The use of biometric technology in the financial services sector has generally been promoted from the angle of security, with an emphasis on fingerprints. But the development of mobile applications and a focus on customer convenience could make voice signature another strong contender.

A recent study by the Mercator Advisory Group on payment authentication points out that "biometrics has been long on promise and short on delivery". Indeed, while technologies like fingerprint scanning have been gaining ground in access control applications, customer-oriented biometric authentication remains elusive, at least in mature markets.

Among the most remarkable consumer-oriented initiatives was US-based biometric payment scheme Pay By Touch, which allowed users to pay via fingerprint scanning. The company had enrolled a few million customers by the time it went bust in 2007, not because of a complete lack of demand or poor technology performance, but reportedly due mainly to governance and management issues.

Arguably the most famous example of bank-related biometric deployment is Japan, where more than half of the country's ATMs are equipped with biometric readers for vein pattern recognition.

While similar biometric ATMs started being rolled out last year in Poland by BPS bank, using Japanese technology provided by Hitachi, no other plans for large-scale deployments have yet surfaced in Western Europe.

In fact, the so-called emerging markets have thus far proved more receptive to customer-facing biometrics technology in financial services than mature markets, where biometric payment and banking solutions mainly remain at the pilot stage.

"The big opportunities for biometrics in financial services today are in regional markets like Latin America, South Africa and India," says Phil Scarfo, senior vice president, worldwide marketing and sales, at fingerprint sensor provider Lumidigm. "Government-issued ID documents in Chile and Brazil enable the intelligent use of biometrics for personal identity at bank ATMs or service counters. In South Africa, several large banks have begun to focus on measures to eliminate fraud that include adopting identity systems that utilise biometrics."

In India, the country's "Aadhar" Unique Identification Authority project, which aims to deploy a unique identification number for each citizen, is being secured by biometric authentication. The scheme will ensure government benefits are provided to the right person, but will also promote financial inclusion by shifting the large unbanked population from cash-based transactions to electronic payments. In fact, both Visa and Mastercard have already announced solutions allowing individuals to use India's Aadhar ID number for payments.

"I believe emerging markets will likely be the fastest growth areas for biometrics over the next three to five years," Scarfo adds. "The Indian UID program is an excellent case in point. They will be enrolling more than 1.2 billion people over the next three to five years and there will be a number of derivative programs and projects that emerge as a result."

Convenient security

Wherever the implementation takes place, the main selling point for the use of biometrics in financial services has been increased security, and for good reason. Compared to the limitations of password-based authentication and knowledge-based challenges, biometric technology is arguably the only tool available to ensure the party to the transaction is who they say they are, not just someone who has all the right answers.

But while fraud prevention is undoubtedly a significant element in the business case for biometric authentication, convenience could be an equally compelling, if not stronger, driver in mature markets, especially for the consumer space.

As Thomas Marschall, president and chief executive of Sweden's Precise Biometrics, a provider of fingerprint recognition technology, puts it, beside the elimination of password-related fraud, "convenient security is another driver as most security is inconvenient, but using your finger is convenient".

For Dave Birch, director at Consult Hyperion, biometrics is really about convenience, as far as Western European consumers are concerned, because the business case for security isn't sufficiently compelling.

"On the financial services side, we tend to think of biometrics as a security technology," he explains, "but as such, it doesn't buy you enough over Chip and PIN or what you can do with mobile phones, to make it worth doing. For nuclear missile launching, certainly, but not for buying a pair of shoes."

In emerging markets, too, convenience and ergonomics are a strong component of the business case, despite an arguably stronger case for security. Indeed, literacy can be an issue in some developing countries, where fingerprint readers can be used for document signing in bank branches. Illiteracy can also make voice recognition a useful alternative, which can be paired with voiceprint biometric technology for authentication purposes.

Among the proponents of biometric payments in Europe is payment processor Equens, which offers a payment system based on hybrid scanners that combine fingerprint and finger vein biometrics, for which the company has already conducted successful pilots. It also emphasises the convenience aspect of the technology.

"Our figures show that paying with biometric means is perceived as extremely convenient for the user," the company says. "Consumers like the convenience and ease of use. 99% want to keep using it in the future and 90% of them would recommend it to friends and family."

Equens also points out that its technology provides shorter transaction time at point of sale in 60% of cases, against the fastest card transaction, while saving consumers the trouble of looking for their card, and generates increased spending, which benefits the merchant.

