Banking is changing at an extremely rapid pace, from mobile transactions to expanding regulatory demands across the world. As technological advances allow consumers and employees to interact with financial accounts in more intricate ways, it’s essential that institutions know who is involved in each transaction. Proof of identity is the hill that many organizations may die on in 2018, but thankfully, there are disruptive technologies arising that can solve that problem – namely blockchain and biometrics.
Blockchain & Biometrics in Banking
Blockchain refers to secure distributed digital ledger technology that records all transactions. Blockchain creates one “master” record of transactions by different parties. Any information recorded on the blockchain is transparent, which is perfect for the financial industry. However, some executives are pushing back on it due to its decentralized and anonymous form. On the other hand, banks generally enter and track their data manually – which is not efficient or transparent at all. In some instances, financial reports might only be reviewed quarterly by the CEO. This creates a huge gap in the transparency of transactions.
Blockchain, while being somewhat decentralized and anonymous, does offer a lot more transparency and security than traditional methods of recording transactions. Anyone in the C-suite or accounting department would be able to access all records for transactions in real time. This can give many executives peace of mind, because they can trace fraud quickly, reducing the risk of employee theft. In addition, having data not stored in a centralized place also reduces the risk of data being stolen in an attack.
IBM has already picked up on blockchain by developing a platform that lets banks rapidly clear and settle payment transactions globally. These developments will help make payment networks more efficient, even in the most remote areas of the world. This will create profound change in areas where transactions would normally take days to clear.
Unfortunately, blockchain will only exist through mass adoption – since it can only work in a peer-to-peer network. This can only happen if it serves a wide range of applications, offers open Toolkits, and accommodates open identity standards.
Biometrics Is Disrupting Our Lives for the Better
In addition to the blockchain, other innovations can help secure financial dealings – such as biometrics. Many finance executives believe that biometrics is the most important area of new tech needed in the industry right now.
By deploying biometrics along with blockchain technology, both can become a lot more palatable. Biometrics could become the primary method for linking individuals with identity claims on the blockchain. Relying on user-controlled biometric credentials that are cryptographically secured into multiple shares across the user’s device and blockchain-linked personal storage providers would exponentially increase the security of blockchain.
Biometrics and blockchain are both fairly new technologies, but they are already proving to be huge disruptors in the financial industry. It’s anyone’s guess what will catch on and stick, but we’ll place our bets on it. Blockchain on its own may seem risky, but with many banks already embracing biometric authentication, it can be the next big thing in banking.