The President, EMEA and APAC, Clive Bourke, in this interview with Ugo Aliogo, stressed the need for banks and financial technology companies to adopt biometric authentication. He also spoke about other issues in the digital banking space. Excerpts:
Nigerian banks record cases of cyber fraud daily despite consistent campaigns against the criminal act. What do you think is the challenge?
Banks and financial institutions globally, not just in Nigeria, continuously invest in cyber security issues. They are putting in place measures to address it using soft tokens, device based security, biometrics such as finger prints, face and voice focusing on both convenience and security. The Biometrics Verification Number (BVN) can move to follow some of the banking customer regulations changes that are being adopted elsewhere. Some country regulations (Japan and Europe) are adopting what is called remote digital on-boarding which allows customers to register though mobile or web channels. For Nigerians who live abroad this could be a good interim BVN like solution. What should be done is to allow them to register using their mobile device and facial biometrics remotely, which allows them to get started with a “Digital” BVN – that would be my advice to the Nigerian government.
You spoke about biometric authentication. Can you give an overview of what this is all about?
There are quite a number of biometric techniques, but the established ones used in banking and financial services are fingerprints, face, voice, and behavioural biometrics. How they work is that you capture a sample of the biometrics, you create a biometric template from the sample which becomes your registration and you bind that the person’s profile to their device. Now you have the biometrics and the device which are two separate factors. What this implies is that you authenticate the device and the biometrics, and then you have a multi-factor authentication which is strong security. So that is the essential basics for biometric authentication and why people are using it is to improve the digital experience, to authenticate customers whether they are coming through the mobile or online channel or even the call centre. If they come through the mobile channel, you can allow the people authenticate using their device and one of the other factors, could be a pin, face or finger print. Then if they want to do a transaction within the mobile channel, you can ask for a step up authentication which means you ask for a pin and a face together or pin and voice together while still authenticating the device. In an online channel, you can find out if the person has a registered device, then you send a message to their device which is known as push notification with authentication and transaction details, the person has to verify and authenticate themselves and approve that transaction, or reject that transaction or report fraud.
Another way people are using this technology is to make it easier to remotely connect new customers, which is known as digital on-boarding. Today, in most countries, people have to go a bank branch to open a bank account or go to fintech location.
If you don’t have locations, and banks don’t want to be dependent on branches, all that needs to be done, either on the web or mobile is essentially capture your face with liveness checking to make sure it is a real person not a photography or video, to submit that and capture your identity document information, read the photograph from the identity document, match it against the live face, and essentially, you now have a verified person and you have registered their identity information. So that’s how people are using digital on-boarding to grow their customer base.
So how will fintechs and banks in Nigeria leverage biometrics authentication?
Typically, what banks and fintechs need to do to leverage on biometric authentication is to make it is secure and convenient in accessing services in order to perform transactions in the banks. The key message is that using biometrics device and authentication provides safety and security. It also provides greater adoption and usage.
Cyber fraud is a big challenge facing fintechs and banks. How can banks curb the issue of cybercrime using biometric authentication?
The first defence is that you have to include biometrics as part of the transaction. Consequently; if the customer says later ‘that wasn’t me,’ we have a record of your biometrics with your transactions, so if someone tries to deny that it was not them you have the copy of the biometric data that was used.
The second defence is that once you are using biometrics, if you find fraudsters, you can put them what is known as biometric watchlist. Therefore, the next time a fraudster comes into the bank, you search the watch list. The watch list can be a facial watchlist; basically, we only need the photograph of the fraudster, even if they have a total different identity, they still need to submit their face. If we search that against the facial watchlist, then we find a match, that is a totally new technique we are taking back from government implementation back to financial services.
What is your view about digital services providers updating authentication?
One of the customers we work with – USAA, what they do is to say that if you want to update your data, use one of the other authentication factors previously registered to verify yourself, then you can self-serve the update of your data. An example of that is I previously registered my device, PIN and Face, but later I forgot my pin, I can use my device and face to reset my PIN. This is an example of using one factor to reset another authentication factor.
Do you spot a challenge with adoption of biometric authentication in the Nigeria fintech space?
The first thing is that the customer experience has a direct relationship to adoption. You can use biometric capture pretty much on any smart phone, device, as long as there is camera on the microphone, it can capture the biometric or voice channel, but it is the experience that the user has that drives adoption.
If it is faster to do voice biometric authentication than talk to an agent, people will start doing that more often. In the mobile app or online channel, if it is smoother and more convenient to authenticate and verify yourself and setup an approved transaction, which is what drives adoption. What we have experienced with our customers is that adaption can move very fast. We have one customer that is migrating 500,000 customers a month and it is the customers’ choice and they are choosing to move themselves.
How will you assess the Nigerian market?
The level of market innovation is very significant across all the banks we have engaged with. We have been here for about two years, and what is amazing is that each bank has its own unique strategy, each fintech has its own strategy, and each of them has growth in mind and in different ways. Some want to be number one in retail, others want to be the number one in call centre experience and others. Basically, every business that we have met here is trying to innovate within their business using technology which is different to other markets that are more settled with less competition. Nigerian banks embrace new technology as a competitive edge.
Going forward, what is the potential for growth in the area of biometric authentication in Nigeria?
The potential for growth is very significant. Presently, though there are some good things done already, we are only developing. The truth really is that Nigeria has a growing volume of banking customers. Within that growing volume of banking customers, there is a growing adoption digitally. The rate of acquisition of customers in the first place and the rate of adaption of mobile banking adoption have significant growth
In all of these, how do you think this can help fast track financial inclusion in Nigeria?
Basically, all the banks that we have met in the last two years have been involved in financial inclusion, as part of their growth strategy and responsibilities as well. So if you can find a way to register people remotely, through digital channels, it means you don’t have people register in person which is significant. Presently, if you need a BVN in Nigeria, you have to go through the bank branch. If you can start the process remotely you don’t have to do it all in the branch, then it is significant improvement. Also, the cost in digital is much less, so you can scale digitally and get a much less cost per customer in order to on-board.
What are the prospects for digital economy in Nigeria?
Basically, people are seeing brand new ways whereby if they capture their identity for somebody, and they are responsible for that identity, they can monetise around that identity, then the entire digital economy changes.
What are your thoughts on artificial intelligence and Internet of Things?
The Internet of Things is great because it has given us more devices through which we can engage and consequently more channels and devices we need to authenticate. You can actually use that new information and big data to do risk analysis. New techniques such as machine learning make developments faster and better. We have used those techniques with biometric data to make the algorithms more accurate with African data. The world is changing to be about data and deep learning techniques enable better performance.