Using Cognitive Technologies to Ensure the Information Security of

Banks in the Conditions of Digital Transformation and Development of

Biometrical Identification

1BORIS M. FEDOROV, 1SVETLANA V. FEDOROVA, 2HUAMING ZHANG,

1NATALIA A. MAMEDOVA

1Basic Department of digital economy, Higher School of Cyber Technologies, Mathematics and

Statistics, Plekhanov Russian University of Economics,

RUSSIA

2Deputy Dean, School of Economics, Shanxi University of Finance and Economics,

CHINA

Abstract: The digital transformation of the economy will affect all spheres of life of every citizen of the

Russian Federation. This also applies to the financial sector, where in the near future the standard for providing

services to customers will be the possibility of their remote receipt, which, among other things, will be

facilitated by the use of biometric identification technology. However, this requires great effort in terms of

information security. One of the directions in this area should be cognitive technologies, focused on human

intellectual abilities. The article discusses the use of cognitive technologies to ensure data security when using

biometric identification in the context of the development of this direction in the framework of the policy on

digital development of the economy of the Russian Federation.

Key-words: digital transformation, financial companies, cognitive technologies, biometrics.

Received: July 22, 2022. Revised: November 25, 2022. Accepted: December 17, 2022. Published: January 26, 2023.

1 Introduction

The current stage of development of the world

economy is characterized by a high level of

scientific and technological progress, the

introduction of new technologies into daily use, and

an increase in the amount of information and data

used in decision making, [1]. All these changes lead

to the transition of existing economic formations to

a new level - the economy of knowledge, one of the

elements of which is the universal digital

transformation. The basis of economic, social, and

cultural relations is the use of digital information

and communication technologies. The response to

world processes was the adoption in the Russian

Federation of the National Program “Digital

Economy of the Russian Federation”, approved by

the government on July 31, 2017. The strategic

objective of implementing the digital transformation

of the Russian economy is a matter of global

competitiveness and national security.

As part of the overall digitalization and transfer

of the client base to the remote provision of its

services, including through the use of biometrics

technology, banks and other financial market

participants in the Russian Federation need to

ensure an adequate level of information security.

Financial companies are responsible to customers

regarding the execution of payments, as well as the

obligation to ensure the confidentiality of

transactions. For this reason, the use of advanced

technologies in the field of security is a necessary

task for business development and the ability to

respond to your commitments.

18 December 2017: The Government

Commission on the use of information technology

to improve the quality of life and the business

environment has approved an action plan for the

direction of "Information Security" Program

"Digital Economy of the Russian Federation '' in

2018-2024 years. The approved program includes

measures to develop and use new technologies to

ensure the information security of personal data of

citizens of the Russian Federation, as well as data

that is a commercial or banking secret.

2 Role of Internet Technologies in

Russian Banking System

In the conditions of transformation of the Russian

economy and its transition from the traditional

system level of the knowledge economy, a complex

change occurs in its functions, values, development

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Boris M. Fedorov, Svetlana V. Fedorova,

Huaming Zhang, Natalia A. Mamedova

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vector and fundamentals of the reproduction

process. Moreover, these are radical changes of the

system-forming components, which lead to the

formation of new relations based on innovations.

This also applies to the relationship between

organizations and customers.

A knowledge-based economy is an economy that

creates, spreads, and uses knowledge to ensure its

growth and competitiveness. This is an economy

that not only uses knowledge in a diverse form, but

also creates it in the form of scientific and high-tech

products, highly qualified services, and education,

[2].

The society is in the stage of technological

singularity, which is stimulated by many factors:

technological capabilities for analyzing large data

arrays, increasing computing power and speed of

information processing, improving artificial

intelligence, and integrating real and virtual worlds

when people and devices act as equal parties to

communicate (Internet of things), [3].

One of the cardinal change, especially in the

service sector, is the ability to render them remotely,

using Internet technologies. The new paradigm of

the information society is the ability to receive

goods and services remotely, as quickly as possible

and at the same time being in any part of the Earth.

These processes are due to globalization trends, as

well as new opportunities that have become

available thanks to the achievements of scientific

and technological progress. The primary relevance

of this approach has been found in organizations

engaged in the sale of certain goods to end users,

but then the use of Internet technologies has become

a general trend for service organizations, [4].

