> Posted by Sonja Kelly, Director of Research, CFI
Embed from Getty ImagesWeBank started piloting facial recognition for KYC (“know your customer”—verifying that a customer is who they say they are) last year—we heard about it when we talked with Jared Shu, a partner with McKinsey, as part of our deep dive about the different ways banks pursue financial inclusion. At that point, the technology was mere possibility, with some question about whether the regulator would allow it. Now, it seems, facial recognition is indeed serving as a form of identity in China. With the help of technology, customers can quite literally authorize a transaction using their face.
Alipay, a mobile payment app launched by Alibaba in 2004 and used by 120 million people in China, is partnering with Face++ (pronounced “face plus plus”) to allow people to use their face as a credential to make payments. The technology is a natural extension of using a fingerprint to verify a person’s identity, and it is far more secure than just comparing a signature on the back of a credit card to a signature on a receipt.
Software can distinguish between faces far better than humans can. You may have noticed this when you uploaded photos to social media like Facebook and the platform suggested names for the faces in your photos. Face++ uses 83 different points on the human face to verify a person, assigning a measure to the distance between each of the points. It is this combination of distances that verifies identity. The technology’s use cases go beyond the financial system to unlocking doors (literal ones—as in you don’t carry a key any longer), tracking down criminals, or verifying Uber drivers/riders. A scenario is even possible in which a customer walks into a store and receives a personalized experience based on their previous spending—just like Tom Cruise gets to enjoy in “Minority Report.”
While I am slightly disturbed by some of the implications of corporations having a searchable image of my face on their servers, I am optimistic about the possibilities that this technology offers. Open a bank account by holding up your iPad to your face! Split a cab fare by holding a smartphone to your friend’s face! Send money for your niece’s birthday using voice recognition technology even while you’re stuck on the bus! More convenience in my financial services? Yes, please.
However, everything I have read about this technology is just that—a push for convenience to make transactions easier for existing customers. Nowhere am I reading about increasing access to people who aren’t carrying high definition cameras in their pockets or rucksack. The big news should be small microfinance institutions in the Democratic Republic of the Congo equipping their staff with iPads that will enable them to solve the problem of the majority of the population not having a government-issued id. We should be hearing about some of the problems of de-risking solved by the possibility of a reliable and robust technology that verifies identity through a means that people aren’t likely to lose when their wallet gets stolen.
Why are we not hearing about the application of this technology for low income populations? This is not a rhetorical question—I truly want to know. Is it that the technology is too expensive? Too experimental? Doesn’t fit squarely within regulatory requirements? I would love to hear your thoughts in the comments below if you have any.
Creative ways of solving the identity problem are exciting and present new possibilities for financial inclusion. I will be anxiously watching this space to see how these new possibilities are translated into creating a more enabling environment to include more low income and vulnerable customers into the financial system.
Have you read?
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July 16, 2017 at 1:10 pm
John Gitau
Congratulations are in order, Dr. Kelly, though belatedly. We, the CFI fraternity are proud of your diligence, commitment and excellence.
I came back from hibernation to find people more quiet, posts more concentrated, sophisticated and hard to digest, but nutritious. Reading Beth’s posts is like chewing yams-calls for absolute concentration. It was like those days CFI was keeping free range chicken whose eggs could be fertilized but changed to Layers to generate eggs for consumption and not multiplication ( weren’t comments and debates then great ways of fertilizing thoughts delivered through posts!)
To your post and your concern, as always, about the trickle down of technological goodies to the majority at the bottom. My favorite writer Chinua Achebe would perhaps have answered you as follows “The sun shines on those standing before it shines on those kneeling before them”. The able are better people to experiment with, good testing grounds so that if trials work, the good results can be duplicated at lower levels. Low income people, less banked, may lack the sophistication to understand innovative ways within banking. Or, would you rather they be included in experiments even before they are persuaded enough to embrace banking? In my mother tongue, a proverb goes ” Don’t hit a snake until its full head is out of the hole, otherwise it will go back”. Low income people need to be handled with kid gloves until they are confident enough to get into the ring.They can benefit more from trials’ successes at the mass production stage.