The
Latest Way To Pay
Is At Our Fingertips
Toppling
The PIN:
Banks Eye Biometric Technology For ATM Access
by
Lucas Mearian
Citibank
is looking into the feasibility and cost of using biometric
technology as a more efficient and secure method of identifying
its customers. Meanwhile, Huntington Bancshares Inc. is
studying the impact of identity theft and fraud with a
close eye on biometrics as a possible approach to reducing
the chronic problem.
Indeed,
a growing number of financial services firms are strongly
considering the use of biometrics technology sooner rather
than later because of heightened security concerns sparked
by the Sept. 11 terrorist attacks and skyrocketing fraud
rates. Biometric identification systems use individuals'
unique physical or behavioral characteristics, such as
fingerprints or voice patterns, to identify them.
According
to Meridien Research Inc. in Newton, Mass., consumer fears
and losses due to fraud are a strong enough incentive
for institutions to invest large sums of money in biometrics.
And with 500,000 cases of identity theft in the U.S. each
year, consumers are ready to accept biometrics at the
cost of increased privacy and more intrusive methods of
identification, according to a recent report by Meridien.
Deutsche
Bank AG and Citibank have been using biometrics for several
years for employee access to computer server rooms, Meridien
said.
Tom
Connaughton, managing director of risk management at Citibank,
North America, in New York, said his company wants to
be a leader in extending biometric technology to customers,
providing them with several types of identification options,
such as fingerprint and facial-recognition technologies,
so they can choose which one they're most comfortable
with.
Having
customers use biometrics to gain access to accounts is
the only way for the bank to know for sure whom they're
dealing with, Connaughton said.
Steady
increases in fraud have led more financial institutions
to invest in biometrics. In 2000, companies spent $127
million on biometric devices, with fingerprint scanners
accounting for about 44% of the sales, according to Meridien.
Face recognition made up 14% of overall sales, hand geometry
13%, voice recognition 10% and iris scans 8%, the firm
said. By 2004, the financial services market will spend
about $1.8 billion annually on biometric technology, according
to IDC in Framingham, Mass.
According
to a report to be released this month by Gartner Inc.
in Stamford, Conn., one in 12 online consumers surveyed
said they had been victims of identity theft or of someone
else using their personal information to steal money or
buy products. Meanwhile, 1.13% of all online transactions
are lost to fraud, representing billions of dollars each
year.
Meridien
believes that there are uses for biometrics in banking
because the technology can offer "security to customers
at their ATMs, within branches to authorize transactions
and for online banking." The technology can also
be used inside a company as a means to secure vaults and
monitor access to doors and computer systems, according
to Meridien analyst Christine Barry, who co-authored the
report.
Columbus,
Ohio-based Huntington Bancshares performed a study of
biometric technology three years ago. At the time, the
technology had too many problems associated with it, according
to Huntington CIO Joe Gottron.
"The
initial setup was quite cumbersome at the time, and the
technology had limitations in sharing biometric data at
the time between ATMs. Basically, we stepped back and
said it didn't make sense at the time to push the envelope
of technology," Gottron said.
Currently,
Gottron has a team working on defining the effects of
fraud on the bank. Once that study is complete, by midyear,
Gottron might commission another study of biometrics to
see which technology would fit best.
"There's
going to be a lot happening [in biometrics] in the next
three years. I'm going to stay close enough to biometrics
given the new world we live in to make sure we make a
move on it when the business case warrants it," said
Gottron.