Nevertheless, there remained branches where the

role of Internet technologies was not exclusive and

was considered only in the concept of additions to

the core business, which was carried out according

to traditional schemes. One such industry is banking

and other financial companies. First of all, this is

due to the need to ensure a high level of information

security, which is much simpler and easier to

implement an “its” site: in bank branches,

operational offices, ATMs. But market demands and

high competition in the industry require banks to

take active steps to expand the existing client base,

which can be achieved primarily due to the high

quality of services provided. At the same time,

quality criteria in the first place mean the

opportunity to receive the service as quickly as

possible and with minimum requirements for its

design. This requires the development of used

technologies that contribute to the formation of a

new, innovative business.

This is especially true for medium and small

banks. This is due primarily to the fact that the

entire banking system in recent years has become

closer to a complete monopoly on the part of state

banks, which are at the same time the largest in

terms of net assets. According to the Herfindahl-

Hirschman index, which reflects the level of

concentration of assets, in the Russian Federation it

is 8.69 points, which indicates the oligopolistic

nature of the market. For comparison, in the United

States this figure is 16.85 points, in the UK - 24.27,

and in Japan, on the contrary - 8.32, [5].

At the same time, one of the criteria for the high

quality of the services provided is the safety of

operations performed by customers. This part of the

activity is not visible to the end user, but

nevertheless it is critical, and its provision is the

most important task of the bank.

Remote banking services have already become

the norm, but not all organizations represented on

the domestic market can offer a truly wide range of

services or a unique and convenient service. Over

the past five years, the share of users of such

Internet banking services has grown by about 3-4

times in the total retail customers of Russian banks.

According to a study assessing the effectiveness of

Russian Internet banking services for individuals,

conducted by Markswebb Rank & Report, 69.5%, or

37.4 million Russian Internet users aged 18 to 64,

use Internet banking for individuals ,[6]. For

comparison, in 2018, the number of Internet

banking users increased by 32% compared with

2017.

3 The Use of Biometrics for Digital

Identification of Remote Clients

Biometrics is a scientific discipline that studies

ways of measuring and static analysis of people's

physical and behavioral characteristics, to identify

one person from many other people. Biometric

technologies are being actively integrated into

different areas around the world. Already, biometric

identification technologies have become an integral

component of the global information technology

market and are becoming a convenient tool for

solving a wide range of tasks. Currently, they are

used and implemented in many areas or areas aimed

at ensuring the protection of information, such as:

online payment services, personal identification

systems in various structures and in banking

structures. Every year the number of biometric

systems and their users increases.

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Boris M. Fedorov, Svetlana V. Fedorova,

Huaming Zhang, Natalia A. Mamedova

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Well-known examples of biometric data are

characteristic patterns of the iris or papillary lines on

the fingertips, [7]. However, it is worth noting that

biometrics include not only physical, but also

behavioral indicators, such as gait or individual

features of typing on the keyboard, [8], [9],

However, whatever type these data belong to, they

are inherently inherent in a person and therefore can

guarantee a very high reliability of identification -

provided that the readers are difficult to deceive.

Identification using any type of biometric data

consists of the following steps:

• Record - the system remembers the biometric

data.

• Selection of a biometric sample - information is

processed and converted into a mathematical code.

• Comparison — the stored biometric sample is

compared with that presented during the

identification.

• Getting the result - the algorithm gives the

result of the coincidence of biometric samples.

The volume of the global market for biometric

systems at the end of 2016, according to the

international consulting company

J'son & Partners, estimated at 14.45 billion US

dollars. According to the forecast, for the next 6

years, the compound annual growth rate (CAGR) of

the biometric technology market will be 18.6%, and

the projected market volume by 2022 will grow to

40.2 billion US dollars, [10], [11]. (Fig. 1)

The largest segments of the world market for

biometric systems are in the public sector, including

the migration sector, as well as the travel segment.

The third major market for biometric systems is the

financial sector, whose share is estimated at 15%.

Banks around the world are launching pilot

projects to test various biometric technologies, and

many banks are already actively using them in

business practice. For example, two major banks in

Singapore (DBS and OCBC) use voice recognition

systems in their call-centers. City Group also

integrated voice biometrics into its processes in the

Asian region (the bank plans to connect about 1

million customers to the service).

Fig. 1: Volume of the global market for biometric

systems 2015–2022, [10], [11]

In recent years, multifactor authentication using

biometric technologies has been developed at the

highest rates in the financial sector, which is

typically used in critical areas such as banking and

insurance, as well as security.

Of all the multifactor authentication models, the

most common (and traditional) is two-factor

authentication (for example, pin code or one-time

password plus biometric technology), which is used

in online banking, ATMs, and access to bank cells.

