Biometrics Come into Focus in Financial, Retail Environs

Lower costs, better reliability expand business use beyond access control

The company's assumption proved correct. Customers are warming up to the technology "We see the technology primarily as a customer benefit and a security tool that hopefully will reduce fraudulent check cashing," Postell says.

Customers enroll in the program by showing a valid I.D. They then swipe a finger on the biometric reader five times, after which they swipe whatever cards they intend to use at the point-of-sale - such as credit, debit, or loyalty - to link those cards to their account. All account data is stored at a secure IBM data center.

Cost Savings
While Postell declined to be specific about the cost savings, Eric Bachman, chief operating officer for San Francisco-based Pay By Touch, which developed the biometric application for Piggly Wiggly Carolina, says supermarket executives have told him that if the checkout process is reduced by one second per shopper the operating efficiencies gained are the equivalent of about a $6 million savings in labor costs annually.

Pay By Touch also has contracts with Roundy's Inc., a Wisconsin-based supermarket chain that is a division of Pick N' Save, as well as Discover Financial Services. Discover is planning to attach a biometric application to its card in the coming year. Discover executives were unavailable for comment.

Improved operating efficiencies played a key role in Bank of America's decision to roll out palm readers for access to the safe deposit box vaults in its branches. By installing the readers, the bank no longer needs an employee to accompany a customer into the vault. Before this, employees had to be stationed at or near the vault to verify a customer's signature on file.

Next, the employee would accompany the customer into the vault and use a master key in conjunction with the consumer's key to unlock the safe deposit box. The double lock system was an extra layer of security. If a customer's key proved to be a fake, the master key alone would not unlock the box.

BofA modified its entry system to match a customer's handprint to one on file and require customers to enter a PIN. The new system frees personnel to focus on other duties. BofA plans on rolling the application out to its more than 5,800 branches.

The application builds on an earlier biometric pilot by the bank. In 1999, BofA internally tested a smart card-based biometric application that read fingerprints to help customers access its online banking service. The fingerprints were stored on the smart card and were accessed after the cardholder swiped his or her card through a reader attached to a PC and entered a pass code.

The cardholder then placed a finger on a scanner attached to the PC, which verified the finger print image against that contained on the card. The project never made it out of the pilot stage.

A drawback to loading a biometric application onto a smart card is the lack of a supporting infrastructure for smart cards. It has only been in the past few years that merchants began installing terminals with the capability to read a smart card. But even with an improving infrastructure to support smart cards, credit issuers have only dabbled with the technology due to low consumer demand.

Payment experts also argue that smart card wallets can be limited in size by the chip's memory.

It's clear biometrics still face stumbling blocks. Chief among them are privacy concerns over shared databases, which are the cornerstone of any plan to make biometrics a mainstream technology. Without a shared database, end-users are in effect tied to a closed loop system that is limited to a single set of customers.