The biometric payment cards market is coming to fruition after a period of accelerated innovation, and the Asian region is providing a fascinating case study for industry watchers. That’s why FindBiometrics Managing Editor Peter Counter recently spoke with Stan Swearingen, CEO of IDEX Biometrics, a pioneer in fingerprint-powered next generation smart cards.
The conversation focuses on the Asian biometric payment cards market in the wake of IDEX’s Money20/20 Asia showcase. Swearingen highlights the myriad partnerships his company has in the region, and the infrastructure required for the adoption of biometric cards. The discussion turns to the cultural factors in biometrics adoption that vary by region, how user familiarity fits into the biometric card revolutions, and the importance of education in biometrics today.
Read the full interview with Stan Swearingen, CEO, IDEX Biometrics:
Peter Counter, Managing Editor, FindBiometrics: Congratulations on your successful showing at Money20/20 Asia. That market has been such a fantastic space to write about, I find, because it’s so unique. From your perspective, what are the unique opportunities and challenges in the Asia Market?
Stan Swearingen, CEO, IDEX Biometrics: We’re engaged with card integrators across Asia, but China is a particular region of focus, as it is super aggressive when it comes to developing a new market. They have a very pragmatic approach on making the market and figuring out how to make money. As such, they have the right profile in the market of biometric payment cards – being a geography that really understands how to drive market adoption.
We are quite proud of the fact that in Q4 we announced partnerships with Hengbao, Chutian Dragon, Excelsecu, XH, Goldpac, and announced a pilot with Feitian, which are not only powerhouses in China but globally too.
FindBiometrics: That sort of infrastructure is a real key to the whole biometric payment card paradigm, and shifting into that, because you need to have that partnership acceptance. We saw a lot of that when people, five to six years ago, were really skeptical about mobile wallets. They were talking about having that partner support within the infrastructure. It’s nice that that’s all coming together very quickly here through these partnerships. Can you speak to the importance of having partnerships specifically in the Asian region?
IDEX: It’s critical. For IDEX Biometrics our economic buyer is the card integrator, the likes of Goldpac, Hengbao, etc. To have a partnership where we can work through whatever issues come up is vital. Certification from a particular scheme and how certification works will set the criteria for biometrics. Features including reliability and robustness are all part of these requirements. For example, can the card go in the washing machine? Will it survive a severe bending test?
There are also biometric requirements – manufacturers must ensure the card is robust from a security perspective. False accept rates (FAR) and false reject rates (FRR) must also be considered. False reject rates are really around convenience, if every three out of ten times you go to use the card and it doesn’t work then it’s not a very good experience, right? So, they want the FRR to be very small and they want the FAR, the number of times it is falsely accepted, to be exceptionally low, so there is a balancing act between security and convenience.
Working together through this testing process is critical. If issues come up, you want to have the sort of relationship where the two parties can work as one to solve these things. So, we put a lot of energy into forming those relationships with card integrators and making sure we have the right technical resources available in the region to solve these issues in real time. It is a very key part of our value proposition.
We are a system provider, so we don’t just go in and say, “This is my fingerprint sensor; you guys go and figure everything else out”, we go in with a full turn key reference design and offer flexibility based on the integrators own technical ability. We’re seeing that system model is quite powerful now because a lot of these card integrators are in full force and looking for the fastest time to market.
To find a card integrator in Asia who doesn’t have an active program you would have to work really hard, which is a big statement because it says there’s tens of millions of dollars going into creating cards – in fact, now they are past even creating cards, they’re actively being promoted via pilots or sampling and so forth. So, it’s an exciting time.
FindBiometrics: It really seems like an active region. Earlier we were speaking about the importance of having a culture that is ready to accept the new payment paradigm. It sounds like the Asian consumer is ready for this just based on all of the activity. Would you say that is true?
IDEX: Absolutely. Culturally they accept new technology readily, and I think an example is when you look at online payments, like WeChat Pay in China. In other parts of the planet, online payments are not picking up. Uptake is around five-to-six percent, and that is with a lot of promotion, and actually in some regions it is in decline. But in China they readily accept that payment method, which demonstrates their culture is very open to adopting new technologies.
FindBiometrics: You have the partnerships there, you have active trials there, what are your plans in the region moving forward?
IDEX: The plans for the region are really to support the card integrators that we have and expand. As a CEO, one of the things you have to make sure you do is focus your company strategy. We’ve been very focused and selective the past couple of ,and now we feel we’re at the point where our technology is there, our tools are there, and our support infrastructure is there so that we can scale. So, this year will be the year of scaling, and scaling not only across many card integrators, but also new verticals including ID, Healthcare, IoT and Access Control.
FindBiometrics: Asia is clearly setting an example for not just technological adoption but biometrics adoption, what markets do you expect to follow in its footsteps?
IDEX: The Middle East and South Africa were early adopters. A lot of the Middle East was around affluent customers’ needs and why the biometric payment card has significant value to them. We’re not seeing adoption sequentially, what we are actually seeing is biometric fingerprint adoption is going global in parallel.
FindBiometrics: That is really fascinating.
