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Biometric authentication technology curbs microfinance org’s losses

Dhwani Pandya, Principal Correspondent

Growing Opportunity is a microfinance organization in south India that provides funding options to the poor, especially across rural India. In 2010, the issue of duplicate client applications cropped up, resulting in major financial losses for the organization. To combat this threat, Growing Opportunity deployed

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the biometric authentication technology.  

Growing Opportunity, a non-banking financial institution, mainly provides business and education loans as well secure saving products to the poor to start or expand business, improving their income and financial security. The organization is headquartered in Chennai with several other offices across south India. In 2010, the organization discovered that some clients were fraudulently trying to obtain two loans at a time using two ration cards. “To this end, we decided to implement the biometric authentication technology, which could notify us about such duplicate attempts to obtain loans,” mentions Immanuel Jeyaraj, head - information technology (IT) at Growing Opportunity.

US-based partner aids selection and deployment

Initially, the organization contemplated on implementing the unique identification (UID) system, instead of biometric authentication technology, but soon realized that it was a time-consuming process. Hence, Growing Opportunity sought support from its US-based partner Opportunity International (a global network of regulated formal financial institutions and non-profit NGOs serving economically challenged families with microfinance) to select and implement biometric authentication technology. The organization decided to adopt the biometric authentication technology from Identity Stream and its IT team played a major role in defining the product requirements and implementation.

While selecting and deploying biometric authentication technology, the organization had to consider several factors such as the number of fingers to be used, the finger to be used for printing, handling fingerprint image data, interfacing the biometric system with portfolio management application, and others. The organization realized that fingerprinting is an imaging solution, which will immediately increase the data size. “So we decided to use minutiae-based bit-strings for saving fingerprint information. It mainly highlights few areas of a fingerprint, converting it into a number and is stored in database as a string,” mentions Jeyaraj. This enables easy storage and comparison of fingerprints.  

Growing Opportunity has deployed biometric authentication technology for all its branches and the entire exercise took around six months. The organization is still busy capturing a lot of old client information. However, any new loan application now has to undergo the biometric authentication procedure. The biometric authentication technology used by Growing Opportunity runs in a batch mode. “We first capture biometric information in batch and let the number crunching (minutiae-based) happen overnight. The system actually matches all the numbers and identifies duplicates if any,” explains Jeyaraj. This is not a real-time system, as the fingerprint has to be matched across a huge database. “The system checks for duplicates not just locally, but across the entire organization,” adds Jeyaraj.

Tackling the fingerprint issue

Although the biometric authentication technology allows integration with other web-based systems, Growing Opportunity has only integrated its portfolio management software, which handles its loan products. The integration process went about smoothly, as Opportunity International had already tested the system. However, a few other issues cropped up while implementing the biometric authentication technology. “Capturing biometric fingerprints itself was a major issue,” remarks Jeyaraj. Indian women apply mehendi on their hands, which completely distorts fingerprint images; they often have knife cuts on their thumb, making it difficult to get the right fingerprint. To handle this, the organization first tried taking 10 fingerprints, but that was tedious and time consuming. Hence, it decided to take any two fingers, apart from the thumb for authentication.               

The biometric authentication technology has enabled Growing Opportunity identify a significant number of duplicate clients and thus, reduce related financial losses. Going forward, the organization aims to further strengthen authentication and identification of its clients using this technology.