Thought those of you who followm biometrics might be interested in the treatment it got on American Banker today in three related articles which follow.
Biometrics Developers Jockeying for
Acceptance
The developers of biometrics are battling fiercely to avoid becoming the Betamax
of the latest round of banking gadgets.
Reciting a litany of reasons why their product is best, developers of everything from
retina scanners to fingerprint-imaging systems are quick to point out the "fatal" flaws
of their competitors.
Retina scanners, claim the makers of iris scanners, are ineffectual with the blind or
those who have cataracts. Iris scanners, retort the makers of retina scanners, are
imprecise with those who have dark eyes.
The makers of both retina scanners and iris scanners morbidly joke that criminals
can crack a fingerprint-imaging system using an authorized user's finger they have
chopped off.
"It's an immature industry in more than one sense," quips an analyst who follows the
biometric universe.
Despite their reputed flaws, biometrics are creeping into the bank world in pilots
with both consumers and employees.
First Chicago NBD Corp., for example, uses a retina scanner developed and
patented by Eyedentify in Baton Rouge, La., to control access to its cash vault.
Voice-recognition technologies produced by companies like Veritel Corp. and
Voton Corp. are being used in bank computer rooms to access terminals.
And Identix Inc., a Sunnyvale, Calif., maker of fingerprint-imaging systems,
recently agreed to combine its technology with Redwood Shores, Calif.-based
Oracle Corp.'s computer servers, which are popular in bank data processing and
information systems units.
Despite the fierce rivalries, biometrics companies agree that they may have to
combine forces to gain wider use in financial institutions.
"No one biometric will save the day," said John A. White, president of Voton in
Pleasanton, Calif. "We expect to see companies use a combination of these
products. It's just a matter of time."
-- Liz Moyer
Fingerprint ID Systems: Cost,
Familiarity Make It Leading
Anti-Fraud Technique
By Liz Moyer
A rising number of banks are using a variation on an old law enforcement tool to
reduce fraud.
Institutions in 25 states have either started or are rolling out programs to fingerprint
noncustomers who wish to cash checks at their teller windows. In some cases,
banks are also fingerprinting people who want to open new accounts.
The programs employ imaging technology, rather than ink pads and paper, to
capture fingerprints for analysis. Advocates of the programs, which have been
blessed by law enforcement officials, state banking associations, and the American
Bankers Association in Washington, say fingerprinting can reduce the instances of
check fraud by 40% to 60%.
And despite criticism from some consumer groups and legislators, who have raised
civil rights concerns, bankers report few complaints.
They say fingerprinting promises to be a stronger deterrent than other forms of
physical identification, especially because of its connotations to law enforcement.
Fingerprinting is the most popular of fraud prevention efforts based on biometrics
-- the statistical analysis of biological features. But it is hardly the only choice
available.
In the last year alone, the banking industry has been bombarded with new
biometric products: retina scanners, iris scanners, and voice recognition equipment.
All have been touted as remedies for problems with account security and fraud.
But these headline-grabbing technologies have yet to find widespread use in the
industry, and it may be a longer road to acceptance than biometrics developers
previously thought.
"There are quite a few banks doing trials, but these mostly involve staff access to
computer systems," said Jackie Finn, vice president and research director of
advanced technologies at the Gartner Group in Boston.
Biometric technology probably will not directly involve the public "until the problem
of fraud overcomes the barriers of using technologies that are considered more
intrusive," she added.
Even product developers agree that biometrics may have limited practical use for
banks in their interactions with the public.
"People are massively opposed to these things," said Buddy Boyett, vice president
at Baton Rouge, La.-based Eyedentify Inc., holder of the patent for retina
scanners. "It's not going to work right now."
The most successful of the biometric technologies to date has been fingerprint
imaging, say analysts who follow the market sector. Indeed, Purdue Federal Credit
Union in West Lafayette, Ind., has begun using fingerprint-imaging systems
developed by National Registry Inc. in Tampa in select self-service banking
centers.
Voice-recognition technology has also made some headway into consumer
banking. Chase Manhattan Corp. in New York wrapped up a test of voice
authentication, a process by which a customer's voice is matched against a
previously recorded template, in select Manhattan branches last fall. The equipment
was produced by Voton Corp. in Pleasanton, Calif.
Chase's voice-authentication program is on ice while the bank decides whether to
incorporate the technology in its new automated branch centers, said John A.
White, president of Voton.
And other banks have backed away from plans to offer biometric technologies in
place of traditional customer access using personal identification codes. Huntington
Bancshares in Columbus, Ohio, has abandoned plans for now to equip its
self-service banking centers with iris scanners, said William M. Randle, senior vice
president and corporate marketing head at the bank.
Mr. Randle says biometrics may be most useful in conjunction with smart cards,
but banks are waiting for the technology to become more reliable.
"The need for the applications is apparent, but they have to get down to a point
where they are reliable, scalable, and inexpensive."
In contrast, old-fashioned fingerprinting has been popularized as a more
acceptable, implementable, and cost-efficient means of fraud prevention, say
bankers.
