Banks urged to strengthen verification of customers’ identities

The transition away from SMS-based OTPs in the Philippines highlights a growing recognition that traditional authentication, while verifying credentials, often fails to confirm the actual presence and identity of the person using them. This distinction is crucial as digital financial service adoption, including e-wallets and mobile banking, increases fraud exposure through methods like phishing for passwords and OTPs.

Biometric authentication, specifically facial recognition combined with liveness detection, is presented as a stronger alternative. However, the effectiveness hinges on ensuring a genuine person is physically present, as AI-generated images pose a risk to facial recognition alone. Integrating liveness detection, device intelligence, behavioral signals, and risk-based checks is suggested to create a layered security approach.

Beyond technical implementation, the shift requires banks to re-evaluate how they document transactions. A simple "authentication successful" record is insufficient; financial institutions need defensible evidence detailing the authentication methods, timing, and security controls applied. This is particularly important for managing disputed transactions and establishing accountability.

Implementing these stronger measures also involves practical considerations such as device compatibility, internet connectivity, and customer familiarity with new biometric processes. The success of the transition will depend on whether these methods genuinely enhance security without creating undue friction for users, a balance banks must carefully assess.