Biometric Identity Verification: Enhance Security in 2026

Did you know that over 50% of credit cardholders say they’d switch banks if their current provider didn’t offer biometric authentication?

As fraud becomes more sophisticated and digital threats continue to evolve, biometric solutions are transforming how financial institutions verify identities, prevent fraud, and deliver customer experiences.

In this article, you will learn everything you need to know about biometric identity verification and its role in strengthening security across financial institutions.

Key takeaways:

• Biometric verification replaces weak passwords with real identity proof

It confirms a user’s identity using unique biological traits like fingerprints, face, and voice, making authentication more secure, faster, and harder to steal or fake than traditional logins.

• Modern biometric systems go beyond simple scans

They use enrollment, liveness detection, AI-powered matching, and secure template storage to prevent spoofing, deepfakes, and impersonation while keeping the experience seamless for real users.

• Banks gain major security and efficiency benefits

Biometrics reduce fraud, speed up onboarding, cut operational costs, and improve customer experience while supporting compliance with AML, KYC, and data protection regulations.

• Biometrics alone do not stop transaction-level fraud

Verifying identity does not prevent bad checks, mule accounts, or fraudulent deposits, which means institutions still need real-time risk analysis and behavioral monitoring after login.

• VALID Systems fills the security gap beyond identity verification

While biometrics prove who the user is, VALID protects what they do. With real-time check fraud detection, shared network intelligence, and instant deposit decisioning, VALID stops fraud at the transaction level, making it a critical layer beyond biometric authentication.

What is biometric verification?

Biometric identity verification is the process of confirming a person’s identity using their unique biological traits.

Instead of relying on passwords or PINs that can be forgotten, shared, or stolen, biometrics authenticate users using physical characteristics such as fingerprints and facial features.

For example, a bank can verify a customer by scanning a fingerprint or face and matching it against a stored template or ID photo.

Because it offers strong security alongside a smooth and convenient user experience, biometric verification has become an essential tool in financial services. In fact, over 80% of financial institutions worldwide are already using some form of biometric authentication.

Types of biometric authentication

Modern biometric authentication takes many forms. Below are the main types used in financial services, each with real-world banking examples.

1. Fingerprint recognition

Fingerprint authentication uses the unique ridges and whorls on a person’s fingertip to verify identity, making it one of the oldest and most widely used biometric technologies.

Popularized by smartphones, it’s now common in banking apps and even ATMs, as many major US banks (Wells Fargo, Bank of America, etc.) allow customers to log in with a simple touch using built-in phone sensors.

The process is fast: the device scans the fingerprint, compares it to a stored digital template, and grants access if there’s a match. Because each fingerprint is unique and difficult to copy accurately, this method offers both convenience and strong security.

2. Facial recognition

Facial recognition uses a camera, such as a smartphone camera or a kiosk scanner, to analyze facial features, such as the distance between the eyes, nose shape, and jawline.

Banks increasingly use this technology for secure logins and identity verification, including “selfie verification” during online account setup, where a user’s photo is compared with their official ID.

The system uses AI to confirm that a real person is present and that the faces match, helping prevent fraud and impersonation.

With features such as liveness detection and hands-free access, facial recognition offers a password-free way to securely authenticate users.

3. Voice recognition 

Voice recognition verifies identity by analyzing unique voice features such as pitch, tone, and speaking patterns.

It’s commonly used in bank call centers, where the system compares a caller’s voice to a stored voiceprint instead of relying on security questions, making authentication faster and more convenient.

For example, US-based Citibank uses voice recognition in its Taiwan call centers. It has reduced customer authentication time by 66%, cutting the process from 45 seconds to just 15 seconds.

While AI voice cloning has created new challenges, modern systems are adding liveness detection and extra security layers to help prevent spoofing.

4. Iris and retina scans

Iris and retinal scanning are highly secure biometric methods that identify people using the unique patterns in their eyes.

Iris scans use special cameras to read the colored ring of the eye, while retinal scans map blood vessels at the back of the eye, both offering extremely high accuracy and being nearly impossible to fake.

These technologies are mostly used in high-security settings and limited banking trials, since they require specialized hardware and can feel uncomfortable for some users.

