Financial inclusion is probably the most progressive policy decision that has been taken by various governments for the benefit of the marginalized sections of society in the past few years. Financial inclusion refers to offering formal banking services to all without any discrimination on the basis of their income or social status. While the idea of financial inclusion is indeed groundbreaking, implementing it becomes difficult due to operational challenges. For example, the issue of duplicate account holders arises. To avoid such problems, biometric banking has grown in popularity, especially in areas where the banking sector is not yet fully established.
Experience the evolution of the global biometric banking market. Starting at $5B in 2022, it’s set to surge to $23.6B by 2032 with a remarkable 17.2% annual growth from 2023 to 2032.
Biometric banking and the goal of financial inclusion
Biometrics is an umbrella term which covers capturing of all important biological characteristics such as fingerprints, iris, and voice recognition. The biggest advantage of using biometrics is that each of these biological characteristics are fully unique for each individual. Thus, biometric banking ensures that the problem of duplicity of account holders is addressed.
The main hurdle of financial inclusion in developing countries of Asia-Pacific and Africa is that common masses do not generally have their identification and social security papers with them. In such a scenario, opening bank accounts of these individuals becomes an extremely tedious job. Biometric banking can help in this aspect too. Bank accounts can be opened using the individual’s biometrics and his/her social security number can be directly linked to the bank account using these biometrics itself. In India, under the JAM (Jan Dhan-Aadhar-Mobile) Trinity policy, even mobile numbers are directly linked to the bank accounts. Thus, while availing any government benefits, all that the individual has to provide is his/her biometrics. This makes governmental administration and e-governance easier. Biometric banking also simplifies online payments which further leads to proliferation of formal banking channels. Thus, biometric banking aids in every aspect of financial inclusion.
Future growth opportunities for the industry
As stated earlier, the first and biggest growth driver of the biometric banking market is the security aspect. Since biometric banking almost nullifies the possibility of financial frauds, many banks and financial institutions have started adopting it. According to a report published by Allied Market Research, this factor is expected to create numerous investment opportunities in the industry. The report further adds that the growth of contactless and mobile payments is sure to compel banking institutions to opt for biometric banking. This will further help the market grow substantially.
Large banking corporations have also taken the aid of advanced technologies like Artificial Intelligence and machine learning to unlock the true potential of biometric banking. Especially, machine learning will help banks to analyze banking patterns and behaviors of their customers and improve the biometric banking services accordingly. Apart from this, many banks have launched their biometric banking services in the past few years which has augmented the growth rate of the market. For instance, in April 2023, City Union Bank announced the launch of a voice biometric authentication system for logging into the bank’s mobile application. In a similar launch in June 2023, BNP Paribas launched a biometric payment card to combat financial fraud and improve overall banking security. All these factors, as per the Allied Market Research report, will help the market to grow at a fascinating CAGR of 17.2% in the 2023-2032 period.
The global biometric banking market, to summarize, is expected to witness a massive growth in the coming period on account of the growing emphasis on mobile and contactless payment. Further, its support in realizing the goal of financial inclusion will surely increase the market’s stature.