Cloud-Based Biometric Authentication and Why It Matters for Banking

24 June 2025

Cloud-Based Biometric Authentication and Why It Matters for Banking

24 June 2025

In today’s digital world, proving who you are is more important and more difficult than ever. With passwords, codes, and tokens failing to keep up with rising fraud and security breaches, biometric authentication has emerged as a powerful solution for financial services.

But what do we really mean when we talk about biometric authentication? Is it just FaceID? How does it work, and what does it mean for industries like banking and fintech?

Let’s dive into the fundamentals, the biometric authentication techniques, the pros and cons, and the real difference between authenticating someone and just verifying their identity. But before we go on, let’s quickly differentiate between identity verification (IDV) and identity authentication. They are often used interchangeably but are in fact very different.

Identity Verification is a one-time process to verify your identity, typically when you sign up to a financial services app (e.g., scanning your ID when registered for a bank or your passport when applying for a VISA).
Authentication, on the other hand, is part of the ongoing authentication process that proves you’re still the same person who passed verification. It happens every time you do anything inside the app, like logging in, performing a sensitive action, or recovering your account.

Think of verification as showing ID to enter a building, and authentication as the keycard that lets you in and out of areas within the building.

What is Biometric Authentication?

Biometric authentication is the process of verifying a person’s identity using something they are - biometric identifiers such as face, fingerprint, voice, or other physical or behavioral traits.

Unlike passwords (the knowledge factor - what you know) or devices (the possession factor - what you have), biometrics fall under the "inherence" factor - meaning they’re unique to you.

COmmon examples of biometric authentication systems include:

Unlocking a mobile device with FaceID or a third-party cloud-based solution.
Verifying your voice when calling your bank.
Using a fingerprint to access an investment app.

But not all biometrics were created equal. Some are much better than others at proving identity.

Biometric Authentication Methods and Techniques

Let’s take a closer look at some of the most common biometric authentication modalities and how they compare.

Despite the cons, every time you authenticate, you’re proving that you’re physically present, right?

Unfortunately, this isn’t always the case.

Deepfakes - The Scourge of Biometric Authentication

Deepfakes have made it easier for attackers to spoof facial recognition systems and impersonate users.

So how do we defend against this?

Liveness Detection: The First Layer of Deepfake Defense

Liveness detection distinguishes real human interaction from spoofed media. There are two types:

Active liveness: Asks users to blink, smile, or move their head. But this can now be bypassed by sophisticated deepfakes.
Passive liveness: Runs in the background using advanced AI and computer vision. It analyzes micro-movements and texture to detect spoofs - without requiring user interaction.

Advantages in deepfake technology have made passive liveness detection the standard in facial biometric authentication.

Device Binding: Security Beyond the Face

Even with accurate facial recognition, there’s another layer of defense: device binding.

This ties the biometric authentication to the specific mobile device originally used to enroll. That means even if an attacker has your biometric data - or a deepfake version - they can’t authenticate unless they also have your phone or laptop.

Combined with passive liveness, this helps ensure that only the authorized user can access sensitive information or perform high-risk actions.

FaceID - Similar, But Different

Most people assume that FaceID, Samsung Touch, or other biometric systems embedded into phones offer sufficient protection for everything from unlocking a phone to authorizing financial transactions. But FaceID is a device-bound biometric system - meaning the app on the phone never actually knows who the user is.

When you use FaceID to access a banking app, the app doesn’t perform any facial recognition itself. It simply asks the device whether the stored biometric matches. If a fraudster has gained access to your phone and re-enrolled their face using your PIN, FaceID will say yes - even though it’s no longer you.

This limitation is a significant weakness in high-risk sectors like finance, where authentication must prove identity - not just possession of a device.

The alternative is cloud-based biometrics offered by third parties.

Device-Bound vs Cloud-Based Biometrics

Device-bound biometrics (also called local biometrics) are stored on the user’s device. While they offer strong privacy, they lack cross-platform support and fail to deliver identity assurance.

In contrast, third-party biometrics—also called cloud-based biometric authentication—are processed by external providers. These solutions offer greater flexibility and security and are especially critical for financial services that need to authenticate users across multiple devices.

Cloud-based systems are divided into:

Centralized solutions, where biometric templates are stored on a central server (risk: data breach).
Decentralized solutions, which use cryptographic techniques like Secure Multi-Party Computation (sMPC) to process data without ever storing or exposing it.

The advantages of biometric authentication via decentralized infrastructure include stronger identity assurance, compliance, and built-in identity theft protection.

Why This Matters for the Financial Services Industry

While device-bound biometrics like FaceID and Android Fingerprint provide a fast and private way to unlock apps and authorize basic logins, they fall short when it comes to high-risk actions - and that’s exactly why banks and financial institutions typically don’t rely on them for sensitive operations.

Actions like transferring large sums, changing personal details, or recovering access to an account demand a higher level of identity assurance. They don’t just require confirmation that a user has access to a phone—they require proof that the user is the same verified individual who originally opened the account.

This is where device-bound systems reveal their biggest flaw: the app or service never actually sees or verifies who is authenticating. Instead, it asks the device: “Is this the same person enrolled on this phone?” If the device has been compromised - say, someone has the PIN and re-registers their own face - FaceID will still return a "yes." The result is a false sense of security.

Banks understand this risk. That’s why, for actions like account recovery, password resets, or profile changes, they often fall back on outdated methods like SMS OTPs, security questions, or call center checks - not because they’re ideal, but because device-bound biometrics can’t meet the identity assurance bar required.

Unfortunately, those fallback methods come with their own risks and friction. SMS codes can be intercepted by SIM swapping, phishing attacks, or man-in-the-middle attacks. Call centers are expensive, slow, and vulnerable to social engineering. And none of these methods truly prove the identity of the person making the request.

The solution lies in cloud-based biometric authentication systems that can work across devices and channels, verify real identity in real time, and ensure that only the rightful user can access or modify sensitive account information - no matter what device they’re using.

The Bottom Line

Cloud-based biometric authentication systems aren’t just about convenience. They address real-world threats like account takeover fraud, credential stuffing, and injection attacks. In high-risk, regulated industries like banking, they are becoming a vital layer of identity assurance.

When paired with the right architecture, it confirm the user’s identity - not just the device they’re holding.

A face match ensures it’s the same person, not just the same phone.
Combined with device binding, this ensures that only the registered device can be used to authenticate.
Liveness detection prevents spoofing with printed photos or deepfakes.
Cloud-based biometrics prove are embedded within a financial services app.
With decentralized approaches to biometrics, privacy is preserved.

This is what modern identity authentication should look like.

If you’re interested in seeing how Keyless could help improve your authentication stack, request your custom demo today - we’ll send it to your inbox within 24 hours.

Cloud-Based Biometric Authentication and Why It Matters for Banking

24 June 2025

Cloud-Based Biometric Authentication and Why It Matters for Banking

24 June 2025

What is Biometric Authentication?

Biometric Authentication Methods and Techniques

Deepfakes - The Scourge of Biometric Authentication

FaceID - Similar, But Different

Device-Bound vs Cloud-Based Biometrics

Why This Matters for the Financial Services Industry

The Bottom Line

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