Advances in AI & biometrics signal tighter 'know your customer' protocols for finance bodies, like multiple databases of biometric data, including facial and even voice IDs

Advances in AI & biometrics signal tighter ‘know your customer’ protocols for finance bodies, like multiple databases of biometric data, including facial and even voice IDs. Source: AFP

Does the combo of AI, biometrics hold the key to stopping identity theft (and money laundering)?

  • Advances in AI-supported biometric IDing and AML compliance solutions could be the “secret sauce” to banks, fintech finally getting “Know Your Customer” right.
  • Huge majority of APAC banks (93%) say they’re continuing spending on e-compliance despite economic downturn.
  • FICO survey: 83% of HK banks believe AI is the key to securing their financial crime strategies.

With so much reliance on digital payments and other financial technology (fintech), going through some form of purportedly secure, digital verification process (often referred to as ‘know your customer’, or KYC, processes) is often par for the course these days.

But with pervasive cyber threats like data breaches and identity theft delivering blows to what the end-user hopes is an un-breach-able system, “taking a single selfie just isn’t enough to ensure your customer’s identity [anymore],” laments Philipp Pointner, chief product officer at digital security specialist Jumio. “It leaves banks and financial institutions vulnerable to spoofing attacks as a fraudster can easily find a picture of someone else online and pass that off as genuine.”

“But using solutions that employ biometrics, and specifically 3D face maps and certified liveness detection, ensures the [people] behind a transaction [are] who they say they are,” Pointner recently told PYMNTS.

Biometrics – working in concert with a combination of artificial intelligence (AI) and machine learning (ML) to scan, analyze and then to create what could be a varied biometric identity database capable of verifying and storing fingerprints, facial features, even voice and device data – could allow for not only tougher, more meticulous identity security, but also a deeper understanding of a financial institute’s customer profile – giving banks and other fintech a truer way to “know your customer”.

How AI helps you Know Your Customer (KYC)

The advancements in reliable AI and biometric technology would not just make identity theft a whole lot tougher, but a majority (83%) of banks from regional financial hub Hong Kong believe the technology will solidify regional anti-money laundering (AML) operations, according to a recent survey by global analytics software firm FICO.

FICO’s comprehensive solution of advanced ML techniques, designed to help financial institutions operationalize AI within their compliance strategies, by significantly improving detection accuracy using advanced analytics models.

Advances in AI & biometrics signal tighter 'know your customer' protocols for finance bodies, like multiple databases of biometric data, including facial and even voice IDs. Source: AFP

Advances in AI, biometrics signal tighter ‘KYC’ protocols for finance bodies, such as multiple databases of biometric data, including facial, fingerprint, even voice IDs. Source: AFP

“Rules-based compliance systems continue to be the workhorse for banks in Asia Pacific when fighting financial crime,” said Timothy Choon, FICO’s financial crimes leader in the Asia Pacific territories. “However, some early adopters are starting to embrace the new world of AI and realize that the decade-old rules-based systems can’t keep up with sophisticated threats on their own.”

“The secret sauce is operationalizing advanced AI technology and making it work side-by-side with the rules-based systems,” Choon confided. “In fact, 20 percent of respondents picked this as their principal obstacle in meeting financial crime risk mitigation targets.”

An independent research company carried out the online, quantitative poll of 256 senior executives from banks across eleven Asia Pacific (APAC) countries (Australia, Hong Kong, Indonesia, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam) on behalf of FICO in May 2020 – after the global health crisis had helped to bring about a significant surge in detected malicious cyber activities in many surveyed markets, including Australia and Malaysia.

FICO’s Integrated AML Compliance Survey also found that a sizable majority of banks (93%) across APAC are likely to continue their technology spend on either upgrading or enhancing existing compliance systems this year, despite recent global events pointing towards a probable financial recession.

“This survey, conducted in May, shows that even in the recent economic downturn triggered by the pandemic, banks remain committed to targeted spending that boosts their AML compliance defenses,” commented Choon on the findings. “There is an increased willingness to perceive compliance and fraud as a common financial crime risk – a fraudster is more likely to launder money, and vice versa.”

“This convergence is a global trend. Banks in the US and UK are well on their way to fully integrating their compliance and fraud functions, bringing together teams, leaders, and technologies,” Choon divulged. “We believe banks in Asia Pacific are looking to these markets to see what will work, with plans to follow quickly in the next 24-36 months.”