IDEX: It is interesting, because we announced Fransabank in Lebanon, and then we announced a pilot in Kuwait, and then we had South Africa. Now, when I look at the pilots that we have across the planet it is just exploding worldwide. There isn’t any one geography that I would say is now more aggressive than another. Each geography comes with a slightly different angle to it, but like I said in the Middle East it is an affluent customer, versus in Africa it was for a different reason. The parallelism is exciting, obviously, but it’s an interesting dynamic.
FindBiometrics: I wonder how much of that is based on working with such a ubiquitous form factor as the card? That’s something that everybody’s familiar with already and so it seems like we’re also familiar with the obstacles and challenges of using that and so it’s just a very easy thing to educate a consumer on.
IDEX: I agree, that’s a great observation. In the EU, they’re so used to using the cards and now that the contactless is becoming so pervasive. In fact, according to UK Finance, 123 million of the country’s 159 million debit and credit cards are incorporating contactless technology. I know in Canada, Poland and Australia, contactless transactions are quite pervasive also.
I think, as you said, it is a well understood modality and usage, then when we integrate the fingerprint biometric authentication, it’s very natural right? You don’t have to learn how to hold your card differently, you hold it as you would today. And then regarding the infrastructure, you don’t need new readers, you don’t need to learn anything new. Just about every smartphone now has a fingerprint reader, which has encouraged people to become comfortable with using a fingerprint reader in their daily lives. So, that convergence of a form factor that’s tried-and-true, well understood, and with a use model that’s bleeding over from another domain is quite a powerful combination.
FindBiometrics: It really feels like everything is culminating in this biometric card trend, and it’s just super exciting to see. Going back to the uniqueness of the Asian market, while all of these other global markets are sort of going in parallel, what lessons have you learned from your activity in Asia that you expect to be carrying into these other markets?
IDEX: I think an important learning is that some of the people in Asia are quite regional and it comes down to personalisation and some of them have services globally, a good example of this is Goldpac. Others have regional personalisation and the card is a part of service offering from the card integrators and each one of the card integrators has a strategy of how to go from being a regional player to a global player. Some of the global players are saying I’m a global player already, how do I use biometrics to gain shares? So, there are different dynamics depending upon the player.
We can leverage our experience by helping our partners go through the certification process because each one of the schemes will have their own certification. Being on the forefront, we gained a lot of insight and have the ability to help our partners get through that process smoothly.
FindBiometrics: It also speaks about what you were saying about being able to present them with more than just a sensor and that you are really a partner with these people.
IDEX: We believe the partnership model is what our customers are looking for. So, I think the ability to help them get to market as fast as they can and to realize revenue and so forth is invaluable.
Of all the segments, the payments market is probably the hardest because of the number of players and the complexity of what has to happen to bring that product to market, versus some other verticals like access control where you don’t have to have some of the restrictions we talked about like those imposed by major payment schemes and so forth.
As a result, there are some verticals that we are seeing that can materialise quicker by leveraging the same technology platform so there isn’t a lot of extra work for us. However, we can support our customers as they look to promote the card in the vertical and we can help them do that adaptation quickly.
FindBiometrics: We’ve been talking a lot about the acceptance in the culture around new technology and biometrics, and IDEX has been present at Money20/20 Asia, Mobile World Congress in Barcelona, and Money20/20 in Las Vegas before that, and the other conferences that you have been to as well – and your company’s focus has been helping spread education about biometrics beyond our own industry. You also have a very active educational blog on your website, and at FindBiometrics and Mobile ID World we have been seeing a big trend towards educating end users on the specifics of biometrics. From your perspective, why do you think education is so important at this point in our industry’s history?
IDEX: We are very passionate about educating people and helping them understand the value biometric fingerprint technology can bring to their lives. We believe it is important that people are educated on the value that this can bring to them and debunking any myths or scaremongering. For example, there are currently misconceptions around the use of biometric data within a centralised system. We help people understand that their fingerprint never leaves the card and is not connected to some network or held in a central databases that could be easily accessed by cybercriminals. At the end of the day, consumers will decide if it is right for them and we are all about making sure they have good information to base that decision upon.
FindBiometrics: It seems to me like the privacy enhancing aspect of biometrics has been a really big focus recently. It’s difficult for the average user to get over that idea of biometrics not being synonymous with biographical data. I think that people are finally starting to get there, but it definitely takes a lot of conversations, and it’s really great to see leaders like IDEX out there on the front lines really talking to these integrators. Biometrics have been around for a while, but it really feels like for some people they haven’t really thought about the big implications yet. But I think they are ready to.
IDEX: I would agree.
FindBiometrics: What can we expect next from IDEX?
IDEX: You’ll see more partnerships announced for either customer partnerships or infrastructure partnerships. There are many secure element providers and we want to make sure that our technology works with all of them. We have announced partnerships with secure element providers Infineon and a partnership with Huada. We would expect in the coming months that we will form more partnerships there.
You will also see lots of pilots in the coming months that involve household names, extending pilots from regional to global players.
FindBiometrics: Fantastic. Personally, I can’t wait to be freed from my tap to pay limit by using biometrics on my card. It’s going to personally change my life. I’m excited by everything that is going on with IDEX and thanks again, Stan, for taking the time to talk with me today.
IDEX: Thank you Peter, it is always a pleasure.