Privacy-First Identity Assurance Delivers Security Without Compromise

by Gabriel Steele
January 15, 2026

Artificial intelligence is rapidly reshaping the way we interact, conduct transactions, and verify identities in the digital age. AI-driven biometric technologies — such as facial recognition, voice authentication, and behavioural analysis — are now leading the charge in digital identity assurance. These solutions offer not only seamless user experiences but also enhanced capabilities to detect and prevent increasingly sophisticated forms of fraud.

Today, more than 70% of global enterprises have adopted some form of biometric authentication, 74% of consumers now perceive physical biometrics to be the most secure method of digital identity verification, and 81% of consumers globally have used biometrics for online or mobile banking at least once for authentication.

However, as AI continues to advance, so too do the methods employed by fraudsters. Deepfakes, synthetic identities, and AI-powered attacks have become commonplace, making it ever more challenging for organisations to reliably distinguish genuine users from imposters. Compounding the risk, data breaches have climbed sharply — reports show a 15% year-on-year increase in global breaches in 2025, exposing billions of records and amplifying the potential for identity fraud.

Why Privacy Has Become Non-Negotiable

“Trust isn’t just a value — it’s a powerful growth engine. While consumers are naturally drawn to innovation, they deepen their engagement and loyalty with companies that prioritize responsible data stewardship. By combining cutting-edge technology with strong data ethics, companies can do more than just lead the market, they can cultivate lasting customer relationships.”

 - Steve Fineberg, vice chair and U.S. technology sector leader, Deloitte

As biometric technologies become more widely adopted, concerns about privacy, data breaches, and regulatory compliance are intensifying. Recent surveys show a marked increase in consumer unease: in 2025, 68% of consumers expressed concern about how companies store and use their biometric data, with data breaches and misuse cited as the primary risks. This growing awareness reflects a shift in public understanding of the risks associated with digital identity and the potential consequences of data misuse.

These concerns are not theoretical — they directly shape consumer trust and behaviour. Notably, 81% of respondents said they are more likely to trust organisations that are transparent about their biometric data practices. Clear communication about data collection, protection, and usage has become a key differentiator for businesses aiming to build and maintain customer confidence. Organisations that proactively explain their privacy policies, offer meaningful choices, and demonstrate regulatory compliance are far more likely to earn and retain trust.

For businesses, these findings highlight the necessity of a privacy-first approach to biometrics. It is no longer enough to simply deploy secure technologies; companies must actively engage with customers, address their concerns, and provide reassurance through transparency and accountability. As biometric authentication becomes mainstream, those organisations prioritising privacy and open communication will be best placed to foster lasting relationships and drive adoption.

At the same time, organisations must navigate a complex and evolving regulatory landscape. Laws such as the EU’s General Data Protection Regulation (GDPR) and the UK Data Protection Act classify biometric data as a “special category”, requiring explicit user consent, clear purpose limitation, and full transparency about data handling. Similar regulations are emerging globally, each with its own requirements for consent, retention, and user rights.

The rise of artificial intelligence has brought further scrutiny. Regulations like the EU AI Act establish voluntary frameworks that are rapidly becoming industry standards. Organisations are advised to conduct additional AI-related risk assessments, ensure human oversight, and implement robust security controls to guard against potential misuse and breaches.

Across all these frameworks, several themes stand out: users must have clear choices and control over their biometric data; only the minimum necessary data should be collected and retained; and strong encryption and access controls must protect data both in transit and at rest. Transparency is paramount — individuals have the right to know how their data is used, to access it, and to request its deletion. Organisations are expected to demonstrate accountability through regular audits and thorough documentation, often including Data Protection Impact Assessments.

Reflecting these pressures, a 2025 global survey by Forrester found that 72% of security leaders rank biometric data governance among their top three priorities, highlighting growing concern over privacy risks when considering or deploying biometric authentication. Moreover, 60% of enterprises are actively reviewing or updating their biometric privacy policies in response to new regulations and increased customer scrutiny.

The Strategic Question

How can organisations strike the right balance between customers’ desire for the convenience of biometric authentication and a growing concern about data breaches and the misuse of personal information?

