Biometric Authentication for Financial Technology
From lending to wealth management, fintechs must be able to prove genuine identity. Biometrics are the most secure, user-friendly, and compliant form of authentication.
Biometric Authentication for Financial Technology
From lending to wealth management, fintechs must be able to prove genuine identity. Biometrics are the most secure, user-friendly, and compliant form of authentication.
Why Phishing-Resistant Authentication Matters
Strong and user-friendly authentication is essential for any secure system.Two-factor authentication (2FA) under PSD2’s Strong Customer Authentication (SCA) is a universally-used approach to mitigate several of the issues associated with passwords.
Unfortunately many authentication methods are vulnerable to phishing. Email codes can be forwarded to attackers and SMS OTPs are particularly at risk. Fraudsters exploit SIM-swap attacks, using social engineering to take control of users' phone numbers and intercept messages. These weaknesses highlight the need for more secure, phishing-resistant authentication solutions to protect sensitive accounts and transactions.
Biometrics: The Gold Standard
Biometrics provide secure, convenient, and phishing-resistant authentication with minimal error rates, requiring little training and enabling near-instant user verification. Widely embraced in banking, more than half of credit cardholders would switch banks for biometric options.
A major advantage is identity assurance—verifying users’ true identities, unlike SMS OTPs, which cannot confirm the authenticity of the person entering the code. This is essential for Strong Customer Authentication.
Dynamic Linking for PSD2 SCA Compliance
In the EU, PSD2 SCA mandates payment institutions use at least two authentication factors and dynamically link transaction amount and account number.
Keyless ensures compliance by generating a unique one-time code before each transaction, securely linking transaction amount and account number.
Integrating Identity Verification and Authentication
Identity verification (IDV) and authentication are critical for fintechs. Typically, users verify their identity once with a government ID and use biometrics for future actions like payments or account recovery.
However, IDV and authentication often require separate sign-ups or lack integration. Fintechs can streamline this with the IDV Bridge, allowing users to authenticate with Keyless without needing to enroll in the service.
End-User Benefits:
- Existing Users: Users already verified with an IDV are passively enrolled through a backend bulk integration.
- New Users: Users enrolling with an IDV are automatically enrolled in the biometric authentication system.
- Other Users: Those not verified with an IDV can enroll via SDK or web.
Key Fintech Use Cases
IDV providers use biometrics to match a user’s face with a government ID for KYC checks, but users dislike repeated re-enrollments. Few IDVs offer biometric authentication, and fewer still support privacy-preserving decentralized models. Many IDVs partner with authentication providers to offer combined solutions.
Biometric logins replace traditional methods such as hard tokens and SMS OTPs. By using biometrics, fintechs can effectively prevent account takeovers and greatly enhance the user experience by verifying the genuine identity of the person logging in.
Many banks still rely on SMS OTPs for authentication, but these are vulnerable to fraud. The frequent warning, “DO NOT SHARE THIS NUMBER,” highlights the risks of interception and phishing. Switching to secure methods like biometrics is essential for safeguarding customer accounts and strengthening security.
This is used for actions that carry higher risk, such as changing personal details like passwords or addresses. Biometrics can effectively secure these areas by proving identity in a way that SMS OTPs cannot.
Account recovery fraud, a key enabler of account takeovers, often goes unnoticed but has high success rates and significant costs. Forrester estimates password-related support expenses can reach millions annually, split between SMS OTPs and call centers. Biometrics offer a cost-effective solution by enabling self-service account recovery, reducing reliance on manual password resets and enhancing security.
The Keyless Advantage
Related Resources
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