Israeli Banks to Start Using Customers' Biometric Data

As Interior Ministry builds biometric database of citizenry, Discount and Leumi introducing smartphone apps.

Dreamstime

Two Israeli banks are slated to become Israel’s first commercial institutions that use biometric data to identify their customers, under plans unveiled recently.

This comes as Israel’s Interior Ministry is working on a biometric database of citizens. The database is still in its pilot phase, but has drawn criticism from privacy advocates.

On Monday, Discount Bank announced that it intends to unveil within the next few weeks an iPhone application that would enable customers to connect to their bank accounts via biometric data, without use of a username and password. This comes after the head of technology at Bank Leumi declared that the bank intends to unveil a similar application that reads fingerprints in the first quarter of 2015. It remains to be seen how comfortable Israeli consumers will be when it comes to letting companies record their fingerprints.

Technology giant Apple also recently released an application that allows users to sign in via biometric identifiers. Apple Pay was released in the United States in October.

The Interior Ministry’s authority for managing the biometric database commissioned a survey looking into the use of biometric data by financial institutions around the world. According to that study, of which TheMarker has obtained a copy, Brazil has a central database of fingerprints used to identify bank customers when they open new bank accounts and use ATMs. Brazil launched its database due to an unusually high rate of financial fraud. The number of ATM fraud instances has reportedly dropped by 45% since the database was launched.

ANZ, the largest bank in Australia and New Zealand, is also planning to launch a biometric database to identify customers. According to a poll of 1,000 ANZ customers, 79% said they would feel comfortable letting the bank record their fingerprints.

In the U.S., Bank of America and JP Morgan use biometric data to identify customers via smartphones, and Bank of America also offers biometric identification at ATMs.

Israel’s banks reportedly have no intention of installing biometric identification points at ATMs, in part due to the high cost involved. However, some of the country’s credit card companies are looking into cellular payment systems such as Apple Pay, which enables customers to charge their credit cards by placing their cell phones against a device at a cash register and identify themselves via fingerprint. Apple charges a 0.15% commission for all payments made through Apple Pay.

Israel’s credit card companies will have to determine whether this is a price they are willing to pay – the average clearing fee in Israel is currently 1.1%, meaning the payments to Apple would amount to about one-seventh of what credit card companies currently earn from transactions.