But as promising as such "Pay By Touch" types of systems may be, the financial services industry seems to have focused its recent point-of-sale development efforts on contactless payments, with no biometrics in sight.

However, another major trend is the emergence of mobile payments and banking, which could drive the need for more advanced security, for which voice-based biometrics seem more appropriate than fingerprint, face or iris scans. According to proponents of voiceprint-based solutions, voice offers the same kind of reliability as other types of biometrics, with the advantage of using an existing infrastructure, the phone system.

According to the Mercator Advisory report mentioned above, other methods of biometric authentication are compatible with mobile handset, including fingerprint and iris scans, facial recognition, as well as technologies still in development phase, such as eye movement tracking.

The author goes on to say that a number of obstacles to biometrics adoption "are mitigated by the presence of the smartphone, the fact the consumer pays for the device (and not the merchant or issuer), and the ubiquity of mobile devices".

Ease of deployment

Unsurprisingly, providers of fingerprint-based solutions contend that fingerprints are currently the most appropriate biometric technology for payment applications.

"Fingerprints are the most mature biometrics and there are even standards in place," says Precise Biometrics' Marschall. "No other biometric modality offers the same at this point, although they will also continue to mature."

Besides, a number of applications, such as biometric ATMs or access control, might lend themselves better to fingerprint readers, as users may be reluctant to speak out in a public setting.

However, voiceprint technology does seem to present a few significant advantages over fingerprint and iris scan technologies, not least of which is ease of deployment, with no requirement for a expensive reader infrastructure to be rolled out, and a less cumbersome enrolment process, whereby the user just needs to speak a few sentences.

A prominent player in this budding space is VoiceCommerce, founded by former WorldPay executive Nick Ogden. The company became a payment institution in 2009 and is already a member of Visa and MasterCard.

It offers a wallet application called VoicePay, and an associated merchant acquiring capability, Cashflows, as well as a KYC and anti-money laundering system, all based on voiceprint technology.

"Voice does fix an awful lot of problems that other biometrics can't solve," Ogden says. "The principal one is the ability to ‘fast distribute' at no cost. All of the biometrics technologies work as well as each other, but voice is the easiest to deploy."

"Globally today, we've got about 5.1 billion mobile phones and over 3 billion consumers who also hold a Visa or MasterCard linked to their debit accounts," he adds. "So there is a distribution ecosystem already in place for mobile payments to operate."

Ogden says his company is hoping to create "a federated alliance" with other organisations, to allow consumers to reuse their voice signatures for multiple applications, without having to go through multiple registration.

However, Consult Hyperion's Birch does not see mobile payments as a major driver for biometrics in Western Europe, again because he sees the security business case as insufficient.

"The security mechanisms you get with mobile devices are a big advance over what you have with cards," he argues. "When you move the chip and PIN application into a phone, you get a lot of extra security, and I'm not sure you need a layer above that yet."

Meanwhile, one financial institution already using voice biometrics in a live setting is online broker TD Waterhouse. The company worked with contact centre specialist Datapoint to implement a voice authentication application for its phone service, using biometrics technology from VoiceVault.

Once they are enrolled, customers calling in are authenticated by the system through their voiceprint before being passed on to an agent to carry out their transaction.

"The technology is very robust in real world applications," says Jason Beever, head of consulting at Datapoint. "We are not analysing your voice so much as the biometric footprint generated through the energy from your physiology, focusing on actual biometric measurements."

Beever adds the use of voiceprint authentication could easily be extended to online banking and replace token generating devices that some banks require customers to carry with them at all times.

"It seems the answer to fraud is to make the process more difficult and more secure by adding more devices and more questions to ask," he explains. "The problem with that, is it affects the single most important thing for a retail bank, and that is customer experience."

Instead, he suggests, customers could receive a call-back from the bank and speak the last four digits of their account number to be authenticated through their voiceprint. For Beever, it is essential that banks look at the authentication and security issue from the customer experience perspective, in order for them to gain a competitive edge."All banking products seem to be commoditised," Beever argues. " All that banks seem to be fighting on is customer service, while all customers want is a low effort, quick and efficient process. Most major high street banks are looking at this technology, among others. Our message to them is to focus on the customer experience and then choose the most secure capability to support it."