Biometrics is thriving with the explosive growth in mobile

17 Feb Biometrics is thriving with the explosive growth in mobile

Interview with Calum MacLeod, Behaviosec

Calum MacLeod is not the youngster you expect to work for a start-up like Behaviosec. He explains that he joined Behaviosec as director of business development a half year ago, when he had the opportunity to team up again with a number of former colleagues from twenty years earlier. They’d been there before, doing “rocket science stuff” back in the 90s with another start-up, and fast forward a generation, and yet another opportunity to solve problems in a new world. Behaviosec is a Swedish based company that launched in 2007. The background of its founders is typical for fintech startups: very smart young people that want to change the world and some experienced people that made their mark already in the financial services and IT sector and that focus with their start-ups on solving issues that can be a show-stopper for many businesses.

Behaviosec initial developments were focussed on protecting unauthorized use of PC’s when left unattended, based on recognition of keystroke and mouse movements. Basically, this means recognition by the way a person types on his keyboard (key stroke dynamics) or the way he swipes with his mouse (mouse dynamics). Compare it with the handwritten signature, every person has specific movements that can be used for recognition.

The business really began to explode in 2010 as Scandinavian banks were looking for improved authentication solutions for Internet and Mobile banking. Behaviosec’s success at migrating its device based behavioral technology to address both web and mobile banking has resulted in the technology becoming the de-facto standard in Scandinavia for internet and mobile banking. “The application of biometrics really began to thrive with the explosive growth in mobile since 2010”, says MacLeod. The attraction of Behaviosec’s software is that it seamlessly integrated with the web mobile application of banks. “Users don’t need a special device, and don’t need to change their behavior. And it gives the banks what they’re looking for: improved security and a great user experience. And at the same time the technology integrates easily with any existing system.”

Apple introduced the fingerprint on the mobile phone to the general public as means of identification with the launch of Apple Pay last year. MacLeod describes that with current developments in mobile devices, there are so many sensors that allow you to recognize someone such as the angle they hold their phone or the pressure they put on the screen, for example, that identifying users based on behavior has become extremely accurate.

MacLeod explains that with mobile the concept of user experience became one of the most important issues in developing software. This also changed the nature of the traditional IT investments. Before the digital transformation, people had high expectations about investments in traditional IT. Being the first to invest in online reservation software, for example, like American Airlines once did, gave companies a head start. Now companies can buy the knowledge and services in the market and investments in traditional ICT do not give a competitive advantage anymore. MacLeod compares it with the beginning of electricity; at first factories had to invest themselves in the supply of electricity, afterwards they simply could sign a contract with an energy provider.

The fact that Behaviosec is nominated again for the EU Fintech50 in 2015, illustrates that Behaviosec is really one of the companies to watch in the field of fintech and biometrics. Despite the success of Behaviosec MacLeod is very thoughtful about developments in biometrics. No matter how well developed and accurate the biometrics services are, from a societal point of view, it is necessary to have transparent discussions about the storage and use of data in relation to privacy issues.

But there are many other things to be thought about as well. Now Behaviosec’s business is thriving, they have to be keep on nurturing the specific culture and mentality, which is typical for start-ups. Part of the success of Behaviosec is realized by highly skilled and dedicated developers, who are used to work in a flat organisation and who are used to have flexible working schedules. MacLeod experienced in other companies that with the advent of venture capital there is a lot of pressure to formalize the organization’s procedures, a process that can be very counterproductive.

On a commercial level, Behaviosec is ready for the challenges of the international marketplace. For developing regions, like Africa, there are opportunities for Behaviosec because of the high adoption of mobile banking. The technology is particularly suited for this type of scenario since in some cases a single family will all use one mobile phone to do their mobile banking. And in the US, it is not very unusual for a family to have only one account and one password for Internet banking, and for different family members to use it.

Now that most of Scandinavia is using Behaviosec, the company is working with many other banks throughout Europe, and globally. MacLeod foresees some serious shifts in what players will be dominant in the future: “Every week we see new banks being launched. Telecom provider, Orange, recently launched Orange Finance in Poland”.

But also on a country level, there are shifts. MacLeod: “The Dutch market is always an interesting market, because of the high adoption of Internet banking, and Dutch banks have always been leaders when it comes to innovative financial services, so it will be interesting to see what they think of behavior biometrics. iDeal is a good example if this. We have a lot of projects across Europe and we would expect to see the Dutch banks leading the way”.

Interview by Carlien Roodink, partner Holland FinTech