Wednesday, July 28, 2010

Biometric Voice Signatures and Organizational Transformation

Trade Harbor  is an Openwater portfolio company specializing in delivering low cost voice authentication solutions primarily for the financial services industry.  Their primary insight is that current mechanisms to do business on line by capturing digital signatures are insecure and ultimately inadequate.  If my dog knew how to key in my credit card numbers (front and back) he'd be able to sign 'his' signature and that new 4 foot long mega chew toy would be winging its way mouthward, no questions asked.  Trade Harbor was designed to eliminate this problem.

But the more interesting opportunity with a voice signature application is its ability to drive organizational change and ultimately strategic positioning in the consumer financial services industry.  A reminder:  organizational change is nothing more than changed behavior by employees, partners and customers.  And it is strategically directed and focused changes in behavior that drive advantage.

So back to voice signatures:  The current mechanisms for authenticating customers into voice, web and even personal interfaces are appalling.
  • Appallingly obtuse: "give me your site key!"; "no, for this account your user ID is your account number unless you changed it", "your password must include both alpha and numeric fields", "what is your shared secret?  I'm sorry sir, I can't tell you which one you chose, you need to tell me". 
  • Appallingly insecure:  most people keep their userids and passwords on post-its, the more organized have them all crisply organized on a single 3X5 card for easy theft.
  • Appallingly unresponsive to variations in risk:  authentication to check an account balance is treated the same as that to make a trade.  
  • And appallingly expensive:  the lack of trust in the authenticity of the customer leads to challenge questions, snail mail confirmations, denied purchases, angry customers and burned out customer service representatives "yes sir, I know that I know who you are and that you need to get money out of the ATM today because you're in Khazakstan, but we must send the new pin to your home address.  Yes sir, I know that you aren't there and that the Yak Herd Hotel won't take a credit card."
This lack of trust means that the barriers to customers purchasing a new service from their existing provider often differ little from those required from a brand new customer.  From the customer's perspective, brand loyalty delivers little if any convenience or enhanced trust.  The bank that you have done business with for 20 years still doesn't know who the heck you are and doesn't trust you farther than they can throw you.  "User ID and password, please".  And that makes sense since the current system is shot through with fraud that costs consumers, vendors and banks more than a hundred billion dollars every year.

With Trade Harbor's VSS the paradigm can change.
  • The VSS can deliver far higher real 'field' levels of security than any UserID/Password/Physical Token combination can or ever could.
  • Try as they might, people can't forget or misplace their voices, a critical factor with a rapidly aging customer base.
  • A bank could stop treating customers like Pavlovian dogs ("site key!, ID!, Password!, Shared Secret!, rollover!, sit!; good boy!!") and start treating them like human beings:  "Hi!  All we need is your full name, your address and your voice."
  • VSS can be 'tuned' so that the authentication threshold for transferring money to a third party can be far higher than that for providing balance information.
  • And Voice is the only biometric that both has enormous signal complexity (making voices fiendishly difficult to replicate) and a ubiquitous capture tool (landline, mobile, or PC microphone).
So what?  Well a financial institution that makes it far easier for its customers to interact with it will have a compelling competitive edge.  VSS can drive down process costs and reduce fraud levels.  It also can make it much easier for existing customers to purchase services inside the firewall.  But most importantly, VSS offers marketers significant opportunities to differentiate services and increase sales.  Some examples  
  • Automated challenges to a customer's mobile phone so check and card transactions that exceed the fraud threshold can be validated by a simple automated call to the customer's mobile rather than rejected. 
  • Stronger VSS non-repudiation guarantees, protecting volume erosion from low service/low price competition.
  • Enhanced security feature bundles, yielding premium prices for true peace of mind.
  • Youth cards with flexible spending limits:  the student can spend up to $100 a day on her own but if she needs to spend more, the responsible party can approve it with a voice signature.
  • Corporate cards that support only certain transaction categories can be overridden with a voice signature from the appropriate executive.
  • Disbursements of cash, tickets, vouchers and other money equivalents can be delivered remotely via UPS or Fed-ex by simply requiring a voice signature be collected by the driver prior to disbursement.
And since more people have access to mobile telephones than flush toilets, the VSS is truly a world-beating solution.  The only question is which global financial institution will gain the enormous branding and executional leverage available to those that are the first to launch their ships out into the Openwater.

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