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Strong Growth for Bio Metrics in Financial Institutions Expected Globally

Strong Growth for Bio Metrics in Financial Institutions Expected Globally

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Published by findbiometrics
A unique proposition of biometrics is the diverse number of modalities that find applicability in financial services. Modalities ranging from non-AFIS fingerprint recognition, face, iris, vein, voice, signature, and hand geometry recognition have all found varying levels of acceptance. The following chart depicts how various modalities are being utilized across the three major financial biometrics applications— Physical access control, logical access control, and transactional authentication.
A unique proposition of biometrics is the diverse number of modalities that find applicability in financial services. Modalities ranging from non-AFIS fingerprint recognition, face, iris, vein, voice, signature, and hand geometry recognition have all found varying levels of acceptance. The following chart depicts how various modalities are being utilized across the three major financial biometrics applications— Physical access control, logical access control, and transactional authentication.

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Published by: findbiometrics on Dec 19, 2009
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Strong Growth for Biometrics in FinancialInstitutions Expected Globally
May-30-08
New report from Frost & Sullivan
 
Banking on Biometrics: A Snapshot of Biometrics in Financial Services
 
Imran F Khan, Research Analyst, Auto ID & Security Group 
 The financial services vertical is poised to be one of the key end-user markets for biometrics
technology globally. Biometrics, which verify an individual’s identity b
ased on their uniquephysiological and behavioral characteristics, offer advantages of enhanced security,convenience, and time efficiency, which benefit financial institutions.According to the latest analysis from Frost & Sullivan, the financial biometrics market accountsfor almost a third of the revenues of the total biometrics market revenues globally. It is expectedto grow at a compound annual growth rate (CAGR) of more than 50 percent from 2006 to 2013.Although the government and civil identity applications have been the early adopters and largestimplementers of biometrics over the last few years, the commercial and the consumer sectorshave become important target markets, especially financial services. This is in order to offsetincreased fraudulent activity and identity theft.
Regulations Driving Growth
 In North America and Europe, regulatory compliance has been the biggest motivation forfinancial institutions to adopt biometrics. Some prominent government regulations include:
o
 
The 2005 Federal Financial Institutions Examination Council (FFIEC) guidelines
o
 
The Sarbanes-Oxley Act of 2002 (Section 404)
o
 
The Basel II AccordRegulatory activity has resulted in increased demand for secure authentication of bankingaccounts, stronger employee audit trails, and risk mitigation. Although the regulations do notendorse any specific technology, biometrics is emerging as the favored choice owing to its
capability of being able to accurately link any transaction with an individual’s unique traits.
Reac
hing the ‘Underbanked’
 In the developing regions of the world such as South Asia, Latin America, and Africa, biometricsis playing an important role in helping banks reach the vast rural population with innovativesolutions. This segment of the population has been largely underserved by the financial servicesindustry due to illiteracy and distance from bank branches.ATMs integrated with biometric sensors are growing in popularity, especially in developingnations. Since 2004, Columbia based Bancafe Bank has deployed hundreds of non-AFIS
 
fingerprint-enabled biometric ATMs in rural Columbian towns to cater to coffee growers.Similarly, in 2006 in India, Citibank launched a non-AFIS fingerprint-enabled ATM to allow itsmicrofinance customers to access funds sanctioned to them. The technology allows customersto withdraw funds using just their fingerprints rather than having to carry an ATM card.In the medium term, biometrically-enabled ATMs can be used for more unique applications.There is significant potential for relief organizations such as UNICEF to disperse aid throughbiometrically-enabled kiosks and ATMs. This will ensure that only the rightful recipients canaccess the funds.
Diverse Use of Biometric Modalities
 A unique proposition of biometrics is the diverse number of modalities that find applicability infinancial services. Modalities ranging from non-AFIS fingerprint recognition, face, iris, vein,voice, signature, and hand geometry recognition have all found varying levels of acceptance.The following chart depicts how various modalities are being utilized across the three majorfinancial biometrics applications
Physical access control, logical access control, andtransactional authentication.In 2006, non-AFIS fingerprint recognition
was the dominant modality. The technology’s
key strengths are its cost efficiency and highaccuracy. It also has wide applicability inphysical access control, logical accesscontrol, as well as transactionalauthentication. Non-AFIS fingerprintrecognition technology is found acrossfinancial institutions for uses ranging fromATMs, access to bank vaults, and businessPCs.Other emerging biometrics such as voice verification and vein recognition are gaining traction globally. A number of banks in Europe have deployed voice verification technology to enableremote authentication of customers for telephone banking. In 2006, Netherlands based ABNAMRO deployed a telephone-banking customer verification solution utilizing voice biometrics inits contact centers. This installation is considered to be one of the largest deployments ofbiometrics in the financial services vertical.Vein recognition that includes palm and finger vein recognition was largely prevalent in Japanand South Korea until 2005. However, in 2007 it has begun to emerge as a popular alternativeto non-AFIS fingerprint recognition, especially for biometrically-enabled ATMs and increasinglyfor physical access control.Despite v
ein recognition’s high cost when compared to non
-AFIS fingerprint recognition, itscontactless interface, low failure-to-enroll rate, and lack of association with criminal activityplaces the technology in a strong growth position. At present, vein recognition is in the earlyadoption phase, but has the potential to become a widely deployed solution as its price isanticipated to decline in the medium to long term.
Future Trends and Strategic Recommendations
 

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