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When biometrics go bad

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Inadequate biometrics systems could be creating a false sense of security in banks, security estates and office blocks, and in effect rolling out a red carpet to criminals, writes MARIUS COETZEE, MD of Ideco.

Biometrics-based security devices, in particular fingerprint readers, are now widely in use across South Africa. But in many cases, they could be creating a false sense of security among enterprises, and worse – serving to enable criminal activities.

This is because not all fingerprint readers are created equal. Although all fingerprint readers use minutiae points to match fingerprints, not all have the ability to detect the difference between real minutiae of a fingerprint and spoofed minutiae. Typically, enterprises investing in fingerprint readers believe the biggest risk facing them is a scenario in which a fraudster or criminal replicates someone else’s finger or fingerprint, and uses it to gain access to a premises or to authenticate their identity. But because most fingerprint readers are manned by cashiers, tellers or security guards, the chances are slim that the fraudster will have an opportunity to introduce an entire fake finger into the process unnoticed.

A lesser known risk, and one far easier for villains to employ, is to fake or ‘spoof’ minutiae. The simplest methods are simply to wind thin thread around the fingertip, or to introduce a series of cuts to the fingerprint. This creates scores of new minutiae points, increasing the risk that the spoofed fingerprint will be a close enough match to that of an authorised person on the estate or bank database. No one should underestimate the ingenuity of criminals – they know the reader uses minutiae points to match them against a profile, and they also know that by introducing a lot of false minutiae points, they will increase the chances of their matching an existing profile on the system. Only the most advanced technology has the ability to differentiate between typical cuts and true minutiae to determine whether a fingerprint has been spoofed or not.

Performance requirements and consequential recourse

Another major risk lies in the fingerprint system’s performance and standards: in many cases, the images they produce are of a low quality and characterised by noise, or they simply do not meet the standards required by law enforcement agencies and courts. This means that in the case of fraud or a criminal opening a bank account using such a fingerprint reader, the biometric records and images generated cannot be processed against the SAPS criminal record system, or indeed most international law enforcement systems.

Equally concerning is the fact that these systems produce images that are of a quality too poor to be admissible as evidence in a court of law. The mere fact that many fingerprint readers used today are not compliant to international standards for evidence and criminal investigation defeats the entire objective of using fingerprints for proof of identity in the FICA or RICA process.

Inadequate biometrics-based identification and security systems therefore, could not only give villains access to accounts and assets; they could also help them to avoid prosecution.

Organisations need be very careful in their choice of biometric devices deployed for customer identification, security and protection of assets, to ensure they are compliant with all key standards and legislation, and that the systems deliver the security they promise.

When selecting systems, organisations need to ask:

–          Is it fit for purpose at the site, and for effective governance, risk and compliance?

–          Does it fully adhere to regulatory requirements from the process of taking the customer aboard through to post-event audits?

–          Can it be spoofed by added minutiae caused by thread, cuts, wrinkles and blisters?

–          Does the technology discard false minutiae and only process true minutia?

–          Is the data collected by the device, including all records and images, fully compliant to all international standards?

–          Can this data be processed against the SAPS criminal record system?

–          Is this data accepted as evidence in a court of law?

Always remember that mass adoption does not constitute great technology, but rather great sales effort. A simple “show me how accurate it is”, is always recommended.

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VoD cuts the cord in SA

Some 20% of South Africans who sign up for a subscription video on demand (SVOD) service such as Netflix or Showmax do so with the intention of cancelling their pay television subscription.

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That’s according to GfK’s international ViewScape survey*, which this year covers Africa (South Africa, Kenya and Nigeria) for the first time.

The study—which surveyed 1,250 people representative of urban South African adults with Internet access—shows that 90% of the country’s online adults today use at least one online video service and that just over half are paying to view digital online content. The average user spends around 7 hours and two minutes a day consuming video content, with broadcast television accounting for just 42% of the time South Africans spend in front of a screen.

Consumers in South Africa spend nearly as much of their daily viewing time – 39% of the total – watching free digital video sources such as YouTube and Facebook as they do on linear television. People aged 18 to 24 years spend more than eight hours a day watching video content as they tend to spend more time with free digital video than people above their age.

Says Benjamin Ballensiefen, managing director for Sub Sahara Africa at GfK: “The media industry is experiencing a revolution as digital platforms transform viewers’ video consumption behaviour. The GfK ViewScape study is one of the first to not only examine broadcast television consumption in Kenya, Nigeria and South Africa, but also to quantify how linear and online forms of content distribution fit together in the dynamic world of video consumption.”

The study finds that just over a third of South African adults are using streaming video on demand (SVOD) services, with only 16% of SVOD users subscribing to multiple services. Around 23% use per-pay-view platforms such as DSTV Box Office, while about 10% download pirated content from the Internet. Around 82% still sometimes watch content on disc-based media.

