Retail Banking & The New Normal

The global COVID-19 pandemic has caused many industries to re-evaluate their day-to-day operations, and the retail banking industry is no exception. Retail banks have been forced to temporarily close physical bank locations, redeploy staff, and temporarily suspend many services. Consequently, many banks are now incurring significant reductions in operating profit and in some cases firing staff and permanently closing physical retail banking locations.

As a result, the banking sector is now under tremendous pressure to move as many services online as quickly as possible and to embrace Digital Transformation. Onboarding of clients is key to the banking sector and this often entails customers being in the branch for an extended period for the verification of documents. This transition will manifest itself in several forms, as banks will need to for example redesign physical locations to encourage social distancing and adopt new technologies to identify potentially ill staff and customers. Many banks are also looking at ways to utilize digital identity to onboard new customers, smart devices to book face-to-face meetings in banks to reduce customer footfall, and some are even looking at technologies to hold online-only meetings. However, the most important aspect of Digital Transformation for the banking sector will be to offer as many services as possible online, especially the onboarding process, which will eliminate the need for physical contact, which is highly desirable in a post-COVID-19 world.

Face Recognition Technology Can Be Applied Across the Banking Value Chain

Face recognition technology solutions exist in the market today which can greatly improve banking efficiency as they can be seamlessly integrated into the banking applications, and solutions can be deployed in many phases of the banking cycle.

While biometric authentication is still relatively new to the banking world, surveys have shown that consumers are increasingly comfortable to adopt biometric authentication in their banking activities as long as the software is able to detect spoofing such as photos, videos or 3D masks. For example, a survey commissioned by Visa found that over 80% of respondents were comfortable using a fingerprint or face recognition as an identity token for their banking services. Furthermore, over 50% of the survey respondents said that they would consider leaving a bank which does not offer biometric authentication services as consumers viewed such services as faster, easier, and more secure than traditional authentication methods.

Some of the most prominent cases of utilizing face recognition in the banking sector that are currently available include the following:

Online – Account Opening via e-Know-Your-Customer (eKYC)

One of the main benefits that face recognition services can offer in the retail banking sector is its ability to offer eKYC services. This enables consumers to take a selfie with a smart device and a copy of their identity document, which are shared with a financial institution. Face recognition technology can then verify this person’s identity against their documents when they wish to register with the financial institution. This offers great convenience to the end user, as it eliminates the need for a new customer to visit a physical bank location to verify their identity by sight. During the pandemic, it is important to reduce the customers’ physical presence at the branches due to branches being closed and the additional measures put in place at branches, such as contact tracing and social distancing. eKYC offers considerable value to financial institutions, as it reduces processing time and manual paperwork by seamlessly integrating to the backend processes, in turn increasing operating efficiency and delivering a better customer experience.

As such, many banks have moved to offer biometric-based digital onboarding solutions to improve customer experience. For example, in the UK NatWest was the first bank to allow customers to apply for accounts using a selfie and a physical ID with AI-based verification after a pilot found a significant drop in fraudulent applications. French bank Societe Generale also allows customers to open accounts fully online and uses facial recognition and a dynamic selfie to verify customer identities. The bank is targeting to have 30% of all new accounts opened online in 2020.

Online & ATM – Service Authentication

Face recognition technology can also be used as an authentication method both online and at ATMs, which offers several benefits to consumers and financial institutions. Customers who use face recognition online and at ATMs no longer need to carry bank cards and remember passwords, which provides a contactless interface and can reduce instances of fraud and lost cards. Cameras can detect spoofing, enabling greater comfort level and security for the customers. Banks can also benefit from face recognition as this will deter fraud cases such as skimming and other forms of identity theft.

Retail Payments – Contactless Service

Another use of face recognition technology is as a payment token in a retail setting. Customers can benefit from such a service as they will no longer need to handle physical currency and will also no longer need to carry payment cards nor remember passwords for credit card payments, enabling the user to have a pleasant shopping experience. Banks and retailers alike benefit from providing such services as they can offer customers an efficient shopping experience by seamlessly authenticating the customers and integrating into the backend processes. Face recognition tends to deter fraudulent transactions. There is no need for any special devices to complete transactions, as face recognition can use off-the-shelf cameras, and no personal information needs to be stored on the retail store’s side.

Bank Branch – VIP Identification

NEC Offers Leading- Edge Face Recognition Technology for the Banking Industry as a Key Secured Authentication Tool

NEC is a global leader in face recognition technology and our high-quality biometrics algorithms have been proven in numerous deployments worldwide in a variety of sectors including government, aviation, and retail. NEC's face recognition technology has been recognized as the most accurate algorithm in the world by NIST, an independent body that tests biometrics technologies.* This is especially important for the financial services industry as face recognition services must be highly accurate and secure due to a tendency in the industry for fraudulent cases. NEC’s face recognition technology is the fastest and most accurate as customers today demand speedy processes for their interactions with banks. NEC has developed an end-to-end secure solution for banks leveraging on its face recognition to cater to the highly- secured needs of banks.

NEC continues to innovate in the face recognition space as one of its core businesses, leveraging many years of research and development experience. NEC’s face recognition software has continued to improve over the years, and most recently the company developed the “liveness” detection to its face recognition offering. The purpose of this liveness detection software is to prevent spoofing by users attempting to steal a customer’s identity using the customer’s photo, video, or a 3D mask of the customer.

Secure digital ID optimizes banking customer experience

NEC is also actively involved with several major financial institutions globally using our face recognition software. For example, the company works with major retail banks, including one in Singapore, leveraging face recognition systems to identify VIP customers upon entering private lounges. This system can recognize important clients who have opted in to the bank system, and bank staff are able to access information such as a customer’s preferred name, their service preferences, and banking records, offering a tailored user experience. The bank is also able to analyze the data to further improve its customer journey.

NEC is also experienced working with retail banks to implement eKYC solutions, and partnered with a leading financial institution to help digitally transform their customer onboarding experience. In the banking industry, it is common for customers to physically visit bank branches to open accounts, update customer records, and to apply for new services using physical ID cards. However, this created a burden for customers living in remote areas, and fraud with fake ID cards was rampant. As a result, this bank partnered with NEC to use face recognition and smart devices to move these processes online. The bank’s customers are now able to use a mobile application to scan national identity documents and verify their identity using NEC’s face recognition service creating a more efficient and secure method of serving customers.

Conclusions

The COVID-19 pandemic has likely changed the face of retail banking forever, as physical bank branches will need to be redesigned and there is a major emphasis on moving retail banking services online. However, this is no easy task for financial institutions, as there is now a great need to provide solutions that are fast, convenient and secure while preserving the privacy of the customers. COVID-19 has accelerated the digital transformation of the industry and NEC is here to offer our support to transform the industry in a secure and effective way.

Face recognition technology is one solution which can greatly help the retail banking sector to digitally transform in the area of identity management. By allowing the fast verification of a customer’s identity for online, retail, ATM and physical bank branch locations, banks can operate more efficiently and seamlessly while delivering a superior customer experience. NEC, as a global leader in face recognition technology, has been validated several times via NIST independent testing. Not only are we able to offer tried and tested solutions, but we also have a team of experts who understand financial business to add value for your bank.

Selected Resources

* NEC ranked No.1 several times as the world's most accurate face recognition technology in vendor tests conducted by the US National Institute of Standards and Technology(NIST).
The evaluation results do not represent recommendations by the US government for specific products.

(September 23, 2020)