Facial Recognition Technology Rapidly Picking Up Steam with Banks and Fintechs

Facial Recognition Technology Rapidly Picking Up Steam with Banks and Fintechs

by July 30, 2020

Advancement in biometric technology, including facial recognition, touch ID fingerprint sensors and voice recognition, is creating new opportunities for fintech innovators to streamline the customer experience.

Facial recognition in particular is seeing rising adoption in Asia but also other parts of the world as a new way to make digital payments more convenient and prevent fraud.

It’s a trend that is picking up right here at home, DBS announced in July 2020 that Singpass users will be able to sign up for DBS’ digital banking services using facial recognition technology. Similarly UOB’s digital bank in Thailand, UOB TMRW has also enabled the use of facial recognition technology for bank account opening.

China leads in facial recognition payments

In China, facial recognition payment is increasingly gaining popularity for its convenience and efficiency, and for Chen Jing, a member of the Chinese State Council’s Advisory Committee for State Information and former chief of the central bank’ technology division, adoption will only increase.

In 2019, an estimated 118 million Chinese users embraced facial recognition payments compared to 61 million in 2018, according to a report issued in late-2019 by iiMedia Research. By 2022, the research consultancy expects the number of users to exceed 760 million, representing about half of the country’s population.

Both Ant Financial’s Alipay and Tencent’s WeChat Pay have developed facial recognition point-of-sale (POS) devices. Alipay’s Dragonfly device was rolled out in late 2018, while WeChat Pay’s Frog Pro was first demoed in August 2019.

In October last year, it was the turn of state-backed Chinese bank card issuer UnionPay to introduce its own facial recognition payment service, dubbed Face Scan Pay.

Amid growing adoption of facial recognition payments, the National Standardization Group for Facial Recognition Technology was formed last year in China, with Chinese AI giant SenseTime elected to lead the group. The organization, which includes representatives from tech companies including Ant Financial, Tencent, Xiaomi, PingAn and iFlyTek, aims to develop industry standards and ensure rapid but healthy development of the technology.

But the rapid surge in usage of facial recognition for banking and financial purposes has also raised concerns over user consent and data privacy. In response to this, the Payment and Clearing Association of China released earlier this year self-discipline guidelines aimed at tackling associated risks.

Facial recognition in fintech around the world

China is far from being the only country tapping into the many possibilities brought in by facial recognition.

In the US, banks including Chase, HSBC, and USAA are using Apple’s FaceID to let customers securely log into their mobile banking apps. Bank of America is reportedly working on such capabilities, as well, after being granted in May 2019 a patent for an authentication system using a variety of biometrics, including facial authentication.

MasterCard launched its “selfie pay” app in 2016, allowing customers to use a phone camera to approve online purchases, and that same year, Amazon filed a patent for a similar payment method.

In Japan, Seven Bank said in 2019 that it would equip its ATMs with face recognition capabilities to let users open bank accounts on the spot. Close by, in South Korea, IT services company LG CNS introduced in April 2020, a so-called “face recognition community currency” system which combines AI, blockchain, and cloud server technologies, to automate payments to employees.

In Africa, Nigeria’s Access Bank launched in March a new facial biometric payment system to verify customers’ identity and authorize retail transactions, and Standard Bank in South Africa has added facial recognition to its mobile app through a partnership with iiDentifii.

In Latin America, Brazilian digital bank Original rolled out a facial recognition system, called Liveness, in November 2018 to allow account holders to authenticate banking transactions, while in Guatemala, digital wallet Akisi App has been using ID card scanning and facial recognition technology provided by Mobbeel to enable digital onboarding.

Most recently, the Bank of Lithuania partnered with iDenfy to allow customers to use facial recognition to pass electronic know-your-customer (eKYC) procedures when purchasing a digital collector coin.

The surging facial recognition market

The facial recognition market size surpassed US$3 billion in 2019 and is projected to grow at a compound annual growth rate (CAGR) of over 18% between 2020 and 2026 to cross US$12 billion, according to a new report by Global Market Insights.

This is further supported by Jumio’s recent announcement that they are seeing the largest customer growth in the company’s history. Jumio is a renowned provider of AI-powered end-to-end identity verification and authentication solutions.

Global Market Insights Facial Recognition Market

Global Market Insights Facial Recognition Market

The industry’s growth will be fueled by rising demand for precise identification of individuals in sectors including the banking and financial services industry, healthcare, defense, homeland security and retail, the research says.

In Asia Pacific (APAC), the facial recognition market is anticipated to witness growth of around 19% between 2020 and 2026, with digitalization pushes in countries including China, India, Japan and South Korea expected to drive market adoption, it notes.