Strong Growth for Biometrics in FinancialInstitutions Expected Globally
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:
The 2005 Federal Financial Institutions Examination Council (FFIEC) guidelines
The Sarbanes-Oxley Act of 2002 (Section 404)
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.
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