Facial recognition technology is being adopted by the financial services sector, with Chinese companies receiving the most funding
According to Javelin Strategy & Research’s ‘2019 Identity Fraud Study’ report, 14.4 million US consumers fell victim to fraud in 2018.
Despite an increase in adoption of EMV cards and strict password creation policies, banking customers are falling victim to fraudsters. The key to improving banking security is now seen in facial recognition software and other biometric solutions.
The Chinese AI provider Megvii Technology Ltd, commonly known as Face++, recently raised $750 million. According to the company statement, the proceeds will be used to strengthen the technology capabilities in deep learning, recruit talent and finance global expansion, thus accelerate commercialization of its AI-enabled solutions.
According to data from Refintiv, investments in the AI sector surged to $2.1 billion through 88 deals in 2018. Megvii’s rival SenseTime Group Ltd has also raised more than $600 million from SoftBank and its Vision Fund. Last year, tech giant AliBaba invested in Megvii that provides the technology for Alipay, Alabama’s online payment unit and uses facial recognition to make transactions. Clearly, Chinese companies are getting a lot of support in terms of funding for this fledgling technology.
Facial recognition technology
Facial recognition is considered among the most convenient form of biometric modalities. As facial recognition technology develops for mobile devices, it offers multi-factor authentication that presents more barriers to fraudsters. Biometrics-as-a-Service (BaaS) not just provides a cost-effective way for financial services enterprises to integrate facial recognition technology into operations, but also, the web services running from a cloud allow organizations to perform biometric comparisons without even installing the software.
However, Facial recognition could also pose a higher risk of impersonation, given the higher availability of facial images of a given victim. It’s essential to implement means to detect spoofs by assessing the “liveness” of the picture. This could be a risk, but there are methods in place for mitigating it.
Beijing’s plans for being an AI leader
The Megvii fundraising comes amid Beijing’s plans to build closed-circuit television (CCTV) surveillance network and become an international leader in AI. Though facial recognition technology has helped police track crimes, there have been concerns around its use for surveillance. Higher adoption of facial recognition technology raises questions of privacy, but biometrics also makes it difficult for fraudsters to hack financial data.
So the investments in FR are going to pay off in the near future, and Chinese start-ups will be the likely biggest beneficiaries, for timely investments.