The joint regulatory body known as the Federal Financial Institutions Examination Council has not updated its guidelines for authentication security since 2011, so it’s not regulatory pressure that’s causing so many forward-thinking banks to adopt voice biometrics. Nor is fraud prevention the big reason even though the technology’s primary function is to confirm identities.
The main push behind today’s voice efforts is to improve upon verification routines that have not evolved since the late 1990s. The simple act of accessing an account has turned into a potentially painful and frustrating event, with customers confronted by passwords and challenge questions they have likely forgotten. “At Barclays we called them ‘miserable moments,’” says Iain Hanlon, head of change delivery at the $2.5-trillion asset London-based institution.
Barclays knew from ongoing surveys that customers were dissatisfied with the way their identities were verified when calling into the call center. Though in line with industry standards, customers found the procedures time-consuming, unfriendly and cumbersome. “We found that we were depersonalizing our relationships,” Hanlon says.
Voice biometrics, which Barclays rolled out to its high net-worth clients in 2012, has changed the experience entirely. Now customers engage in natural conversation with agents, during which time their voice is matched against a stored voiceprint in a process that takes eight to ten seconds. Creating the initial print takes about 45 seconds. Ninety-seven percent of customers who have called in have agreed to enroll in what Barclays calls its “voice security” program once agents explain it to them.
Since the rollout, dissatisfaction with authentication routines has dissipated. Seventy-five percent of high net-worth clients say they would recommend the bank to others, up from around 40 percent before the bank began using voice authentication. In a first for a technology implementation, clients have pushed the bank to expand voice authentication beyond the call center, for example, to the relationship managers and private bankers whom they also occasionally call. “It’s been a transformational implementation,” Hanlon says.
An improved customer experience is also a primary driver for Toronto-based Tangerine Bank, formerly ING Direct Canada and now a subsidiary of $410-billion asset Scotiabank, which is currently conducting a pilot of voice authentication for its mobile banking customers. As voice authentication begins to get rolled out over the next year or so, customers won’t have to input passwords on the small screens of their devices, sometimes a tricky proposition for glove-wearing customers trying to beat Canada’s cold. “It may sound small, but these small things add up,” says Charaka Kithulegoda, the bank’s chief information officer.
Despite all the focus on user experience, security is not a secondary consideration. Bankers agree that voice biometrics offers greater security than traditional methods, although they did not share metrics on fraud reduction. “We are very comfortable in saying that this is much stronger than using a password and much more difficult to break,” Kithulegoda says.
Beyond improved security and a better user experience, many banks are finding they can greatly reduce call times through voice authentication. On a five-minute call, eliminating the minute of time typically spent on passwords and challenge questions can save $1, estimates Tamar Sharir, director of fraud and real time authentication at Nice Systems, an Israeli provider of compliance and security systems, with offices worldwide.
Voice biometrics’ three-pronged business case, combined with advancements in the technology, is leading to a spurt of investment. Opus Research, an advisory firm based in San Francisco, estimates spending on voice biometrics increased 74 percent between 2011 and 2012, and will continue to expand at a compound annual rate of 35 percent over the next five years. It helps that the technology has matured. A high rate of false positives in its early days was a negative, according to Julie Conroy, research director at Boston-based Aite Group. The ubiquity of smart phones provides another spark, she says, making it possible for customers to perform voice authentications anytime, anywhere. “Voice, without question, is here to stay,” Conroy says.
Nuance Communications, a Boston-based provider of voice software, sells its software for a one-time fee (ranging from $1 to $2 per customer) or on a pay-as-you-go basis (on the order of pennies per authentication). So, a large bank with millions of customers opting for the one-time fee will be looking at a multi-million dollar investment. Despite the potential expenditure, all of Nuance’s banking customers have realized cost savings within the first year of deployment, says Brett Beranek, solutions marketing manager at Nuance.
Regulators may not be pushing voice biometrics as an added layer of security, but it seems customers are. “It’s become a very seamless interaction,” Tangerine’s Kithulegoda says. “The big advantage is giving our customers choice and making the whole banking experience simpler and more relevant.”