Biometrics Come into Focus in Financial, Retail Environs

Lower costs, better reliability expand business use beyond access control

When law enforcement agents authenticate an identity, they turn to fingerprints or dental records - two physical attributes that can't be faked.

When lenders, credit grantors, or merchants want to check an identity, they compare a document signature to a signature on a driver's license or review some other form of identification - such as a passport or PIN at the point-of-sale. Such methods are less secure and identity thieves have found flaws.

But one iron clad security solution debated for years is biometrics - technology that electronically reads physical traits to verify identity. The appeal is that people can be authenticated by traits, such as a retina scan or voice pattern.

Biometrics received a lot of hype in the past couple of decades, especially in movies where filmmakers have capitalized on the technology's "Wow!" factor. It's common in spy thrillers to see biometrics used as part of a high-tech, ultra-secure government agency. (Think James Bond.)

But the technology remained largely experimental through the 1980s and 1990s. Early versions of electronic fingerprint readers, retinal scanners, and voice recognition units were costly and prone to malfunction. Many fingerprint scanners tested on ATMs proved ineffective because the lens on the reader became smudged, scratched, or blocked by a foreign object, making it difficult to scan the customer's fingerprint.

The high cost for a low-end fingerprint reader left banking executives hard-pressed to put much capital behind what they saw as a one-dimensional security device when cheaper solutions, such as smart cards, were available.

So biometrics languished - until recently. Lower costs, improved reliability, and a growing need for lenders, credit grantors, and merchants to curtail fraud and identity theft expanded the business case beyond security.

Potential end-users now weigh the consumer convenience factor and lower operating costs that biometric applications bring to the table. "With applications more robust, costs coming down, and ease-of-use improving, there are more reasons to at least consider biometrics, which is why we are seeing more pilots and rollouts," says Ariana-Michelle Moore, a senior analyst for Celent Communications, New York.

Bank of America, Discover Financial Services, and grocer Piggy Wiggly Carolina Co. are rolling out biometric applications. Yes, even supermarkets that are known for having severely constrained IT budgets, are finding uses for the technology - a sure sign of a strengthening business case.

"We view biometrics as an affordable high-tech solution that provides our customers with convenience at the point-of-sale and that can also help reduce fraud," says Rita Postell, manager, community and employee relations for Albermarle, S.C.-based Piggly Wiggly Carolina Co.

Piggly Wiggly Carolina, a Piggly Wiggly Corp. franchisee with 114 stores throughout South Carolina and Georgia, initially piloted the technology in four stores last year. Plans are underway to roll out the application chainwide. The grocer turned to the technology to create an electronic wallet accessed by reading the customer's fingerprint. But recognizing that its clientele is technologically conservative, Piggly Wiggly Carolina instead focused its initial marketing efforts around the store's loyalty program.

The idea was to introduce customers to the technology through use of an application that didn't access any of their personal financial data. Once customers became comfortable with how the technology worked and the security of the system, the feeling was they would be more apt to enroll their payment information into the system.

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