Why demand for ID verification services has grown so quickly?

By Puja Sharma

Financial services and FinTechs are now actively pursuing biometrics to increase security in their banking environment since the technology assists with the reduction of identity fraud and the establishment of audit trails of transactions. Traditional security measures such as PINs, passwords, and tokens are not able to offer effective protection against increasingly sophisticated intruder attacks, which is driving the shift to biometrics.

A new wave of identity verification platforms is offering Big Data risk analysis to corporations, resulting in a greater level of transparency and trust in the FinTech sector. By weeding out cases with a high probability of fraud, financial institutions can identify prospective borrowers, save costs, and reduce loan process times, as reported by the local media firm.

The growing realisation among banking customers about the inadequacies of PINs and passwords in offering protection against sophisticated bank frauds and online threats is leading to high demand for strong security solutions such as those involving biometrics.

MSMEs and SMEs are often dependent on informal lenders for credit, which can be crucial to their very existence. In addition to preventing fraud, technology-based identity verification has other benefits as well. As well as encouraging traditional banks to digitize their services, it also helps them serve their customers better. Financial institutions should provide a fully digital, seamless banking experience to their customers at a time when consumer expectations are constantly evolving. It would be beneficial for banks to implement digital identity checks that verify customers’ identities remotely without compromising security, which would speed up onboarding, improve the user experience, and reduce app abandonment rates.

Further, a steady increase in the number of password hacks in recent times reflects inadequate security associated with the use of passwords as an access method. Driven by the growing need to offer protection against the rising instances of fraudulent transactions and identity thefts along with the ever-widening scale of frauds, banks are opting to invest in strong authentication measures.

Fingerprint Biometrics, one of the segments analysed in the report, is projected to grow at a 13.4% CAGR to reach $6.2b by the end of the analysis period. After a thorough analysis of the business implications of the pandemic and its induced economic crisis, growth in the Face Biometrics segment is readjusted to a revised 11.6% CAGR for the next 7-year period. This segment currently accounts for a 22.8% share of the global Biometrics for Banking and Financial Services market.

Growing demand for ID verification in FinTech

One such company, Fingerprint Cards AB (Fingerprints) has experienced growing demand for its biometric authentication solutions, with over 1.5 billion sensors shipped worldwide since 2014.

“It is gratifying to see the results of our diversification work,” said Christian Fredrikson, CEO of Fingerprint Cards. “We have done a huge amount of work to ready ourselves for broader adoption of biometrics and the market is now increasingly recognizing the value biometrics can offer to consumers and businesses. This is a testament to our continued innovation and product development. And with every new market and use case, our total addressable market grows. There’s still work to be done, but with privacy, security, convenience, and hygiene top of the agenda, biometrics have a big role to play in the future of our digital society.”

In the recent news, as part of its efforts to enhance its offerings to FinTech firms and other financial institutions, M2P Fintech acquired identity verification service provider, Syntizen, for a third acquisition this year, as reported by the Economic Times.

Madhusudanan R, Co-founder and CEO of M2P FinTech, believes that Synitzen’s work around Aadhaar enabled services and the KYC platform is an excellent opportunity to overlay Synitzen’s stack on top of our infrastructure to deliver innovative solutions.