5. Behavioral biometrics

Behavioral biometrics identify users based on how they interact with devices, such as typing patterns, mouse movements, scrolling behavior, or how they hold and move their phone, creating a unique “digital fingerprint.”

This technology works quietly in the background to detect fraud by spotting unusual behavior that doesn’t match a customer’s normal patterns, even after they’ve logged in. Because it’s passive and invisible to users, it adds a strong security layer without extra steps or inconvenience.

How do biometric identity verification systems work?

Biometric identity verification systems generally follow a simple, structured process made up of a few key steps:

Step 1: Enrollment

First, a user’s biometric is captured and stored as a secure, encrypted reference (“template”). This can happen in person (e.g., fingerprint scan at a branch) or remotely (e.g., a selfie in a banking app).

Enabling fingerprint login creates a mathematical template from the phone’s sensor, while digital account opening may store a facial template from a live selfie to compare with an ID photo.

Step 2: Liveness detection

Modern systems verify that the biometric comes from a real, live person, helping prevent fraud using photos, recordings, or fake fingerprints. Methods vary by modality:

Step 3: Matching

A live biometric sample is converted into a digital template and compared with stored reference template(s). This can be done as:

• Verification (1:1): The system checks whether the biometric matches the user’s enrolled record, asking: “Is this the person they claim to be?”
• Identification (1:many): The system compares the biometric against a database of users to determine identity, asking: “Who is this person?”

The system calculates a similarity score, and if it exceeds a set threshold, a match is confirmed, typically in milliseconds with optimized algorithms.

Step 4: Decision and action

The system uses the match result to either authorize the action or flag it for review. A successful match grants access, while a failed match may trigger rejection or alternative verification (such as a one-time code or security questions).

In onboarding, a mismatch between a selfie and an ID photo can result in application denial or a manual review. For high-risk actions, banks often use multi-layered security, requiring biometrics plus another factor, and if any check fails, the process is stopped.

Step 5: Secure data handling

Banks protect biometric data by storing secure templates rather than raw images, often keeping them on the user’s device. They log activity for security and follow privacy rules by getting user consent and deleting data when it’s no longer needed.

Legal, compliance, and regulatory considerations

Banks and credit unions in the US must consider several legal and regulatory factors when implementing biometric identity verification. Below are key laws, regulations, and guidelines relevant to biometrics in banking:

• Bank Secrecy Act/Anti-Money Laundering (BSA/AML): Under BSA/AML rules, banks must reliably verify each customer’s identity. While biometrics aren’t required by law, they are allowed and encouraged as a secure, innovative way to meet these standards. As long as the process is secure, well-documented, non-discriminatory, and inclusive with alternative options, biometrics can support strong compliance with identity verification requirements.
• Gramm-Leach-Bliley Act (GLBA) – Privacy and Safeguards: GLBA requires banks to protect the security and confidentiality of sensitive customer data, including biometric information. While biometrics aren’t prohibited, banks must safeguard them with strong controls (such as encryption, limited access, and vendor oversight) and handle them transparently and responsibly to stay compliant with privacy and data protection rules.
• State Biometric Privacy Laws (e.g., Illinois BIPA): State biometric privacy laws, such as Illinois’ BIPA, require clear notice, consent, and strong protections for biometric data, reflecting a growing trend toward stricter regulation at the state level. Even when banks are technically exempt (such as under GLBA), following these principles helps reduce legal risk, protect customer trust, and align with best practices nationwide.

Benefits and challenges of using biometric identity verification

Implementing biometric identity verification in banking offers significant benefits, but it also presents a set of challenges and considerations.

Pros:

• Enhanced security: Biometrics add a much stronger layer of protection than passwords because they can’t be easily stolen. Banks using biometric multi-factor systems report major fraud drops, including 63% fewer cases of synthetic identity fraud and 41% fewer account takeovers.
• Customer convenience and speed: Biometric login is faster and easier than traditional security methods. 38% of mobile banking users already use face recognition to log in, and another 32% say they would use it if their bank offered it.
• Efficiency and cost savings: Biometric verification reduces manual work, speeds up onboarding, and lowers operational costs for banks. Digital identity systems can cut customer acquisition costs from $280 to $120, and eventually to as low as $19, while also reducing fraud losses and call-center handling time.
• Compliance and risk mitigation: Biometrics help banks meet AML, KYC, and cybersecurity requirements by providing reliable identity verification. They strengthen multi-factor authentication, reduce the risk of breaches from weak passwords, and demonstrate regulatory compliance through secure verification logs.
• Fraud detection: Biometric systems can actively spot fraud in real time, from detecting fake account creation to identifying unusual user behavior.