Three-factor and more authentication solutions are

applied when it is necessary to provide exclusive

access or for operations requiring increased

confidentiality. Having considered the best

practices, we concluded that for most online

operations, when providing banking services, a two-

factor model will suffice, provided it is highly

reliable, or both factors are directly related to

biometrics.

In the Russian Federation, biometric

identification in banks is widely used. Large banks

use voice technologies in call centers, face

recognition technologies when a client re-applies to

a bank for a loan, fingerprint scanning to enter a

mobile application and access bank cells.

The remote identification mechanism in the

Russian Federation allows you to open deposits,

accounts, and receive many other services online.

To do this, the client only needs to come to the bank

with the documents once and go through the

primary identification - to record voice and video.

The bank sends this data to the Unified biometric

system. Then a person can remotely receive the

services of any bank, having passed a double

confirmation of identity: through the Unified State

Identification and Authentication System and

through the Unified Biometric System. The whole

procedure will take several minutes. At the same

time, the Ministry of Digital Development,

Communications and Mass Communications has

developed criteria for biometric samples - face

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Boris M. Fedorov, Svetlana V. Fedorova,

Huaming Zhang, Natalia A. Mamedova

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images and voice recordings that will be used to

identify citizens in a single biometric system.

On December 25, 2017, “Otkritie Bank”

officially announced the launch in their mobile

application of money transfer services by customer

photo. “Otkritie Bank” became the first bank in the

world with such a service. The service is

implemented using a unique technology - the neural

network facial recognition system, which allows

you to identify a client with his biometric data with

a high degree of accuracy. To use the service, you

need to download the application “Opening.

Translations” (available for iOS and Android

systems), in the main menu, select the type of

translation - “translation by photo”- and take a

picture of the recipient on the smartphone’s camera

or select a photo of it from the gallery. Next, the

image will be sent to the banking system of face

recognition, which will determine the recipient and

will display in the application the masked number of

his bank card, to which the transfer will be made.

One of the main problems encountered during the

creation of the service was the correct identification

of the user and the ability of the mechanism to

estimate that the camera reads to a real person and

not his photo.

It is important to note that biometric data is

particularly sensitive information, the compromise

of which leads to serious consequences. In this

regard, when using biometric data for identification

purposes, uniform requirements for their transfer,

storage, processing, and protection of data should be

applied.

4 Modern Technologies to Ensure the

Safety of Banking

The increase in the number of transactions carried

out by customers of banks through remote services

leads to the need to develop mechanisms and means

to ensure their high level of security. First of all, it

concerns the detection of “suspicious” and

fraudulent transactions. An example is the work of

the international payment system MasterCard,

which unites more than 22 thousand financial

institutions around the world, [12]. Millions of

payments pass through the payment system every

day, some of which are potentially fraudulent. And

for their detection, analytical systems are used,

which according to the developed algorithms

correlate transactions according to certain criteria

and, if they coincide, block a bank card. Such

algorithms are simultaneously used more.

1 million, which in a matter of seconds can relate

a transaction to an unreliable one. For example, a

person making a trip from Moscow to Brazil with a

transfer in Portugal, made purchases at three

airports, risks that his card will be blocked due to

transactions in three countries distant from each

other during the day. The bank card will be blocked

due to an algorithm based on machine learning

technology.

But similar technologies are implemented with

the active influence of a person as an expert,

creating the necessary models for analyzing

incoming data and developing the necessary

solutions. However, only about 20% of this data is

structured, that is 80% of it is not visible for

computer systems created by classical technologies.

To solve this problem, cognitive calculations are

used, which allow to partially replicate the

characteristics of the brain in terms of processing

and analyzing incoming information, as well as

opportunities for self-learning, [13]. For example, a

client's profile can be enriched from various sources,

from the transaction history — how a person spends

money in relation to how much he receives. It is

also possible to find data on how he behaves in

social networks, how he moves around the city, in

which places he spends more time. And this data is

used in the subsequent determination of the

attribution of transactions for fraud.

