Fingerprint sensors on phones are the newest form of mobile security, but they open up questions about personal identity security. If our phones can recognize us by our fingerprints, that means our fingerprints are being stored somewhere. What happens to those fingerprints? A user on Reddit asked this question to the Google team responsible for the Nexus 5X and Nexus 6P during an AMA.
Fingerprint features are securely encrypted on the device, and processed in the secure Trustzone protected area of memory. The Android 6.0 fingerprint APIs do not provide any access to the fingerprint material to apps. Fingerprint features never leave the device and are not shared with Google (so for example if you setup a new phone, you need to re-enroll your fingers). If your phone is ever lost or stolen you can easily find, lock, and erase your phone using Android Device Manager.
That should put your mind at ease. Your fingerprint will only be on your device. The bit about setting up a new phone and re-entering your fingerprint is important. That means your fingerprint will never be uploaded to the cloud. It stays on your device at all times. It’s still possible for someone to hack your device, but if that happens you’re going to lose more than just fingerprint data. Always make sure to use Android Device Manager.