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Fingerprint system makes banks greener

Farzana Rasool
By Farzana Rasool, ITWeb IT in Government Editor.
Johannesburg, 24 Nov 2011

Apart from reducing the chances of fraud, the online fingerprint verification system between local banks and the Department of Home Affairs (DHA) reduces the time it takes to open bank accounts.

During a demo of the system yesterday, Absa managing executive of face-to-face channels Alfred Ramosedi said the process to open a bank account usually takes more than 45 minutes, but the biometric system has reduced this to less than 10 minutes.

Additionally, the large amounts of paper used are removed completely, as every step is now digital.

The agreement will see banks having access to the Home Affairs National Identification System (Hanis) to verify the identity of current and prospective clients, since Hanis is a database of South African citizens' ID numbers, fingerprints and photos.

Only digital

Ramosedi explained that clients' IDs are scanned onto the system and then their fingerprints taken.

This information is sent to Hanis, which will verify if the information is correct. This reduces fraud and ID theft since the system will indicate whether the scanned ID and fingerprint match each other.

There is no paper involved at any stage. Clients digitally sign the relevant contracts, which are then e-mailed to them.

Also, with upgraded ATMs, customers can activate their accounts by depositing cash at an ATM and the transaction will be effective immediately.

Legitimate rejection

Ramosedi said there are some risks with the system.

The first is that the dedicated line between Absa and Hanis could be hacked into and the data accessed as it is transmitted.

However, he noted that this risk is mitigated, because the line is not shared with anyone else and data is encrypted.

The second risk is the possibility of rejecting legitimate clients because fingerprints had degraded since their ID was compiled and so will not match.

Ramosedi explained that when information is sent to Hanis, it responds in one of three ways. A green light means the applicant is legitimate, red indicates fraud, and amber suggests suspicion, but not definite fraud.

When receiving an amber light, banks then revert to traditional background checks, like calling a third party to verify a person's identity.

Since the system was launched earlier this month, Absa has already caught out seven fraudsters. When the system responds with a red light, the SA Police Services are called, said Ramosedi.

Voluntary biometrics

Managing partner of IT advisory at KPMG Frank Rizzo says there must be security mechanisms to safeguard customer identity data.

“If the data around your fingerprint gets compromised, this can't be changed like a PIN - your fingerprint is your fingerprint.”

Rizzo explains that the concern is that fingerprints are being shared over a wide network now.

“The public would be concerned about what happens to their data and this has been noted in the past. The bank has very stringent IT security protocols, which also align to data protection and security,” says Nedbank's managing executive for consumer banking Ciko Thomas.

“One thing everyone needs to understand is that the use of this technology and the process thereof is voluntary - clients will be required to give consent before any biometric information is processed or sent to the DHA.”

South African Banking Risk Information Centre CEO Kalyani Pillay assures that banks will not have access to data in the Hanis database.

“What they will have is the ability to verify the identity of a client through information in the database.”

She adds that banks have very robust systems to ensure the integrity of their databases. “They stop at nothing to ensure its security. No data from the DHA will be stored on the databases of the banks.”

Decisive blow

Absa has 12 branches piloting the system and says by March all branches will have it implemented.

First National Bank (FNB) has the system fully implemented in about 160 branches nationwide. More than 130 of these are FNB EasyPlan branches, the bank's low-cost banking model.

“With the rise in identity theft, it is crucial that we adopt measures that not only protect us as a bank but also protect our customers. Biometrics verification is one way to build trust with our customers,” says CEO of FNB Smart Solutions Line Wiid.

When launching the system on 8 November, home affairs minister Nkosazana Dlamini Zuma said the project will deal a massive and decisive blow against acts of fraud and corruption that have cost SA's financial and banking institutions “millions if not billions of rand”.

The DHA partnered with FNB, Absa, Nedbank, Standard Bank, Mercantile Bank, African Bank and Capitec Bank for the system.

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