Answer

Welcome to the era of privacy-preserving biometrics – a world where convenience meets trust. This means embedding privacy principles into every stage of biometric implementation. Collect only what’s necessary, encrypt it end-to-end, and ensure it’s used solely for authentication. Advanced techniques such as tokenisation, on-device matching, decentralised storage and zero-knowledge proofs can further reduce exposure, while server-side models enable robust anti-spoofing and instant updates to counter emerging threats. These innovations help ensure that your face or voice remains yours alone — never exposed, never vulnerable — while delivering seamless access. In this new landscape, security and transparency are not optional; they are the foundation of digital trust.

Perhaps contrary to common belief, there is no single approach to privacy-preserving biometrics. Organisations today can choose from a range of architectures, each offering different balances of privacy, security, and operational flexibility. Some solutions decentralise biometric data, fragmenting and distributing it across multiple nodes to eliminate single points of failure. Others adopt a hybrid model, combining server-side processing with client-side options to maximise both compliance and user control. Advanced methods, such as secure multi-party computation and zero-knowledge proofs, enable authentication without ever revealing the underlying biometric data. Each approach comes with its own strengths and trade-offs, allowing organisations to tailor their biometric strategies to their unique risk profiles, regulatory requirements, and user expectations.

Without doubt, decentralised architectures and Zero-Knowledge Proofs are reshaping the landscape of privacy-preserving biometrics, offering a compelling alternative to traditional, centralised systems. In a decentralised model, biometric data is not stored in a single, central repository. Instead, it is fragmented and distributed across multiple nodes or devices. This approach dramatically reduces the risk of large-scale data breaches, as there is no single point of failure for attackers to target. For users, this means greater peace of mind, knowing that their most sensitive information is not concentrated in one vulnerable location. There’s a lot to like in these types of deployments — however, they come with a unique set of trade-offs that organisations must carefully consider.

First, the technical limitations of mobile devices and browsers often mean that biometric models will often be restricted in size. This restriction limits the complexity and sophistication of the algorithms, making it harder for them to detect advanced spoofing attempts, such as deepfakes or high-quality masks. As fraudsters become more advanced, these lightweight models may struggle to keep pace.

Security and responsiveness present another hurdle. Because the biometric algorithms and templates reside on the device, they are potentially vulnerable if the device itself is compromised. Moreover, when new threats emerge, updating the protection requires users to download a new version of the app. Not only is this burdensome to the end-customer, but this process can also be slow and inconsistent, leaving a window of vulnerability during which users are exposed to risk.

What is often overlooked from a legal and compliance perspective, is that it can be difficult to provide forensic evidence in the event of a dispute. Since biometrics are probabilistic and the raw biometric data is not centrally stored, organisations may be unable to conduct human reviews or provide proof in cases of contested onboarding or transactions. This can weaken legal defensibility and complicate regulatory compliance, especially as data protection laws become more stringent.

Finally, privacy-preserving client-side systems often use proprietary encrypted templates rather than raw images. While this enhances privacy, it can create vendor lock-in: if an organisation wishes to switch providers, it may need to re-enrol all users and repeat the identity verification process, which is both costly and disruptive.

In summary, while ZKP and decentralised architectures offer privacy advantages, they can also introduce significant challenges in terms of security, update agility, consistency, legal defensibility, and operational flexibility. Organisations must weigh these factors carefully when designing their biometric authentication strategies.

Server-Side Architecture: Privacy Without the Trade-Offs

Server-side biometrics, when designed with privacy at their core, offer an alternate, proven path without some of these compromises. At the heart of these solutions is a privacy-by-design philosophy: leading platforms employ proprietary algorithms, securely hashed templates, and strong encryption to ensure that personal data is always protected. Importantly, all biometric information is processed only with explicit user consent and is subject to independent audits that uphold global standards.

One of the standout advantages of these types of deployments is the superior security and performance. Unlike client-side models, server-side systems are not constrained by the limitations of individual devices. This enables the deployment of robust anti-spoofing measures and allows for instant updates to counter emerging threats — without requiring users to download new app versions or take any action themselves. Given the pace at which threats now appear, having an ability to quickly respond without user action is an important consideration.

Legal defensibility is another area where server-side biometrics excel. By securely storing biometric templates, these systems allow for controlled human review, providing forensic evidence in the event of disputes or suspected fraud. This capability is often missing in privacy-preserving, decentralised architectures, which may lack the means for retrospective analysis. This is increasingly important in the realm of disputed transactions and only likely to become more important in a world of agentic commerce; where agents can make transactions on your behalf.