Cons:

• Privacy concerns: Biometric data is deeply personal and can’t be changed or reset like a password, which raises concerns about how it’s stored and protected. Customers may feel uncomfortable sharing their faces or fingerprints unless banks clearly explain the consent process, security, and data protection.
• Security risks and spoofing: Biometric systems can still be attacked using fake fingerprints, deepfake videos, or voice cloning. 
• False matches and accuracy issues: Biometric systems aren’t perfect and can sometimes lock out real users or mistakenly accept the wrong person. Lighting, noise, physical changes, or bias in AI systems can affect accuracy and frustrate customers.
• User adoption and accessibility: Not everyone can or wants to use biometrics due to disabilities, aging, lack of technology access, or trust concerns. A recent survey found that 61% of Americans trust passwords more than biometrics.
• Legal and liability risks: If biometric systems fail, banks can face lawsuits, fines, and reputational damage. Strict privacy laws and consent requirements make biometric adoption a legal challenge, not just a technical one.

Strengthen your biometric security with VALID Systems

Biometric identity verification confirms who a user is, but it doesn’t ensure that every transaction they perform is legitimate. That’s where VALID Systems adds critical protection.

VALID bridges identity verification and fraud prevention by ensuring that activity tied to a verified user identity is continuously evaluated for risk.

Our real-time decisioning platform ensures each transaction, deposit, and account action aligns with trusted behavioral, transactional, and network intelligence.

Why you should consider VALID

1. 1. Even when a customer is verified, bad checks can still get through. That’s because identity checks alone don’t stop fraud at the point of deposit.

CheckDetect analyzes every deposited check in real time across mobile, ATM, and in-branch, and scores risk using AI. It analyzes depositor behavior, payee history, and shared network data to spot fraud as it happens, not days later.

What this means in practice:

• You get an instant fraud signal at the time of deposit.
• Risk scores help teams focus on the worst cases first.
• Controls can match your actual risk tolerance.
• Holds are communicated right away to reduce customer frustration.
• Decisions remain consistent across all deposit channels.
• Loss alerts happen in real time, not after the fact.

2. Edge Data Consortium gives you visibility beyond your own walls. It connects activity signals from 420M+ accounts and $4T in annual transactions, so suspicious behavior doesn’t stay siloed.

When a fake identity, mule account, or takeover attempt shows up anywhere in the network, the signal becomes shared intelligence, not an isolated incident.

The result is simple: You stop fighting fraud alone. You gain early warning on coordinated attacks, see cross-bank patterns as they form, and catch schemes that single-institution data can’t reveal.

3. InstantFUNDS delivers sub-second deposit decisions that give customers immediate access to funds without increasing fraud exposure.

By approving the vast majority of deposits in real time and providing guaranteed loss coverage, InstantFUNDS reduces operational friction, enhances customer trust, and unlocks new revenue opportunities for financial institutions.

Ready to secure your transactions with real-time fraud detection and smarter risk decisions? Contact us today and see how VALID strengthens security beyond identity verification.

FAQ:

How secure is biometric data?

Biometric data can be highly secure when it’s encrypted, stored safely, and handled in line with privacy laws, making it a reliable option for protecting sensitive information.

Can biometric systems handle large numbers of users at once?

Yes. Modern biometric technology is built to scale, allowing systems to process high volumes of users quickly and efficiently without performance issues.

Where is biometric technology most useful?

Biometrics is especially valuable in industries like finance, healthcare, e-commerce, and travel, where both strong security and fast, seamless user experiences are critical.

Are biometric systems compliant with GDPR regulations?

They can be fully compliant when implemented correctly, by following principles like data minimization, user transparency, and secure data storage.