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| An Industrial Bank of Korea employee undergoes iris recognition at an automated teller machine before he makes a financial transaction in the lobby of the bank's headquarters in Eulji-ro, central Seoul, Thursday. / Korea Times photo by Choi Kyong-ae |
By Choi Kyong-ae
Banks are in a rush to implement biometric authentication to capitalize on customers' growing appetite for more secure and convenient services.
The shift comes as the Financial Services Commission authorized banks to use multiple biometric authentication systems in December, largely in order to enhance financial security.
"Early this month, we ruled in favor of the use of biometric information in financial transactions," an FSC official said. "Banks and IT firms are increasingly forming business ties. Such partnerships will allow banks to offer tighter security for their customers."
The Industrial Bank of Korea (IBK) and Shinhan Bank are among the early adopters, with their peers preparing to roll out their own high-tech services next year.
IBK began a pilot program using iris recognition technology from Irience, Monday, initially available to its employees at two of its bank outlets.
On Dec. 2, Shinhan Bank opened 24 unmanned digital kiosks at 17 outlets across Korea. At the unmanned kiosks, customers identify themselves through palm vein recognition to make financial transactions.
"After running a test period for IBK employees and executives by the first half of next year, we will consider offering the biometric information-sponsored services to customers," said an IBK official. "If the financial authorities collect most biometric information from the country's financial customers and have banks share the information among each other for internet banking services, biometric authentication systems could be widely accepted at banks."
Other banks such as KEB Hana Bank, KB Kookmin Bank and NH Bank are also considering introducing biometric authentication systems using fingerprint, iris or vein scanners next year to catch up with the financial technology, or fintech, trends in the banking industry, according to the banks.
Government officials, banks and analysts together called the fintech trend irreversible for lenders in this era where mobile technology begins to govern industries.
"Financial institutions and IT companies are expected to become close business allies in the coming years as customers prefer handling financial transactions on the Internet or on mobile devices instead of visiting a bank outlet," said Hana Financial Investment analyst Soh Jae-yong.
Compared to Japan where biometric authentication systems are widely used for financial deals, Korea is still at the toddler stage. Helped by the government's fintech drive, Korean banks have just started to form fintech partnerships, he said.
The global biometrics market has made stellar progress in recent years, helped by an increasing number of vendors integrating fingerprint sensors in their mobile devices. A report from Biometric Research Group showed the inclusion of biometrics in smartphones and tablets will generate about $9 billion in revenue for the biometrics industry by 2018.
Asked if banks are forced to invest in fintech due to the government's policy, bank officials were against the view.
"The fintech trend is already ongoing but it will take years for customers to become familiar with biometric information services," a KEB Hana official said.
KB Kookmin Bank said biometric authentication systems using iris or vein recognition were under consideration as it regards fingerprints as more vulnerable to forgery.
Woori Bank is working with Iris ID to use the firm's technology to authenticate customers at ATMs in a pilot program which starts early next year. Clients can use iris recognition together with their ATM cards and PIN numbers to access financial transactions, a Woori Bank spokesman said.
"Iris recognition is not the only means for authentication," he said. "Other means are also used so there is little need for security concerns. Biometric authentication is designed to reduce the chances of forgery almost to nothing."
