Windows Hello does not work the same way as BitLocker, where you can pick an “encryption type”.
With Hello you are not encrypting a file that you later decrypt; instead you are

1. Creating a public / private key pair that is bound to (and can only be used by) the device’s TPM, and
2. Unlocking the private key with a “gesture” (PIN, fingerprint, face, iris …).

The fingerprint is only the gesture that releases the private key inside the TPM; it is never the secret that is sent to a log-on server, nor is it compared with anything outside the local device.

Where is the fingerprint data kept?

A. Match-on-sensor devices (the majority of new laptops and tablets)
• The template that is built from the fingerprint never leaves the fingerprint controller.
• Storage format and any internal encryption are vendor-specific; Windows never even sees the template, it only receives “match / no match” from the secure element in the reader.
• In this case there is nothing for Windows to encrypt at all.

B. Match-on-host devices (older or very low-cost readers)
• The driver produces an ISO 19794-2 or ANSI 378 template and hands it to the Windows Biometric Service.
• The template is put into %SystemRoot%\System32\WinBioDatabase*.dat – but only after it has been protected with DPAPI.
• Since Windows Vista, DPAPI uses AES-256-CBC with a per-user key.
• That per-user key is, on a Windows-10-with-TPM system, sealed to the TPM by an RSA-2048 or NIST-P-256 ECC storage key.
• Wherever the TPM has to hash data it uses SHA-256 (TPM 2.0 mandate) – SHA-1 is kept only for backward-compatibility with very old keys.

Therefore, for the part that Windows itself handles, the crypto that protects the fingerprint template is:

• AES-256 in CBC mode (inside DPAPI)
• The AES key is wrapped / unwrapped by the TPM under an RSA-2048 or ECC-P256 storage root key
• Hashing inside the TPM is SHA-256

Can you change it?
No. Windows Hello deliberately hides these details from the user and the administrator; the algorithms are fixed, FIPS-validated selections. The only choice you have is whether to allow biometrics at all and whether the hardware you buy performs “match-on-sensor” (in which case the template never even reaches Windows).

It is definitely not SHA-1, and there is nothing equivalent to the BitLocker XTS-AES-128/-256 selector.