Loans to be approved with face scans 

Borrowers and new banking customers will soon be able to provide facial scans to verify their identity remotely as part of plans by credit check giants Experian and TransUnion.

Customers will be able to cross-reference the scans against IDs such as a passport or driving license to confirm it is them using technology from British biometrics company Onfido. Users will be able to scan their face using the front facing camera on their phone. 

The introduction of biometrics aims to improve security for banks and increase the number of services customers can access remotely.

Experian counts the likes of Barclays, the Co-Operative, HSBC, Lloyds and Royal Bank of Scotland among its clients. A deal with Experian is expected to close over the coming weeks.

Challenger bank Monzo and NatWest use TransUnion to offer credit scores, but its agreement with Onfido is not related to UK customers for now.

Credit bureaus develop “scores” on customers, typically to evaluate their ability to repay loans. Points are deducted for things like late payments and defaults.

London-based Onfido played down the impact its technology will have on loan approvals in the near future.

“While we don’t anticipate that the implementation of digital identity verification will have an immediate radical change to the process by which loans are approved, some users may opt in to use this approach to verify their identity when first engaging with the organisation,” the company said.

Onfido said its partnerships were evidence of the credit bureaus “commitment to innovate in line with growing consumer demand”.

It said: “Onfido is supporting them by enabling more secure and easily-accessible onboarding for new customers.

“However, this is just one element of credit bureaus’ means of securely connecting with their customers and are cognisant that any shifts towards wholly-digital identity verification could prove exclusionary. Therefore, not all customers need to participate in the Onfido-enabled system to access the services of our credit bureau partners.”

Biometrics is becoming increasingly popular in banking as financial institutions look to meet a raft of new regulations introduced last year. Among them was the strong customer authentication (SCA), which stipulates that a username and password does not provide enough security. Instead customers need two forms of proof of who they are, which can include something they have in their possession, such as their phone, or something unique to their person, like fingerprints.

Biometrics have drawn criticism in recent years for placing highly sensitive data like fingerprints at risk of being hacked. In August of last year, the fingerprints of over one million people were discovered on a publicly accessible database. The biometrics were used by the likes of the Met Police and defence contractors.

The industry, which has benefitted hugely from remote working with workers needing to log in securely, is expected to more than double in size over the coming years. Consultancy firm Frost & Sullivan tipped the sector to be worth around $45bn by 2024.