Suddenly, Biometric ID Doesn't Seem like Science Fiction
Costanzo, Chris, American Banker
Community banks are slowly warming up to biometrics.
More of them are using the technology to speed background checks on job candidates, control access to safe deposit boxes and other sensitive areas of the bank, and secure computer networks.
Also, with federal regulators urging banks to improve customer authentication this year, bankers who once viewed the technology as too space age - retina scans and vein pattern recognition seem like science fiction - now consider it a live option, bankers and consultants say.
Aite Group, a research firm in Boston, predicted in January that 35% of financial institutions will have deployed biometric technologies by 2009, up from 5% to 7% currently. International Biometric Group of New York projected in January that global biometric revenue would rise from $2.1 billion in 2006 to $5.7 billion in 2010.
Biometric technology, the analysis of physical or other traits, is thought to be the surest way to make sure people are who they claim to be.
But there are obstacles to making it mainstream. One is cost. Another is the possibility of error - hoarseness can trip up automated voice recognition, and weight gain can foil the analysis of facial images. Furthermore, many consumers still consider biometric authentication intrusive.
Even so, a budding enthusiasm for biometrics is evident among small banks, which have as much incentive as big ones to secure their data but would not need a $100 fingerprint reader at thousands of teller windows and workstations.
Today banks are using biometrics mostly to authenticate employees, but many foresee wider use with customers. They say consumers spooked by the specter of identity theft are becoming more comfortable submitting to a fingerprint scan or signing a digital tablet to prove who they are.
"Five years from today biometrics could be as common as the computer mouse," said Eugene Ekness, an executive vice president at the $244 million-asset United Bankers' Bank in Bloomington, Minn.
United made biometrics mandatory for its nearly 80 employees four years ago and has since rolled it out to its correspondent banking customers. Employees who used to log in to the network with a password now use their fingerprints, which an electronic "time card" system also uses to track their hours.
Mr. Ekness said that United, which specializes in services involving big transactions, such as automated clearing house originations and wire transfers, was worried about using passwords. Employees taped them to their computers and flooded the computer department with calls when they forgot them, he said.
Fingerprint scanning eliminates all that and gives United a quick, easy way to block network access when employees leave the company, he said.
United started inviting client banks to use the system two years ago to gain access to its network. Now employees at more than 400 of them use fingerprints plus an identification number for transactions such as wire transfers and ACH originations.
But even Mr. Ekness does not recommend the technology for a full-scale rollout to consumers. "For the typical retail customer, at this time it's too expensive," he said. The initial rollout cost United $125 to $150 per employee, he said, and bringing in the correspondent banks took a six-figure investment.
But biometrics will not always be off-limits for retail customers, Mr. Ekness said. He noted Microsoft's moves to embed support for biometric security directly in its operating system.
When biometrics are integrated into PCs, the sticker shock is greatly reduced, said Ken Silveira, the chief information officer at the $537 million-asset Bridge Bank in San Jose. Bridge, which has a large mobile work force, has been acquiring PCs and laptops with fingerprint-recognition capability built in.
Bridge plans to roll out fingerprint reading to all employees in the third quarter. …