UNDERSTANDING U.S. ADOPTION OF BIOMETRICS
Biometrics continues to become widely accepted in the U.S. Why? The reasons span a number of different business pains among a variety of different markets. Many markets are adopting biometrics due to compliance and mandated government or industry specific regulations. Other markets are seeing tremendous cost and time savings through biometric solutions. Some of these issues are addressed by taking a look at a few specific markets:
Financial Industry
Just as quickly as consumers seem to be embracing Internet banking so do financial institutions need to confront online fraud scams such as identity theft, phishing or pharming threats. As issues like compliance and identity fraud become more prevalent, the need to implement biometrics becomes more widespread. The October 12, 2005 FFIEC guidance letter stated that for authentication in an Internet banking environment, multifactor authentication systems are more reliable and have become a stronger fraud deterrent:
The agencies consider single-factor authentication, as the only control mechanism, to be inadequate for high-risk transactions involving access to customer information or the movement of funds to other parties. Financial institutions offering Internet-based products and services to their customers should use effective methods to authenticate the identity of customers using those products and services. The authentication techniques employed by the financial institution should be appropriate to the risks associated with those products and services. Account fraud and identity theft are frequently the result of single-factor (e.g., ID/password) authentication exploitation. Where risk assessments indicate that the use of single-factor authentication is inadequate, financial institutions should implement multifactor authentication, layered security, or other controls reasonably calculated to mitigate those risks. FFIEC Financial Institution Letters (2005). FFIEC Guidance: Authentication in an Internet Banking Environment Web site http://www.fdic.gov/news/news/financial/2005/fil10305.html
Retail Industry
Another market that is experiencing biometrics growth in the U.S is the retail industry where companies need to integrate their front end and back office solutions as well as provide security with convenience. Biometric solutions like fingerprint-based authentication methods are being actively implemented for Point of Sale (POS) payment methods in supermarkets, restaurants and other retailers like pharmacies. Retailers want to secure and speed up time-clock and voiding of order entries as well as eliminate the need to reset passwords and cut down on token sharing in their POS solutions. Retailers are becoming more concerned that employees are punching in co-workers on code and password based time-clock systems, a business pain referred to as “buddy punching.”
Additionally, retailers want a solution that will only allow certain users access to particular systems such as a manager, payroll personnel or pharmacists filling prescriptions. These users often require access to systems and programs that are prohibited to other employees. Retailers need systems that limit fraud and other misconduct that passwords and token are susceptible to.
Biometrics is solving these pains by providing heightened security through the removal of password and token vulnerabilities. Employees can now log in and out of systems faster increasing convenience. The ability to log time and attendance addresses the issue of accountability. Also, the ability to authorize employee access based on level of responsibility makes administration of biometrics easy.
Healthcare Industry
Healthcare is another market where increased security and identity needs are becoming more evident. Health Insurance Portability and Accountability Act (HIPAA) requirements are raising the security bar for healthcare organizations. Since most biometric implementations by healthcare organizations concern network access, fingerprint verification, which can easily be deployed at desktop settings, will continue to be the most commonly used biometric technology in healthcare, according to the "Biometrics Market and Industry Report, 2004-2008" by the International Biometric Group (IBG). No longer can doctors and nurses keep computer log-on passwords on Post-it notes where patients’ healthcare records could be compromised by intruders. HIPAA’s security and privacy provisions specify that administrative, technical and physical measures must be implemented to protect confidential patient data. An innovative technological solution to simplify this process is biometric fingerprint readers at kiosks, nursing stations that enable multiple users. The adoption of biometric fingerprint authentication is rising in healthcare organizations nationwide, helping to streamline regulatory compliance, improve auditability and increase security.
Network and application security through biometrics is being pursued throughout the aforementioned markets now more than ever as user behavior has become more predictable yet still harder to control. For example, PentaSafe Security Technologies reported that, “4 out 5 workers will disclose their passwords to someone in the company, when asked.” For this reason and many more biometrics continues to be a growing trend across all markets sparked by U.S. Government adoption.
As the U.S. continues to adopt biometrics in niche markets to aid specific business pains like online authentication, forgotten codes and passwords, security threats, lost access cards, compliance as well as administrative accountability; international market growth is due to far different needs which the U.S. may benefit from now and in the future.
ELEMENTS OF BIOMETRIC ADOPTION GROWTH INTERNATIONALLY
Through working with a number of international clients Digital Persona has seen emergent styles of biometric adoption. For the most part international business pains and consumer concerns are very similar as biometrics does prevent fraud, identity impersonations and card cloning abroad. The international market has also been using biometrics to deliver easier payment methods.
