Barnett of EyeVerify. INNOVATRICS Head of Global Sales Michal Fischer goes even further and sees the future in contactless fingerprint scanning, for which the first prototypes have already been produced.
We are in the early days of biometrics in financial services and there remain challenges of user adoption, security and privacy, among others. Still, biometric related technology has the potential to fundamentally change the way we interact with retailers and financial institutions, bringing benefits not only to the end users but also to the service providers. Wearing your heart on your sleeve may not only become a reality, but it may become profitable for all involved.