Banks give fraudsters the finger

SA's banks are now able to connect to the Department of Home Affairs' database to verify clients' details, eliminating the need for ID books, after the Online Fingerprint Verification System was launched yesterday.

The system has been in the pipeline for several years and the first phase, which proved the feasibility of online fingerprint verification of banking clients, was wrapped up last year. During the pilot phase, at least seven fraudsters were uncovered through the system.

Two of SA's big four banks have already gone live, with both Absa and First National Bank (FNB) claiming to be first out of the gate.

However, questions have been raised as to whether citizens' fingerprints will be secure now that access to the home affairs database has been expanded.

The initiative, which will not cost consumers anything, allows banks to access the department's Hanis database to verify the identity of new and current clients.

Hanis is a database of South African citizens' ID numbers, fingerprints and photos. The South African Banking Risk Information Centre (Sabric) says the initiative, which has been piloted in a few branches since 2010, will help prevent identity theft-related crimes.

Sabric and the department entered into a co-operation agreement in 2007 to jointly address bank-related identity fraud.

Sabric commercial crime office GM Susan Potgieter explains that the banking sector will not access home affairs' system, but will only be able to verify fingerprints against Hanis. She says the banks will then receive a response indicating whether the records match.

“Security of information is of utmost importance and we are satisfied that all measures have been taken to ensure that the communications are safe,” says Potgieter.

Double checking

“Bank clients will benefit immensely from this initiative as it offers the banks a second layer of confirmation that the persons presenting identity documents are indeed who they purport to be,” says Sabric CEO Kalyani Pillay.

“This joint initiative will assist in preventing imposters from securing banking facilities purporting to be someone else.”

Identity-related fraud and corruption costs banks and the economy millions of rands, according to a recent Cabinet statement.

Five banks are taking part in the programme: Absa, African Bank, FNB, Nedbank and Standard Bank, all of which are at various stages of implementation.

Home affairs minister Nkosazana Dlamini-Zuma says the initiative “constitutes a giant step for all the people of our country”. She describes the launch of the Online Fingerprint Verification System as “historic”, as it is the first time it is being implemented in SA.

”The launch of the Online Fingerprint Verification System by the home affairs department and Sabric will lay a basis for us jointly to deal a massive and decisive blow against acts of fraud and corruption that have cost our financial and banking institutions millions, if not billions, of rands,” says Dlamini-Zuma.

Although fraud will not “disappear overnight”, the system will “lay a basis for a major offensive in our national effort to push back the frontiers of fraud and corruption,” says Dlamini-Zuma. “The Online Fingerprint Verification System is indeed a simple but sophisticated war against fraud and corruption.”

First to market

FNB says it has tested and rolled out the system and is “the first bank in SA to have the system fully implemented in more than 100 branches nationwide”. The bank explains the real-time verification system is live in 160 branches, of which more than 130 are EasyPlan outlets, which is its low-cost banking model.

“With the rise in identity theft, it is crucial that we adopt measures that not only protect us as a bank, but also protect our customers. Biometrics verification is one way to build trust with our customers,” says CEO of FNB Smart Solutions Line Wiid.

FNB has been piloting biometric verification in its EasyPlan branch environment since July. Absa also claims to be the first bank to go live with the system, which has been piloted since last year.

Alfred Ramosedi, Absa's managing executive for Face-to-Face Channels, says during the pilot at seven Absa branches, seven fraudulent cases were uncovered in which people tried to use dead people's identities to open bank accounts.

Nedbank's managing executive for consumer banking, Ciko Thomas, says the system is a “big milestone” as it will improve security to cut down on identity theft. “Clients are inconvenienced and their privacy violated when their identity is taken over to defraud them,” says Thomas.

Where needed, scanners will be installed by the bank, but the cost will not be passed onto the public, says Thomas. He explains the process is specific to each bank and Nedbank's system will involve asking clients if they wish to sign up.

Fingerprints will then be scanned and sent to home affairs. If verification is successful, the client's prints are stored, says Thomas.

Should the check fail, the results will be confirmed with the department's call centre and appropriate action taken; either the client's status will be updated or the customer will be sent back to home affairs to have their prints scanned again, Thomas explains.

After verification, clients will no longer need an ID book, says Thomas. However, the bank will also take clients' photos as an additional security measure.

Safe and secure

Thomas says people are likely to be concerned about the technology due to a lack of knowledge and the possibility of theft of their biometric data. However, the bank has strict security protocols and the process is voluntary, he notes.

Managing partner of IT advisory at KPMG Frank Rizzo says there must be security mechanisms to safeguard customer identity data.

“If the data around your fingerprint gets compromised, this can't be changed like a PIN – your fingerprint is your fingerprint.”

Rizzo explains that the concern is that fingerprints are being shared over a wide network now. However, the initiative is a “step in the right direction”.

The programme is a “big deal” as this is, as far as Rizzo is aware, the first time biometric identification is being used on such a large scale.

According to Sabric, individual banks will liaise directly with current and prospective customers on their processes concerning the implementation of the capability.

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