Yet overseas biometric implementation has moved beyond niche markets and is seeing broader, nationwide adoption strategies in areas like South America which is expected to mature faster than the worldwide market numbers. “IBG estimates that the US$1.6 billion global biometric market will grow to US$5.3 billion by 2010, while South American revenues will grow at a greater rate from US$137 million to US$516 million,” said Brian Wong, Senior Consultant, International Biometric Group. We see the similar adoption growth in other nations across the world (Figure 2).
The Emergence of Latin America
Already 25% of the Chilean population has registered their fingerprints and the numbers are growing. Chile continues to see solutions be implemented to prevent fraud, identity impersonation and card cloning. Biometric solutions also provide for easy access to medical records and electronic payments without the need of a credit or identification card. One example of how biometrics has been implemented is Digital Persona’s work with its partner I-Med.
I-Med is a SONDA-group subsidiary focused on delivering mass electronic transaction services. With a great deal of experience in biometric certification, I-Med optimizes transactional processes by developing services based on the use of state-of-the-art technologies, including: biometric support for check verification, credit card payment certification, customer loyalty programs for the retailers, biometric certification for insurance sales at self-service terminals, biometric certification for pension payments, among others.
Digital Persona powers I-Med’s Autentia identification solution for millions of its users in Chile. This solution provides fingerprint-based biometric identification services for secure financial and healthcare transactions in Chile and currently handles a database of over 4 million Chilean fingerprints. At the present time, I-Med’s Autentia biometric identification solution handles more than 1.1 million verifications per month through certification locations at major healthcare providers and point-of-sale sites throughout Chile. Nearly 100,000 new people join I-Med’s database per month. To handle the authentication process, I-Med has deployed over 2,800 Digital Persona fingerprint readers.
Another area of growth Digital Persona can speak to by example is Mexico, where Digital Persona has deployed the world’s largest biometric banking application for Grupo Elektra.
Grupo Elektra, a leading Latin American specialty retailer, consumer finance and banking services company relies on biometrics to assist subsidiary Banco Azteca’s customers, most of whom do not have drivers’s licenses or secure forms of identification. Biometrics, specifically fingerprint based authentication, has enabled over eight million Banco Azteca customers to open accounts for the first time and in a secure manner such that no other person can steal their identity. Moreover, the new offering’s popularity shows no sign of abating: registration is currently increasing at a rate of approximately 10,000 users each day and processes an average of 200,000 fingerprint matches daily across Banco Azteca’s 1,440 branch locations in Latin America.
The implementation of biometrics technology now enables 75 percent of Banco Azteca customers to establish and maintain savings and credit accounts for the first time, and dramatically increases the bank’s potential customer base. It affords Banco Azteca customers secure and convenient account access and eliminates account holder’ need for ID cards that can be easily falsified, lost or stolen. A biometrics solution enables Banco Azteca to authenticate large numbers of users, accurately and quickly. It also eased the authentication of even the most poor quality fingerprint images. All of these factors dramatically increased Banco Azteca’s and Grupo Electra’s customer base while providing a reliable and needed service to the community. In addition, since Grupo Elektra is a leading Latin American specialty retailer, payment methods have been set in place tying in Banco Azteca customer account and authentication information to retail outlets making for secure payment transactions.
GROWING GLOBAL RELIANCE ON BIOMETRICS
U.S. adoption of biometrics, although strong, has been propelled mostly through consumer fear, government and industry compliance and regulation in niche markets. As compliance and regulatory needs move the U.S. to inevitable adoption of biometrics, it is a slower approach. This is proven by IBG’s market research; the average North American growth over the next 5 years is US$311 million compared to the rest of the world’s average of US$395 million (Figure 2). Potentially the U.S. will fall behind international biometrics adoption by 2010, a broader market approach due primarily to forward thinking.
Latin America, specifically Chileans have benefited from implementation on a national level. Although the overall theme of authentication is the same for all implementations of biometrics, Chile has found a way to allocate identification services for secure financial and healthcare transactions on a larger scale. Mexico based Grupo Elektra has done something similar and understands the benefit to building biometrics into a financial network. Biometrics allows Latin America to flourish by making access to money, payment and information simpler, safer and more secure.
Vance Bjorn is CTO and Co-founder of Digital Persona, Inc. (www.digitalpersona.com), a leading provider of fingerprint-based authentication solutions.
For more information, please send your e-mails to swm@infothe.com.
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