“Linear and non-linear television both play significant roles in South Africa’s video landscape, though disruption from digital players poses a growing threat to the incumbents,” says Molemo Moahloli, general manager for media research & regional business development at GfK Sub Sahara Africa. “Among most demographics, usage of paid online content is incremental to consumption of linear television, but there are signs that younger consumers are beginning to substitute SVOD for pay-television subscriptions.”

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New data rules raise business trust challenges

When the General Data Protection Regulation comes into effect on May 25th, financial services firms will face a new potential threat to their on-going challenges with building strong customer relationships, writes DARREL ORSMOND, Financial Services Industry Head at SAP Africa.

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The regulation – dubbed GDPR for short – is aimed at giving European citizens control back over their personal data. Any firm that creates, stores, manages or transfers personal information of an EU citizen can be held liable under the new regulation. Non-compliance is not an option: the fines are steep, with a maximum penalty of €20-million – or nearly R300-million – for transgressors.

GDPR marks a step toward improved individual rights over large corporates and states that prevents the latter from using and abusing personal information at their discretion. Considering the prevailing trust deficit – one global EY survey found that 60% of global consumers worry about hacking of bank accounts or bank cards, and 58% worry about the amount of personal and private data organisations have about them – the new regulation comes at an opportune time. But it is almost certain to cause disruption to normal business practices when implemented, and therein lies both a threat and an opportunity.

The fundamentals of trust

GDPR is set to tamper with two fundamental factors that can have a detrimental effect on the implicit trust between financial services providers and their customers: firstly, customers will suddenly be challenged to validate that what they thought companies were already doing – storing and managing their personal data in a manner that is respectful of their privacy – is actually happening. Secondly, the outbreak of stories relating to companies mistreating customer data or exposing customers due to security breaches will increase the chances that customers now seek tangible reassurance from their providers that their data is stored correctly.

The recent news of Facebook’s indiscriminate sharing of 50 million of its members’ personal data to an outside firm has not only led to public outcry but could cost the company $2-trillion in fines should the Federal Trade Commission choose to pursue the matter to its fullest extent. The matter of trust also extends beyond personal data: in EY’s 2016 Global Consumer Banking Survey, less than a third of respondents had complete trust that their banks were being transparent about fees and charges.

This is forcing companies to reconsider their role in building and maintaining trust with its customers. In any customer relationship, much is done based on implicit trust. A personal banking customer will enjoy a measure of familiarity that often provides them with some latitude – for example when applying for access to a new service or an overdraft facility – that can save them a lot of time and energy. Under GDPR and South Africa’s POPI act, this process is drastically complicated: banks may now be obliged to obtain permission to share customer data between different business units (for example because they are part of different legal entities and have not expressly received permission). A customer may now allow banks to use their personal data in risk scoring models, but prevent them from determining whether they qualify for private banking services.

What used to happen naturally within standard banking processes may be suddenly constrained by regulation, directly affecting the bank’s relationship with its customers, as well as its ability to upsell to existing customers.

The risk of compliance

Are we moving to an overly bureaucratic world where even the simplest action is subject to a string of onerous processes? Compliance officers are already embedded within every function in a typical financial services institution, as well as at management level. Often the reporting of risk processes sits outside formal line functions and end up going straight to the board. This can have a stifling effect on innovation, with potentially negative consequences for customer service.

A typical banking environment is already creaking under the weight of close to 100 acts, which makes it difficult to take the calculated risks needed to develop and launch innovative new banking products. Entire new industries could now emerge, focusing purely on the matter of compliance and associated litigation. GDPR already requires the services of Data Protection Officers, but the growing complexity of regulatory compliance could add a swathe of new job functions and disciplines. None of this points to the type of innovation that the modern titans of business are renowned for.

A three-step plan of action

So how must banks and other financial services firms respond? I would argue there are three main elements to successfully navigating the immediate impact of the new regulations:

Firstly, ensuring that the technologies you use to secure, manage and store personal data is sufficiently robust. Modern financial services providers have a wealth of customer data at their disposal, including unstructured data from non-traditional sources such as social media. The tools they use to process and safeguard this data needs to be able to withstand the threats posed by potential data breaches and malicious attacks.

Secondly, rethinking the core organisational processes governing their interactions with customers. This includes the internal measures for setting terms and conditions, how customers are informed of their intention to use their data, and how risk is assessed. A customer applying for medical insurance will disclose deeply personal information about themselves to the insurance provider: it is imperative the insurer provides reassurance that the customer’s data will be treated respectfully and with discretion and with their express permission.

Thirdly, financial services firms need to define a core set of principles for how they treat customers and what constitutes fair treatment. This should be an extension of a broader organisational focus on treating customers fairly, and can go some way to repairing the trust deficit between the financial services industry and the customers they serve.

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