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By Valentine Waturuocha
March 25, 2010 03:38AM
The emergence of Automated Teller Machine(ATM)
ATM or Cash points, first introduced in 1961 by City Bank of New York on a trial basis, allowed financial institutions provide their customers with a convenient way, round the clock, to carry out varying transactions which included withdrawal of funds, made deposits, check account balance, and later on included features to allow customers pay bills, etc. There was no need for a cashier to be present or for a customer to physically visit the financial institutions premises to carry out such transactions.

ATM technology allows customers carry out the above-mentioned transactions using an ATM card, which could be a debit or a credit card. An ATM machine authenticates the card by reading and verifying the magnetic strip, card number, expiration date, and an already provided or pre-selected PIN number.

Like with most technological advances, there is always a flaw which criminal-minded individuals identify and exploit to perpetuate fraud.

Technology is being constantly evolved so that ATM transactions can be an enjoyable experience to its customers, especially if one has to pay for goods or services in cash by 1.00am in the morning and has no money.

What better way than using Biometrics, which has successfully been applied for identification purposes to validate passport and travel documents, entry into secured areas, and in authenticating or securing financial transactions, especially in developed nations.

Biometrics can be applied to uniquely identify an individual, based on his/her physical or physiological or behavioural traits, features or attributes, which include facial recognition (visage is such an example), DNA, fingerprint, voice recognition, etc.

There is still the issue of fingerprint spoofing or cloning (fake biometrics), but it is certainly easier to clone a card number, as it is currently practised.

In different countries, biometrics technology (fingerprint authentication to be precise) has been successfully used to combat ATM fraud by financial institutions such as the Western Bank in the USA, Banco Falabella in Chile, Groupo Financiero Banorte in Mexico, to mention a few.

In developing countries such as Nigeria, according to reports, ATM fraud seem to be committed by mostly individuals linked to bank officers who are able to provide pin numbers and other relevant information required to commit such crimes.

With biometrics, such fraudulent incidents can be minimised, as an added layer of authentication is now introduced that ensures that even with the correct pin information and in possession of another person's ATM card, a fraudster will not be able to withdraw any money since the biometric features of every individual is unique.

The continuous usage of services such as the ATM will rely quite heavily on public perception and confidence that it is safe to use it for everyday transactions that include cash withdrawals, payment of bills, prepaid phone top up, and a host of other transactions which at the moment can only be carried out by actually going to one's local bank.

Investing in Biometrics
As Biometrics technology is becoming cheaper both in its application and usage, financial institutions need to invest in this technology as a way of securing transactions, both across the counter and whilst using the ATM.

It is possible that in securing transactions in this manner, financial institutions can provide even more services at the ATM which will generate more revenue and cut down on the amount of services offered across the counter.

By providing a wide range of services at the ATM, depositors and customers can conveniently carry out banking transactions round the clock and reduce the heavy reliance on across-the-counter services, which also is to the advantage of these financial institutions.

Certainly, a winning business case based on ROI (Return on investment) can be made for investing in using biometrics to secure ATM transactions.

In the United Arab Emirates, Barclays Bank in 2007 successfully implemented biometric technology to secure ATM transactions. In Bolivia and across the Middle East, Biometrics has been successfully applied as mentioned, providing confidence and peace of mind to bank depositors and customers in these countries.

Off course with such technology, combined with further educating depositors and customers, on the best practice – such as to always change one's pin number, not to use obvious numbers as one's pin number like, one's date of birth, car registration number, etc This will certainly all go a long way in reducing the level of ATM fraud currently experienced in developing countries. Installing all ATMs in a secure, properly lit environment, with CCTV coverage will also assist in minimising ATM fraud.

Also, in a country like Nigeria, a review of the relevant procedures within the financial institutions that caters for how pin numbers are generated, handled and delivered to the customer (at the least to minimise the number of people who it passes it through) will also contribute in combating this manner of fraud.

When the relevant technology is combined with best practice and an effective procedure, the results can be rewarding but they certainly need to be deployed hand in hand.

There is certainly no silver bullet method or technology advocated that will guarantee a 100% eradication of ATM fraud completely (there never is), since as mentioned, the emergence of new technology everywhere in the world is followed closely by a subverting technique or method but can certainly go a long way in minimising it.

The writer is an international IT and Business Process Consultant.