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The recently-introduced biometric Automated Teller Machines
(ATM) will help banks and customers check fraud complaints in the banking
industry, analysts have said. First Bank of Nigeria Plc introduced biometric
ATMs into the country.
The group managing director and chief executive officer of the
bank, Bisi Onasanya, speaking during the introduction, had said the ATMs were
purchased to protect the data resources of its customers.
The biometric ATM solution is available to the bank’s existing
cardholders who may wish to add biometric authentication as part of their
transaction approval process on First Bank ATMs in addition to PIN selection,
while new cardholders will be issued cards with only the biometric
authentication functionality.
Under the biometric system, cardholders are identified by their
fingerprints, making it almost impossible for any other person to use it in
case the card is lost or stolen. Victor Ndukauba, a finance and research
analyst at Afrinvest, an investment advisory and research firm said: “It will
help in terms of security. It will reduce the exposure to and tendency of
fraud, as regards the use of ATMs. It will have an impact because it would mean
fewer complaints from users.”
A random sampling of other banks showed that they are working on
improving their ATM security systems. At Oceanic Bank, a source who did not
wish to be quoted because he was not authorised to speak to the media, said
that while the bank may not have introduced the biometric ATMs to its
customers, they were willing to upgrade their technology for the convenience
and safety of their customers.
“Everything that would reduce the cases of fraud in all its
ramifications is what every bank is working towards,” he said, adding that
banks try to upgrade their existing technology as soon as new ones are
introduced into the market.
“We have upgraded to the chip and pin” a source at Spring Bank
said. “We are yet to introduce the biometric ATM but we make sure we upgrade
our technology for the security of our customers’ funds.”
A long way
Mario Yanez and Annuar Gomez of the University of Miami, School
of Business Administration in a paper titled ‘ATM and biometrics, a
socio-technical business model’, said that parallel to the development of the
industry, different modes of fraud have made it necessary to reinforce the
levels of security utilized in ATMs.
According to them, “Biometric technology is based on the
scientific fact that there are certain characteristics of living forms that are
unique and not repetitive for each individual; these characteristics represent
the only technically viable alternative to positively identify a person witout
the use of other forms of identification more susceptible to fraudulent
behaviour.”
Biometric identification is utilized to verify a person’s
identity by measuring digitally certain human characteristics and comparing
those measurements with those that have been stored in a template for that same
person.
According to them, banks, other financial institutions and
retailers could increase the volume and reduce their ATM unit transaction
costs; increase their revenues and expand their potential customer base using
the biometrics ATMs.
Biometrics is also increasingly included in a wide range of
verification applications in e-commerce, financial electronic transactions and
other financial transactions.
Banks are responsible
Ariyo Kosoko, the spokesperson of Interswitch Limited, an
electronic transaction switching and payment processing company, said that
banks are responsible for upgrading their ATMs.
“It is the banks, and not the connecting companies, that are
responsible for upgrading the technology of their Automated Teller Machines,”
he said. “We just help the banks in their connectivity and make sure cards can
work on machines. We provide interconnectivity. Upgrading the ATM technology is
really left at the discretion of the individual banks. Ours is to make sure
that notwithstanding any type of ATM technology, operated by the banks,
outdated or modern we provide the adequate interconnectivity.”
History of ATM fraud
For years, the banking industry has been fighting the battle of
fraudsters swindling customers through ATMs. Before the enforcement of the chip
and pin cards last year, the banking system was awash with complaints of the
“mysterious” disappearance of funds from customers’ accounts, as statistics
showed that at least 30 million dangerous ‘magnetic stripe’ ATM cards were
carried about by innocent citizens.
Experts said these toxic ATM cards were highly prone to fraud,
as they could easily be cloned once fraudsters got hold of certain information.
The criminals would swipe the band of magnetic material on the card, which
contains vital data, past a card reader or reading head. Although the rate of
reported ATM fraud has reduced over the months, experts say biometric ATMs
would guarantee more safety for customers’ funds.
