Financial fraud solutions at our fingertips
Curbing fraud with advanced biometric technology
By Nick Perkins, Divisional Director, Identity Management, Bytes System Integration
If you've recently tried to open a bank account, chances are you couldn't do so without first having your fingerprints scanned, says Nick Perkins, Divisional Director, Identity Management, Bytes System Integration.
As the first line of defence against the financial fraud epidemic in Africa, most banks and other financial institutions have turned to some form of biometric technology.
That's because fraud is one of the biggest threats to business for the financial services sector. According to a recent report by the US Federal Trade Commission, a personal identity is stolen every three seconds around the world, with Africa topping the list.
By far the most successful of the new generation of biometric security technologies is the fingerprint scanner, which captures a photographic image of your unique fingerprint pattern and compares it to a database of fingerprint records.
But a basic fingerprint scan is just the start of a much longer process. When we talk to our financial services customers about security, we often discuss multiple phases where biometric technology is applicable.
The first of these, as described briefly above, is the initial interaction with a new customer. Before the widespread adoption of desktop fingerprint scanners, companies would take great care to verify official documents - IDs, driver's licences, birth certificates, bank statements - in fact, almost everything was verified except the actual person.
While official documents are still an important part of the process, using fingerprint scanners from the start not only confirms the customer's identity, but also gives companies a credible marker with which to identify them in future.
The second, and arguably even more important phase, is where fraud becomes rampant. A bank-issued card gives almost any customer the ability to transact with little more than an easily-forged signature or stolen PIN. In some cases even these aren't necessary for basic transactions like checking credit balances or buying goods online.
By introducing biometric scanners at the point of transaction, be it a teller, ATM or consultant's desk, repeat fraud can be quickly and effectively prevented. Since most cards today have the capacity to store information like fingerprint records, there's no reason not to verify a customer's identity this way.
Technology at our fingertips
Like any technology, some solutions are more effective than others. Even fingerprint scanners, effective as they are, are not fool-proof, and the onus is on companies to ensure they understand the level of risk before they invest in new technology.
Technically speaking, fingerprint scanners are essentially miniature cameras that take a photo of your fingerprint against a flat piece of glass. The image is then compared against a stored record of your fingerprint to verify that you are who you claim to be.
The problem with many fingerprint scanners is the accuracy of the image they capture. In optimal conditions, accuracy is usually high. But fingerprints deteriorate. As we age the capillaries that create the distinct "fingerprint pattern", and sit just below the fingertip skin, begin to thin, making the captured image less distinct. For many South Africans that are employed as manual labourers, fingerprints are also often stretched, damaged and callused, impacting the effectiveness of basic scanners.
A lower degree of accuracy may be sufficient for applications like access control, but when it comes to high-value financial transactions, the implications of a poor fingerprint scan can be very costly.
In South Africa, all the major banks and the majority of financial institutions use a patented fingerprint scanning technology from Lumidigm called multispectral imaging, which takes composite scans of the fingertip. This effective solution was based on using multiple spectrums of light and advanced polarisation techniques to extract unique fingerprint characteristics from both the surface and subsurface of the skin to create a highly detailed and accurate match regardless of skin or capillary condition.
As technology improves, it is now possible for companies to ensure an almost 100% match using desktop fingerprint scanners, which are far less expensive and more socially acceptable than other biometric solutions such as retina scanners.
The future in our hands
The race is already on to put biometric scanners - and specifically fingerprint scanners - into portable devices. Apple's iPhone was the first such device to introduce fingerprint scanning to the mass market, and other devices are sure to follow.
Similarly, more and more companies are looking to consolidate their devices, so where we once used different devices to sign our names, scan our fingertips and take our photos, multi-function devices combining these functions are increasingly used to simplify and improve identity verification.
South Africans have been quicker than most to accept and adopt biometric technology as a basic security measure. The next step is to lower the barrier to entry even further and extend the benefits of biometric technology into different parts of our lives.