December 03, 2001 11:18
Biometrics Could Mean Major Benefits for Financial Services,
but Cost & Industry Consensus Remain Barriers
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TowerGroup Research Also Shows Convenience-Not Fears Over Privacy -Will be Top Factor in
Consumer Acceptance
NEEDHAM, Mass., Dec. 3 /PRNewswire/ -- Despite the benefits biometrics could bring to financial
institutions and consumers alike, the high cost of implementing these technologies combined with a
lack of industry consensus could delay its widespread use for at least a decade. New research from
TowerGroup's Retail Brokerage and Investing service further finds that counter to popular wisdom,
concerns over privacy will not keep consumers from adapting to biometric screening. Instead,
convenience will be the key to the acceptance of biometric technology use in retail financial
services.
Biometric technologies analyze the unique biological traits that differentiate one human being
from another, such as fingerprints, the retina or iris of the eye, or the patterns of an individual's
voice. Data gathered by some of these technologies, particularly iris patterns and fingerprints, are
unique enough to distinguish a single individual from the entire population of the planet. Highlights
of TowerGroup's findings include:
* Biometric authentication has clear potential benefits for the financial
services industry. By accurately validating clients' identities
through their physical or behavioral characteristics, financial
institutions will be able to drastically reduce costs related to
identity theft, while simultaneously assuring consumers that their
financial assets are well-protected.
* For biometric authentication to be used at a retail level, technologies
must be convenient (quick and reliable), robust (able to stand up to
heavy use), accurate (providing top-quality security) and
cost-effective. Few of the technologies currently available offer all
four of these qualities. TowerGroup believes convenience will be the
top driver of consumer acceptance.
* While certain technologies work better in certain environments, every
financial services delivery channel has a possible application for
biometrics. In call centers, voice biometrics will prevail, as they
can best leverage existing infrastructure. At physical locations
(branch and ATM), fingerprint, iris, hand or face recognition systems
could all be used. For online access, keystroke biometrics present an
interesting alternative that doesn't require additional hardware
investments by financial institutions.
* The high cost of implementing these technologies is currently the
single greatest barrier to their roll-out across retail financial
services. Ultimately, an institution would have to retool every
customer touch-point with new biometric hardware, in addition to costs
for training personnel, educating consumers through marketing materials
and integrating biometric technologies with existing IT systems.
* Either private sector consensus or government mandate will be essential
to developing interoperable biometric authentication systems that offer
real value to consumers, and reap the technology's full benefits.
Following the events of 9/11, it is more likely that the government
will play a key role-either directly through a state or national
biometric identification scheme, or indirectly by setting mandates
and/or offering fiscal incentives to encourage private sector adoption.
"Popular wisdom says consumers will be unwilling to adopt biometrics technologies because of
fears that they will be too intrusive," said Jean-Paul Carbonnier, an analyst in TowerGroup's Retail
Brokerage and Investing practice. "TowerGroup believes this is not the case. Convenience will be
the top consumer driver relative to successful biometric implementation in financial services and
other industries. However, consumers will resist adapting to these technologies if they prove
unreliable, or if the authentication process-whether it entails iris scanning or hand
recognition-requires too much time."
Carbonnier noted that the application of biometrics in both the private and public sectors will be
significantly impacted by the larger discussions that currently surround the technology. "Biometrics
has always been a highly-charged subject. But there is no doubt that recent world events have
increased both interest in, and debates over, its appropriate application. Concerns over national
security now stand side-by-side with more business- driven authentication issues-such as fraud
prevention-as well as with questions about the protection of individuals' privacy and civil liberties.
Ultimately, TowerGroup believes that the government will need to play a key role in any broad
roll-out of biometrics technology. If implementation is left to the private sector alone, the national
security and business benefits of ubiquitous biometric identification may take at least 10 years
to reach," he said.
This TowerGroup report, titled "Biometrics: Security for the New Millennium?," is available to
qualified members of the press for review.
About TowerGroup: TowerGroup is the leading provider of research, advisory and consulting
services to the global financial services industry, providing thought leadership and advice focused
on the intersection of IT and business processes. Our range of services covers each sector of the
industry, including banking, securities, capital markets, investment management, and insurance.
Helping our clients gain a deeper understanding of the complex and ever-changing environment of
financial services, we provide insight into information technology, products, vendors, markets,
investment trends and issues. Headquartered near Boston, Massachusetts, and with offices in New
York, Tampa and London, TowerGroup serves a global client base, which includes some of the
world's largest financial services, technology and consulting firms. For more information, visit us at
towergroup.com .
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SOURCE TowerGroup
/CONTACT: Anne Green, +1-212-455-8017, agreen@cooperkatz.com, or Faye
Nikolaidis, +1-212-455-8078, fnikolaidis@cooperkatz.com, both for TowerGroup/
/Web site: towergroup.com
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