The high cost of cheap biometrics
Banks and financial institutions are spoilt for choice when it comes to selecting a vendor in the remote identity verification industry. Once dominated by a handful of established firms, the sector has rapidly grown as a direct result of the pandemic increasing demand for a range of digital services.
At first glance, the offering from biometric onboarding vendors can appear extremely similar, with many competing on price. However, this isn’t the case in practice and there are a number of questions every bank needs to ask before implementing remote identity verification using biometrics.
At Future Identity Finance, a VC Innovations event that took place in London on 26th April 2022, Daniel Ferak, DOT Business Unit Director at Innovatrics, an independent provider of biometric technology, and Jan Zaborsky, Content Expert at Innovatrics, discussed the current state of the industry and how to effectively develop a Request for Proposals and select the most suitable vendor, alongside other issues.
One of the first points Ferak raised was the fact that, while there are many new start-ups entering the market, most of these well-funded firms do not own the underlying technology.
“They usually use the same software development kit (SDK). For the customer, it’s quite confusing to know the difference and who is doing something different among all these solutions on offer,” said Ferak.
One workshop attendee agreed that they had seen a massive influx of firms entering the market over the last year and now expects market leaders to emerge. “Some of the current cohort may build a bit of a moat, so they can actually start to muscle out some of the competitors as well,” they said.
Evaluating the algorithms that power these solutions is no easy task unless you know which benchmarks and standards to look out for. Ensuring that the vendor has software that can accurately identify people of all races, ages and genders is essential.
Ferak explains that any biometrics vendor you are considering partnering with should have submitted their algorithms to the National Institute of Standards and Technology (NIST) and be able to show the results.
Another attendee raised the point that the biometrics market may soon move to a position where the technology will not need to be leading the sector but could be just “good enough”.
“It doesn’t need to exactly be best in class, as long as it meets the necessary standards, and ranks within a certain range” they said.
Effective Request for Proposals
So, what recommendation does Ferak have for banks who are developing a Request for Proposals and selecting the most suitable vendor?
“First of all, how accurate and how fast is the onboarding? How fair are the algorithms that are inside of the solution? That you can check in the NIST report.
Is there a good balance between usability and security? What is the OCR performance of ID document extraction? And finally, does it support my use case?”
Even once the right vendor is selected, the work does not stop there. “Iterations are key. Now the technology may be good. But is it enough or is it not enough for the future?” adds Ferak.
“The fraudsters are waiting, they are coming with new ways to fool the system,” concluded Ferak. “We need to be constantly monitoring, it’s basically a never-ending story.”
For more on how banks are implementing biometrics for remote onboarding, download the free Vox Pop report: The High Cost of Cheap Biometrics.