For one thing, consumers in most states are accustomed to being fingerprinted
when they apply for driver's licenses or for government benefits, making the bank
programs more palatable to the public than eye scanners or other technologies, say
bankers.
Fingerprinting also costs substantially less than biometric products. A pad of special
ink that does not rub off onto clothes costs $12.50 for ABA members and $15.60
for nonmembers, and there are discounts for bulk purchases, said an ABA
spokeswoman. In addition, the ink pads do not require installations of special
computer equipment, she said.
In contrast, a retina scanner costs about $1,800, including installation. The more
experimental iris scanner costs over $5,000. And a fingerprint-imaging device costs
about $500.
Most of these devices are still too large and unwieldy to complement the standard
automated teller machine or teller window, noted Ms. Finn from the Gartner
Group.
Bankers say they did not want to waste time waiting for the latest in biometric
technology to reach a level of efficiency that would work on a broad scale.
"We began to see escalating losses as the criminal element saw opportunities with
check washing and desktop publishing," said Bob Randolf, a former agent for the
Federal Bureau of Investigation and now vice president in security at BankAmerica
Corp.'s Arizona affiliate.
"As banks, we needed to put our foot down."
BankAmerica, headquartered in San Francisco, started the fingerprinting program
in 1994 through its Nevada affiliate branches and has just rolled out fingerprinting
systemwide, said a spokeswoman.
Wells Fargo & Co. in San Francisco, which has run its program since 1995 in pilot
mode, will roll out fingerprinting systemwide in March, said a spokeswoman. Great
Western Financial Corp. in Chatsworth, Calif., already runs its program
systemwide, said a spokesman.
Newer program participants include banks from Oregon to Florida. Pilots are
scheduled to begin this spring in Minnesota, South Carolina, and New York,
according to bank associations in those states.
Bankers are quick to point out that the fingerprints, placed on the front or back of a
check to be cashed, will not be stored by the banks sponsoring the programs. They
would be used only when a check bounces or shows other evidence of fraud.
These checks would then be passed along to law enforcement officials to be
investigated.
Fingerprinting brings the added benefit of knowing customers better in a world
where interstate branching and huge bank behemoths are becoming a reality, say
bankers.
"We looked at it initially as a deterrent," said Walter R. Heilner, vice president and
manager of loss investigations at Wells Fargo's Arizona affiliate. "But we quickly
realized that its real value was in proving who that person really was."
"With interstate branching, this is becoming more of an issue," he added.
Copyright (c) 1997 American Banker, Inc. All Rights Reserved.
Georgia Bill Would Bar Requiring
Fingerprints to Cash Checks
By Carey Gillam
ATLANTA -- First Union Corp.'s attempt to fingerprint some of its check-cashing
customers is meeting with strenuous opposition from two Georgia lawmakers.
State Rep. Vernon Jones, a Democrat from Decatur, has introduced a bill in the
Georgia General Assembly that would make it illegal for banks to require
fingerprints to transact business.
A second bill, introduced by Rep. Bobby Franklin, a Republican from Marietta,
would prohibit state agencies from conducting business with banks that fingerprint
people.
Opponents claim the fingerprint identification program -- which is used only if
someone who doesn't have an account tries to cash a check at a branch of the
$140 billion-asset company -- treats people as if they've been arrested.
"You're being treated like you're a criminal," said Rep. Jones. The bank goes "too
far to get the guilty, and you punish a lot of the innocents," he added.
First Union officials say the policy will help cut down on fraud by acting as a
deterrent to illicit transactions.
The fingerprint policy, they pointed out, should not present a problem for honest
people.
"We're not trying to impose on anyone's privacy," said David M. Carroll, president
and chief executive officer of First Union National Bank of Georgia. "What we're
trying to do is put a deterrent in place. Fraud is a very real and very big problem."
First Union is one of a growing number of financial companies using fingerprinting
to prevent fraud, but it is the only bank in Georgia to do so. Banks and thrifts in at
least 11 other states now require fingerprints for certain transactions. Moreover,
fingerprinting is only one of several ways companies use personal characteristics to
identify customers.
But many First Union competitors, noting the bad publicity it has received, have put
off the question of whether to require fingerprinting.
"We try to institute measures that are more customer-friendly than that," said Jerri
Franz, a spokeswoman with Barnett Banks Inc. of Jacksonville, Fla.
NationsBank Corp. reviewed fingerprinting but decided to try a different approach,
said a spokesman, Fred Hannon.
This week it started a program under which it will cash checks of people without
NationsBank accounts only inside branches, not in drive-through lanes. Tellers who
are being trained in fraud detection will handle the transactions, Mr. Hannon said.
"This is our way of protecting the bank but at the same time being a little less
invasive," he said.
First Union has asked Rep. Jones to withdraw his legislation, but he has refused
and said he would organize a demonstration at the bank to protest fingerprinting.
Rep. Jones and his supporters have taken a series of actions to fight the bank on
the issue. |
