Biometrics and financial inclusion

Brownbag session | 6 July 2018

Matthew Ferreira

Problem statement

The World Bank (2017) estimates

that 1.1 billion people live without

proof of identity

2 | Source:2 | Source:

“ ”

Problem statement

3 | Findex (2017)

Financially excluded due to lack of documentation

43%

17% 18%

30%

42%

24%

27%

30%28%

11%

21%22%

38%

30%

33%

50%

36%

26%

32%

26%

32%

18%

10%

16%

29%

22%

26%

30%

43%

28%

35%

49%

0%

10%

20%

30%

40%

50%

60%

Ben

in

Bo

tsw

ana

Bu

rkin

a Fa

so

Cam

ero

on

Ce

ntr

al A

fric

an R

epu

blic

Ch

ad

DR

Co

ngo

Co

ngo

, Re

p.

Co

te d

'Ivo

ire

Eth

iop

ia

Gab

on

Gh

ana

Gu

inea

Ken

ya

Leso

tho

Mad

agas

car

Mal

awi

Mal

i

Mau

riti

us

Nam

ibia

Nig

er

Nig

eria

Rw

and

a

Sen

ega

l

Sie

rra

Leo

ne

Sou

th A

fric

a

Sou

th S

ud

an

Tan

zan

ia

Togo

Uga

nd

a

Zam

bia

Zim

bab

we

Pe

rce

nta

ge o

f ad

ult

s w

ith

ou

t an

acc

ou

nt

at a

fin

anci

al in

stit

uti

on

Structure of presentation

• Identity

• What are biometrics and how do they fit into identity

• Use cases for biometrics

• Barriers

• Recommendations

4

Identity

• Biometrics• Identity document

• Proof of address

• Bank card

What is identity?

• Password

• Pin

Something a person knows

Something a person hasSomething a

person is

Identity is the collection of attributes about an individual or legal entity that can be distinguished as unique to that person or entity.

Two-factor identity

Three-factor identity

6 | Source:

What is digital identity

• When some or all of these attributes are captured and stored digitally the composite resulting is known as a digital identity

Example of digital identity: Identity card with chip storing information; identity information stored on a national database; Facebook

7 | Source:7 | Source:

Biometrics

What are biometrics?

• Identification attributes based on physical or behavioural traits

• Physical traits refer to actual physiological aspects of a person, such as their fingerprints, facial features, or the sound of their voice.

• Behavioural traits refer to distinctive behaviours, habits, and micro-habits that distinguish a person

• These biometrics traits can be used as part of a digital identity

9 | Source:

How are biometric data captured and stored?

A biometric template, or profile, is a

statistical analysis of the measurement

resulting in a specific reduced data set

that can be used to represent the

physical characteristics or features of

an individual

10 | Consult Hyperion (2017)

“”

How are they used?

Identification Verification

Asks the question: who is this person?

Asks the question: is this person who they say they are?

11 | Source:

Use cases

Use cases: What is so great about biometrics?

Robust identifier

Inherent to the consumer

• Can’t lose your biometric (or can you?)

• Identity theft more difficult

• More accurate identifier than paper

• More protection from fraud

• Easy to store and manage

13 | Source:

Use cases

• How do biometrics stop fraud?

Biometrics match

another identity

Provide biometrics

Try to register again under

different name

Register for grant

Biometrics don’t match

Hospital scans fingerprint

Use card at hospital

Steal identity card

14 | Source:

Use cases: the banking and financial services sector

• Being able to confidently identify your customers

enhances understanding of consumer risk profiles

• More convenient for consumer

• Safer for consumer

• If linked to a national biometrics identity

database, can reduce onboarding cost and

increase efficiency through e-KYC

Aadhaar India

15 | Source:

Barriers

Barriers

Lack of harmonisation between departments limits use casesHigh capital cost

Failure to follow through and complete projectsLimited political will

Slow or absent network coverage limits usability Underdeveloped infrastructure

Staff not trained or skilled enough to use devicesLack of training and skills

Citizens are concerned for their privacyPrivacy and trust

17 | Source:

Recommendations

Siloed Biometric initiatives can be overcome by an interoperable and harmonized approach

Content

Robust, affordable and harmonized

national Biometric identity resource

Voting registration biometric

Government service/donor

programme biometric

Health insurance

sector biometric

Financial Service sector

biometric

Accessing original biometric data via

source code

Standardised templates

The goal

The solution

The current situation

This may be achieved through the harmonization and effective leveraging of components for improved implementation

Further recommendations

• Develop data protection and privacy legislation

• Conduct business feasibility studies to assess which biometrics options to use

• Ongoing training and mentoring of staff

20 | Source:

About CenfriThe Centre for Financial Regulation & Inclusion (Cenfri) is a global think tank and non-profit enterprise that bridges the gap between insights and impact in the financial sector. Cenfri’s people are driven by a vision of a world where all people live their financial lives optimally to enhance welfare and grow the economy. Its core focus is on generating insights that can inform policymakers, marketplayers and donors seeking to unlock development outcomes through inclusive financial services and the financial sector more broadly.

Thank you