For organisations seeking to balance privacy, security, and user experience, well implemented, privacy-first server-side biometrics continue to offer a compelling and trustworthy path forward.

Case Study 1: How a Major Australian Bank Reinvented Credential Recovery and Transformed High Risk Transfer Experience

When customers lose or misplace their mobile phones, the experience of regaining access to banking services is often frustrating. Traditionally, recovery meant digging through forgotten passwords or answering security questions — credentials that are hard to remember but easy for fraudsters to guess. For a leading Australian bank, this wasn’t good enough. They wanted a solution that was secure, seamless, and customer-friendly, while reducing operational costs.

The Challenge

The bank faced three pressing issues:

• Customer friction: Recovery processes were slow and inconvenient, often requiring manual identity verification through call centres.
• Security risk: Password-based fallbacks exposed customers to phishing and social engineering attacks.
• Operational cost: High call volumes and manual checks drove up expenses.

The Solution

The bank turned to server-side biometrics to deliver a breakthrough: self-service credential recovery. Instead of relying on weak credentials, customers could re-register a new device by simply:

• Taking a selfie for biometric verification.
• Entering their usual PIN.

No passwords. No security questions. No lengthy calls.

The Impact

• Customer experience: Recovery time was slashed from hours to minutes.
• Security: Eliminated phishable fallbacks, reducing fraud risk significantly.
• Cost savings: Reduced reliance on call centres and manual ID checks.
• Trust: Customers appreciated the simplicity and transparency of the process.

Case Study 2: High-Value Payments That Deliver Zero Fraud

When customers have to make high value payments (over $25K), they often have to go to the branch to organise a transfer with a fee, or do multiple, smaller payments each day via their digital channel. Often these types of payments are time bound; a deposit for a house, a tax bill, a purchase of a car. A leading Australian bank wanted to find a solution that empowered their customers to benefit from the ease and security of their digital channels.

The Challenge

The bank faced two pressing issues:

• Customer friction: Customers were getting increasingly frustrated with the inability to make larger payments from their preferred channels.
• Security risk: Existing methods of authentication were prone to phishing attacks and there was a concern with raising the payment limits beyond $25K

The Solution

The bank turned to strongly enrolled, server-side biometrics to deliver a breakthrough: the ability for the customer to opt in to a burst payment up to $250K. Instead of multiple days of payments, or a visit to a branch, customers make a single transaction, safely from their device:

• Register for burst payments from within their banking app (enables a 24-hour window for payments to be made)
• Taking a selfie for biometric verification.
• Given the value of the transaction, human review proved invaluable, providing comfort to the customer and the benefit of non-repudiation.

The Impact

• Customer experience: Overall improvement in payment related NPS
• Security: Zero fraud encountered using this feature.
• Cost savings: Reduced reliance on branch staff and manual ID checks.

Why Privacy-First Design Wins

A privacy-preserving approach to biometrics is no longer optional — it is essential for building trust and meeting regulatory expectations in today’s digital world. However, there’s more than one approach to achieving it and it’s vital to think carefully about which solution is right for your organisation. Each approach comes with its own set of compromises, whether in security, user experience, legal defensibility, or operational flexibility. By weighing these trade-offs and designing with both privacy and practicality in mind, organisations can avoid costly pitfalls and deliver biometric authentication that truly serves both their business and their customers.

There is no doubting the attraction of decentralised, zero-knowledge based proofs and the value they will provide to many organisations. However, when non-repudiation and customer experience matter, server-side biometrics implemented with a privacy-first approach, continue to deliver both the security and privacy that modern digital environments demand – without the compromise or hidden reliance on phishable credentials. The real risk, perhaps, lies in misunderstanding the technology and missing out on its benefits.

Irrespective of the architectural choice you make, it’s clear that technology alone will not be enough. Customers want plain-language explanations of what data is collected, why it’s needed, and how it’s protected. Most importantly, they expect meaningful choices – opt-in consent, alternative authentication options – and tools to manage their data, such as privacy dashboards and deletion requests. Organisations that communicate openly and proactively about these practices stand out in a crowded market. Regulations like GDPR and APRA CPS 234 mandate explicit consent, impact assessments, and strong governance. Organisations that demonstrate adherence to these standards — and make it visible to customers — turn compliance into a competitive advantage.