Purchasing gesture-based, low-cost identity verification (IDV) solutions to meet growing governance demands could put South African businesses at serious risk.
This is according to Lance Fanaroff, co-founder of biometric identity provider iiDENTIFii.
Awareness of security, digital identity, and AML/KYC is rising, with many large businesses in South Africa viewing it as an essential cost. The country is seeing a dramatic rise in impersonation and social engineering scams, including fake police personas and forged documents to manipulate victims into revealing sensitive info or transfer funds.
The South African Fraud Prevention Service (SAFPS) and major banks have warned of increasingly aggressive scams, highlighting the need for more robust customer authentication and verification. Banks are facing mounting operational costs due to the complexity and resource intensity of scam investigations. These cases require prolonged customer support, coordination with law enforcement, and sophisticated fraud analysis, all of which strain bank resources. This is prompting a rise in investment in IDV solutions.
Fanaroff says: “Our recent South African Identity Index measured business sentiment around digital identity and the tools they are using to protect themselves, and consumers. The report found that business adoption rates of AI-based fraud detection are at 50,5% and biometric methods are at 39,5%.”
The need to provide strong, infallible digital protection was reflected in the PWC South Africa Major Banks Analysis 2025 report, which noted a shift to digital banking platforms, particularly in retail banking. The report estimates that digitally active clients are now approaching a third of the South African population. This trend is reflected in growing investments in cyber security, alongside emerging technologies such as AI.
Securing digital identity isn’t just about protection. Many businesses are also adopting biometrics to aid in compliance. This is likely in response to a greater urgency to strengthen financial controls and prevent money laundering after South Africa’s 2023 greylisting and the POPIA Act requirement that companies let their customers know when there has been a breach.
A KPMG Southern Africa Banking Survey noted that 50% of banks in their study said that they had, or intended to, deploy AI technologies to reduce the costs associated with compliance.
KPMG’s study also found that 38% of participants dedicate up to 30% of their IT budgets towards AI and innovation. However, 54% of the group emphasised that the primary factor standing in the way of adopting innovative digital tools – for security, as well as efficiency – is budgetary constraints. The will to invest in digital innovation is there, but there is consistent pressure to keep costs low.
However, gesture-based liveness solutions such as smiling, winking or head movement offer weak defenses against identity spoofing and deepfakes.
Fanaroff adds, “While a more sophisticated solution may seem like a larger investment upfront, companies cannot afford to invest in biometric security and liveness technologies that have not been rigorously tested against current cyber threats.
“Gesture-based solutions may appear cost-effective, but they expose organisations to significant risk and the long-term cost of fraud, financial losses, and reputational damage far outweighs any initial savings. An inferior solution exposes organisations to emerging crimes such as deepfakes and digital replay attacks.”
The right biometric IDV solution should be a top priority in any digital investment strategy. Digital identity is central to security, as it is the point of contact between a business, its resources – like data or funds – and the outside world. As criminals increasingly use low-cost, accessible AI tools to commit fraud at scale, the risks are growing.
The impact of such security breaches goes beyond financial or data loss: it erodes brand trust at a time when consumers are not afraid to switch brands for better, safer service. This is especially true for younger consumers, for whom trust is a key differentiator.
Fanaroff advises: “Small and medium businesses exploring entry-level solutions should pursue passive liveness as opposed to gesture-based solutions, as passive liveness has some resilience against deep fake attacks.”
He adds that companies of any size should be able to switch seamlessly between solutions to a more robust liveness detection for bigger transactions and for high risk transactions.
“For example, 3D Liveness can be used effectively for lower risk transactions, with subsequent authentication and 4D Liveness used for initial onboarding and higher level transactions.
“For South Africa to position itself as a global player and grow the economy, adopting leading-edge technologies is essential. Banks can’t afford the reputational risk of falling behind, especially now, with so many advanced, secure options available for accessing financial services.”