NBC's acclaimed TV show, The Voice, is now in its 6th season. For those of you who are unfamiliar with the show, contestants sing to famous vocalists (judges) who have their back turned and are just listening. If they like what they hear they hit a button and their chair turns around so they can see who is singing. If more than one judge turns around they try to convince the contestant to join their team. What is amazing about the show is the depth of talent people have and how powerful just the human voice can be when it comes to singing. In banking, the power of the voice is also beginning to take hold.
We are referring of course to voice biometrics. Historically speaking, biometrics technology has been used for centuries, really accelerating with fingerprinting in police work in the mid 1800s. Voice recognition biometrics on the other hand only dates back to the 1960s and it really began to pick up speed in the 1980s and 1990s. Because voice biometrics relies on data specific to an individual such as inflection, pitch and dialect, it (and other biometric methods) is considered more secure than most other measures banks currently have put in place.
Things are moving so fast here, that Biometrics Research Group estimates at least $200mm was spent on voice biometrics by the banking sector alone in 2012. That number is expected to jump to close to $1B by banks in 2015.
Consider that voice biometrics has a number of possible uses in the banking sector given its uniqueness. It could be used in call centers to verify the identity of callers, verify a customer's identity for credit card activation, do money transfers or access data access or account balances. Or it could even be used to replace traditional passwords in mobile banking. Given mobile banking growth and to reduce fraud, banks are likely to use biometrics of all types as a second line of authentication in online or mobile transactions.
In fact, U.S. Bank, Wells Fargo and Barclays are among a handful of banks already dabbling in this area. U.S. Bank employees, for example, are experimenting with software and using a simple passphrase to access credit card account balances, search transactions and make mobile payments and other large banks are also moving into this area.
There's good reason for banks to get on-board with voice and other biometric technology beyond the obvious advantage of preventing fraud. According to separate research from the Biometrics Research Group, biometric technology has been projected to cut bank operational risks by 20%, following adoption over the next 10Ys. Given how tight banks must be run these days to produce a decent risk/return profile, this change alone could deliver a significant positive impact to the industry.
At this point in the process, one of the challenges banks face with such technology is convincing customers to use it. Banks will need to keep on file a stored digital template to authenticate the customer and trusting an institution with such sensitive data is a valid privacy concern of customers. This can be a major obstacle to overcome, but of all industries, banks may have less of an issue because customers want security when it comes to their money and financial transactions.
As the technology evolves it will continue to get better. At this point it certainly isn't foolproof, so customers with a bad cold or laryngitis can cause issues with voice recognition software. That said, despite its shortcomings and potential problems, many in the financial services industry believe voice and other biometrics will be widely adopted by banks.
As for The Voice TV show, there can only be one winner per season so fans will have to wait several weeks to see who the winner is this time around. Similarly, present voice biometrics technology is a waiting game for banks as the technology continues to improve. Once that happens, however, look for the sweet sound of profit to increase as banks and their customers may all end up singing the tune of a winner.