The path of financial inclusion, innovations in digital identification
A few months into 2021, it is worth making a little reflection on one of the main challenges facing the financial sector. Although the growth in the use of mobile devices and the internet among the population allows them to extend their services to more consumers, there is still a wide area of opportunity to take advantage of digital technologies in order to prepare a future in which financial inclusion is a What we have seen in recent times is the growth of a supply of financial services by innovative technology companies, many of them technology start-ups, which will continue to compete in the next decade for an important part of the banking market companies that are currently operating, and have more and more followers and greater demand for their services.In 2018, the World Bank considered financial inclusion “as a state in which all people have availability, affordability and accessibility to financial services". Currently considered as a transversal axis of the Sustainable Development Goals of the institution, it makes visible the role it has to improve the state of the economies and the well-being of the population: An indispensable requirement for the sustainable development of people and companies. The common objective is to promote, through technological neutrality and consumer protection, bringing the financial world closer to people who today do not have access. That is, a principle of financial inclusion and innovation that fosters a growth environment in which banks reach certain users who have not wanted or been able to go to a bank, such as populations with a high degree of marginalization or new ones. generations, for example, who are very comfortable in the digital environment.
Thus, financial inclusion helps to solve the liquidity shortage in small and medium-sized companies, either through financing, as well as, through non-bank financial institutions, with more expeditious decision-making or through specialized products for the business sector, as well as the rapid funding that makes it easier for organizations to grow their facilities, close deals with important clients, buy new technology and take advantage of supplier discounts for prompt payment.
Digitization and financial inclusion
The digitization of financial services allows facing the challenge of its provision conditioned to the infrastructure, since it promotes the generation of a system in which the data of financial institutions are shared by users and external developers, through application programming interfaces (API), allowing the creation of more businesses and digital ecosystems, with an expanded value offer of the services offered by the traditional platforms of the financial industry. In his document, “The future of Open Banking. Towards financial inclusion ”, the consulting firm Accenture, considers that digitized financial services“ allow the development of a greater flow of information through the development of big data ”, which provides flexibility and certainty in risk assessment and the use of roles predictive in the classification of these risks. "Through digital channels we can reach a greater number of population in the country than its physical channel, to those who have internet connectivity, increasing the access rate, the potential use and the decrease in the rate of costs for individuals or companies ”, says the report. "Additionally, thanks to the use of APIs and the management of a large data set, we can provide innovative value propositions and new business models in the market."
Financial inclusion and assured identities
To improve the levels of financial inclusion, one of the challenges is undoubtedly the protection of personal and consumer data, through the assurance of the identity of those who are acquiring these financial services. The growth and stability of the financial industry in the digital environment will be underpinned by the perception of trust and security by users and the improvement of operational efficiencies around this security. According to Idemia in its report, “How digital identity can foster financial inclusion ”,“ since trust is the foundation of financial services, digital identity is essential to establish an online trust model that helps validate transactions and user identities in a reliable way ”. “Digital financial services and branchless banking services can be provided through many channels, such as mobile phones, retail outlets, and other widely available access points and field banking. Thus, users can choose which channel best suits their needs. The ubiquity of mobile devices, in particular, represents a great opportunity in that regard, since globally around 1.1 billion, or roughly two-thirds of all unbanked adults have a mobile phone. ”Digital IDs can guarantee greater security and privacy than manual paper processes, as it protects personal data against theft, sharing or unauthorized use and only discloses credentials that are required for each specific service. It also allows users to have control over their data, deciding what data they share, for what purpose, with whom and for how long. The environment of trust that a digital ID promotes will make it possible to deliver increasingly better financial services or products for the consumer according to their needs, the user being the owner of their data, and that with their protected identity they can make better informed decisions about their financial products.
Facial biometrics on the axis of digital identification
With biometric identification it is possible, based on certain unique characteristics of the individual, to determine their identity. The effectiveness of this technology is directly related to the use of data processing, since those unique characteristics are stored in files to allow them to be compared quickly and reliably. Thus, a centralized database, or a decentralized storage device, is necessary to guarantee efficiency and, above all, security, which is why digital identifications, together with new developments in artificial intelligence and machine learning, are based on the biometrics its facial recognition capabilities and increase its accuracy. Artificial intelligence is a central component of the latest generation algorithms developed for these applications, as it increasingly manages the detection, matching and tracking of faces to translate them into real-time identification solutions. Facial biometrics is already used to manage the growing number of travelers worldwide, as indicated in 2019 by the Secure Identity Alliance. "In Europe, more than 18 countries are using facial recognition, allowing 200 million passengers to cross borders using their faces." The financial sector has already begun to use systems based on biometrics for facial recognition seeking security and convenience for its users.
Current challenges, the way forward
According to a recent report by the National Institute of Standards and Technology in the United States, great strides have been made in facial recognition accuracy in the last five years (2013-2018), exceeding the improvements achieved in the period 2010-2013. In fact, most facial recognition algorithms from 2018 outperform the most accurate algorithm from late 2013: In its 2018 test, the institute found that 0.2% of searches in a database of 26.6 million photos did not match. with the correct image, compared to a failure rate of 4% in 2014. “For the most precise algorithms,” the report states, “the proportion of searches that do not return the correct mating relationship in the top 50 example identities is close to zero (or, more precisely, it is close to the rate at which samples are mislabeled due to clerical errors). Furthermore, the correct answer is almost always in the upper range. " For the most advanced algorithm in 2018, which ran searches on a database of 12 million adults, the proportion of matched searches that did not reach the correct match was 0.45 percent. “For the more precise algorithms,” the report states, “the proportion of searches that do not return the correct mating relationship in the top 50 example identities is close to zero (or, more precisely, close to the rate at which the samples are mislabeled due to clerical errors). Furthermore, the correct answer is almost always in the upper range. " For the most advanced algorithm in 2018, which ran searches on a database of 12 million adults, the proportion of matched searches that did not reach the correct match was 0.45 percent, so while the technology is ready and promising Solving multiple challenges in terms of ensuring identity, it is the expansion of digital financial services that requires a legal and regulatory framework conducive to their use. Allowing the offer of financial services to expand the scope of these services to which they have not yet had access should focus on innovative risk management in which digital identification and the technologies that support it can contribute to the user's conviction, protecting you with security and confidence.
To access the potential value of biometrics in the use of digital identifications, it is necessary for people and institutions to fully understand the advantages that technologies such as artificial intelligence, blockchain and machine learning offer to safeguard and capture data from each user, strengthening their relationship with the financial institution and their use of products and services
SOURCES: Accenture (2020). The future of Open Banking. Towards financial inclusion. https://www.accenture.com/_acnmedia/PDF-136/Accenture-El-Futuro-De-Open-Banking.pdf
Idemia (2020). How digital identity can foster financial inclusion. https://www.idemia.com/news/how-digital-identity-can-foster-financial-inclusion-2019-10-21
Secure Identity Alliance (2020): 2019: Biometrics in identity: Building inclusive futures and protecting civil liberties.
Idemic (2020). Top 4 trends in biometrics 2020. https://www.idemia.com/news/idemias-top-4-trends-biometrics-2020-2020-01-28
National Institute of Standards and Technology (2018). Ongoing Face Recognition Vendor Test (FRVT). Part 2: Identification. https://nvlpubs.nist.gov/nistpubs/ir/2018/NIST.IR.8238.pdf