Biometrics as a solution to many of the possible problems of security, efficiency and productivity in banking establishments.
By Sergio Mazzoni*
Fraud remains one of the worst evils facing organizations. In 2018, 58% of institutions in the world reported crimes of this type, 21% more than in 2016, and Latin America was the region with the highest increase with its 25 percentage points of increase between 2016 (28%) and 2018 (53%).
These data, published by the consulting firm PwC through the survey 'Fraud and corruption, an analysis of its impact on organizations'1, also yield some conclusions about the origin of this type of crime.
One is that internal actors remain the most likely to commit fraud. While external attacks have multiplied in recent times, last year 52% of fraud worldwide was caused by the organizations' own employees.
On the other hand, the Kroll agency, in partnership with the Economist Intelligence Unit, reported that, of a total of 901 executives from various industries on five continents, 70% reported some type of internal fraud committed by different actors: lower-ranking employees (42%), members of senior or middle management (35%), or an agent or intermediary (23%).
In this scenario, the financial sector is undoubtedly one of the most exposed to this risk, and not even because of the number of crimes (being a delicate figure) but because of the risk and millionaire losses that each of the embezzlements can generate.
Internal fraud comes alive with the use of sensitive information of bank customers such as personal data, passwords, contact information and bank balances, with which they could commit fraud. Interim criminals could also access inactive checking accounts to carry out illicit activities such as money laundering, involve the company in cases of fraud or corruption and get away with it.
So it's worth asking: how prepared are Latin American financial institutions to combat domestic fraud?
Well, the vast majority of financial institutions do not even have a record of how much capital they lose due to internal fraud, since the missing figures are counted as operational losses.
It is not unreasonable to point out that assets lost due to internal fraud are pigeonholed in the same number of losses due to labor practices, damage to physical assets, system failures and process management; even, that they add it to the total number of losses, mixed with those of external theft.
This is how the amount of loss due to internal fraud can be raised to unthinkable levels. On the one hand, by the lack of preparation, and on the other hand by the inability to detect irregularities in real time, when identifying themselves two or three years after what happened, if they do so.
Technology at the service of security
Today a large number of innovative and sophisticated technologies can be available to control, analyze and learn from the human factor within banks and organizations in general.
The arrival of Fintech accelerated the process of digitization of banks, and frauds that were previously very frequent (such as embezzlement of credit cards and identity theft to access bank accounts) began to decrease.
However, the greater the connectivity, the more information there is also surfing the networks, and financial institutions in addition to taking care of their security also have the challenge of paying attention to control outsourced services. In other words, if institutions want to accompany this digitalization process, they also need to invest in anti-fraud solutions at the height.
One of the most effective solutions in this field is biometric systems that serve as a foolproof authentication method for access to information. This technology is a great alternative to avoid this type of fraud. Thanks to it, it is possible to establish in an accurate way about who accessed, from where, on what date and at what time.
Biometric devices with multispectral technology, for example, use multiple light spectra and advanced polarization techniques to extract the unique fingerprint of a living finger, allowing for immediate identification even in adverse conditions such as when the user has wet, greasy, dirty, injured or their fingerprint is worn. And this is possible thanks to the fact that the technology identifies both the characteristics of the skin's surface and an inner layer irrigated by the bloodstream.
Multispectral biometrics has been successfully implemented for several years in banks and ATMs, and has been successfully tested in a wide variety of applications. Similarly, there are also cryptographic encryption solutions to prevent attacks by intermediaries and tamper-resistant devices that erase internal information when opened.
Employee authentication with biometrics
These types of solutions improve the productivity, efficiency and security of banks and financial institutions. In this area, applications include logical access to networks, shared workstations, call centers, and remote applications.
Biometrics can also be used for transaction verification in applications that include working with customer records, money desk, transfer, remittances, and processing authorizations. Biometric authentication is also ideal for controlling access to customer accounts, whether at ATMs, branches and safes.
One example is Citibank, which is already using fingerprint biometrics for employee login to alleviate the frustration caused by passwords, which also reinforces the customer's sense that the entity is serious about security.
In any case, there are many options for biometric modalities; from facial, iris and vein recognition, to voice and fingerprint recognition, in conventional or multispectral modes.
Choosing between these and other options requires a benchmarking of ease of use, the ability to detect counterfeits, verify that the user is alive, interoperability and, if necessary, the availability of the mode in mobile applications.
Fingerprint recognition is one of the most popular modalities. According to forecasts by Yole Développement, the demand for consumer applications will increase the total volume of shipments by 19% until 2022, when the market value will be 4,700 million dollars.
Footnote: 1. Source: PwC's 2018 Global Economic Crime and Fraud Survey: https://www.pwc.com/mx/es/publicaciones/c2g/2018-04-13-encuesta-delitos-economicos-2018-mexicov4.pdf?utm_source=Website&utm_medium=Descarga
* Mr. Sergio Mazzoni, Sales Director for Latin America of the Extended Access Technologies Business Unit of HID Global.
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