The field of cognitive technologies is one of the

most promising in terms of the development of

human intellectual abilities. In addition, artificial

intelligence can use many different parameters to

identify behavioral abnormalities and minimize the

risks associated with the human factor, eliminating

subjectivity in making decisions. With a high degree

of accuracy, it is possible to identify certain

segments of the IT infrastructure that may be subject

to network attacks or external intrusions, [14], [15],

[16]. The consequences of cyber attacks are

predicted based on machine learning and natural

language processing methods. One of the

implemented solutions is the use of a semantic

model of security descriptors in order to automate

the low-level modeling of threat scenarios based on

the description of computer attack patterns. This

model simplifies informing about the consequences

of an attack and reduces the cognitive burden on

researchers by automatically predicting the

consequences in case of new attacks, [17], [18]

With the help of cognitive technologies, it is also

possible to identify possible cases of fraud,

including actions by bank employees. With the

standard work of an analyst in the detection of

fraud, there is a high degree of probability that some

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Boris M. Fedorov, Svetlana V. Fedorova,

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things will be overlooked. The use of systems based

on cognitive technologies is able, for example, to

detect anomalies in the behavior of traders in

making transactions, analyzing several sources of

information at the same time, including telephone

conversations, assessing intonation, and comparing

the speech to keywords. According to a study of the

US banking market, only 16% of the surveyed

banks were able to detect fraud cases in real time,

[12].

Approved systems have the ability to self-learn,

which increases their effectiveness in the

accumulation of a larger number of analyzed events.

The creation of “anti -fraud” models and the

possibility of their distribution among the

participants will increase the level of protection in

general for the financial market.

Cognitive calculations are particularly effective

in processing and evaluating unstructured data —

information that is difficult to structure in rows or

columns. In cognitive technologies, such as natural

language processing, semantic computing, and

handwriting and image recognition, advanced

algorithms are used to analyze data to identify

valuable information and determine the tone of the

text. According to a study conducted by the

International Data Group in 2015, almost 90% of

the data collected today are unstructured. Thus, the

use of cognitive computing can help companies to

become a leader in their industry, [18].

For our part, we consider it imperative to use

cognitive technologies to ensure information

security in the context of the transition to remote

customer identification, considering the use of

biometrics, [19]. According to a study of the

international market for the use of biometric

technologies, more than 70% of all biometric

information is unstructured, [20]. For this reason,

the application of cognitive technologies nowadays

looks like the most promising direction for ensuring

the protection of information. The existing examples

of solving individual elements of biometric

identification, already implemented by Russian

banks, have proven the high efficiency of using

cognitive technologies (based on neural networks,

genetic algorithms, and data mining).

Biometrics has already established itself in other

areas, such as border control, where increased

requirements for correctness and correctness of

decisions are also applied. Moreover, these

decisions are made in real time, which is especially

important for identifying adverse financial

transactions when using biometric data, [21], [22],

[23].

The development of areas of digital biometric

verification, cognitive technologies and the use of

artificial intelligence should be as closely integrated

with the national Digital Economy program in

information security. Ensuring the safe use of

biometric identification will be provided through the

federal supervisory authority in this area, as well as

the creation of working groups between all

participants in a pilot project to develop a single

biometric system.

The remote identification mechanism is universal

and can later be extended to other areas of the

financial market, in particular insurance,

microfinance, as well as to the sphere of the state

and other services. Also, information security

solutions that will be implemented for financial

companies will find application in these industries,

which will significantly reduce costs for future

implementations.

5 Conclusion

The need for changes, the transfer of most services

to remote services, caused by customer needs will

contribute to more active technological changes in

banks. The massive use of biometrics will

increasingly contribute to this trend. Along with

these financial companies, it is necessary to

approach with great responsibility the

implementation of the information security policy of

the operations, as well as the storage and

transmission of customer data. The use of cognitive

technologies in the near future looks like one of the

most promising areas. And despite the high costs of

implementation, it can bring tangible results,

including financial results, as well as improve

business transparency and reduce the negative

consequences of various risks. Positive effect will

be achieved through the active participation of the

state in the development of technologies and

regulatory standards within the framework of the

Digital Economy of Russian Federation. It is also

necessary for financial companies to create

partnerships in the development of cognitive

technologies in the field of biometric identification

and information security. In the near future, it is

expected that Russian companies will be able to

offer comprehensive solutions, taking into account

adaptation to the conditions of the functioning of the

modern financial market.

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Boris M. Fedorov, Svetlana V. Fedorova,

Huaming Zhang, Natalia A. Mamedova

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Policy)

The authors equally contributed in the present

research, at all stages from the formulation of the

problem to the final findings and solution.

Sources of Funding for Research Presented in a

Scientific Article or Scientific Article Itself

No funding was received for conducting this study.

Conflict of Interest

The authors have no conflicts of interest to declare

that are relevant to the content of this article.

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