How Biometrics Can Help Secure CBDCs?
In the final post of our series on CBDCs (Central Bank Digital Currency), Vince Graziani, CEO, IDEX Biometrics, explains how biometric sensors can help make CBDCs a viable and secure alternative to traditional cash payment methods.
Times are changing in the financial world, as more and more countries around the globe embrace CBDCs as a means of legal tender. Standing for Central Bank Digital Currency, CBDCs promise to deliver a range of attractive benefits, including a reduced reliance on physical cash payments, so it’s little surprise that nations such as China, the USA, Korea and even the UK are interested in this innovative new approach to money. However, if the proposed new digital currencies are to become a viable alternative to cash, it is essential that they are made sufficiently secure.
Touch-Free Is The New Normal
Thanks in part to the Covid pandemic, consumers are now extremely familiar – and comfortable – with making touch-free payments. Not only does such a payment method ensure that safe hygiene standards may be upheld, they are also quick and convenient, typically requiring no PIN input. Paying without touching the terminal, referred to as touch-free or contactless payments, also occurs via a smartphone or wearable tech devices such as smartwatches. If convenience truly is king, then the arrival of CBDCs will surely be welcomed by such customers.
How CBDCs Work?
These digital currencies are typically stored in “hot” or “soft” “wallets”- a term used to describe the device on which they are held, such as a laptop or smartphone. The device must be connected to the internet, and there is the potential of vulnerability to hackers as a result. Central banks need a solution to protect the consumer, and it is here that biometric sensors are uniquely positioned to offer the highest level of integration and security that is needed.
Biometric Sensors Can Support The Roll-Out Of CBDCs
The many benefits of biometric sensors make these devices the ideal addition to any “cold” or “hard” wallet system. Cost-effective for the banking institution or card issuer to build into each payment card, biometric sensors ensure swift, reliable authentication every time a transaction takes place, and can support the terminal touch-free payments that customers now rely on. The embedded sensor will read the card user’s fingerprint, in a way that is already familiar to many smartphone and tablet users, ensuring that unauthorised use is prevented, and a high level of accessibility is maintained. As a means of helping to reduce financial exclusion, digital currencies are likely to play a key role, and including the most stringent security methods will help to reinforce this, as customers will feel confident that their money is safe. Furthermore, such payment cards will allow those without access to a bank account, or a smartphone or other internet-enabled technology to enjoy the benefits of CBDCs, thereby allowing them to take control of their finances safely and effectively.
Security Is Crucial
Indeed, for many users, it will be security and identity protection matters that will drive the public’s willingness to embrace these new digital currencies. By being able to provide robust authentication methods, such as fingerprint sensors and off-cloud usage, the financial institutions will be far better placed to promote this new currency and gain that vital customer support.
In our introductory post, we have talked about how CBDCs are set to transform the way we think about and manage our money