The Emerging Opportunities: A Discussion With Frost & Sullivan Reserch Analysts About The Future of Biometrics

October 29, 2013 – by Peter B. Counter

Recently research firm Frost & Sullivan published a report titled “Emerging Opportunities in Global Biometrics Market.” The report details the global biometrics market growth over the next six years and predicts a total market growth of 22.5 percent between 2012 and 2019, singling out emerging areas of application and regions that are ready to adopt this technology.

I had a chance to speak with Frost & Sullivan senior research analysts Nandini Bhattacharya and Ram Ravi about the current state of biometric deployments and the possible applications we can expect to see over the period of growth that the research covers.

The conversation begins with a discussion on the limited but growing role that mobile biometrics is playing on a global level and then jumps off from there to topics of biometrics in education, gaming and national ID. Finally, we close with Ram giving some expert insight into where in the world vendors should be focusing their efforts.

PBC: Financial services, retail and healthcare are singled out in this report as present key markets. How large of a part is mobile playing in keeping these verticals so promising?

Nandini: It’s a new market and an upcoming one. If you talk about financial services, healthcare and retail, we haven’t identified much of mobile transactions. Yes, of course there is a bit of mobile application when it comes to mobile banking, or when it comes to payments and such.

As far as financial services go we do have a bit of mobile applications included within mobile banking and such. But otherwise -if we’re talking of just biometics, and mobile devices and consumer electronics- then it’s a growing market and it’s still at a very nascent stage.

Ram: We were recently having a discussion with one of our clients where we were speaking about the emergence of smartphones across the world and how they are actually being equipped with what we call the software development kit or the SDK. Customers can download these from the App Store or the Google Play Store – whichever one you want – and you can use your smartphone to be an iris scanner or leverage the hardware within the smartphone, be it the camera or the touch pad, to measure the characteristics of the human body. Usually this is iris or fingerprints. So, without the addition of external hardware, companies are actually introducing biometric technologies into the existing smartphone.

When you look at the number of personal mobile units, you see that in the top four or five countries -countries like China and India – these are the economies where there is a surge of mobile phone use. When we talk in terms of growth, we are talking about a range of about 20 to 40 percent for smartphones and tablets.

So there’s the probable growth percentage of users of smartphones and tablets around the world, and, particularly in the emerging economies, we are seeing adoption between the ages of 15 to 34. This is significantly higher in these countries.

This generation of people is more receptive to new technologies and more prone to using smartphones. That is one of the anomalies that will be adding to the surge of usage. It’s one of the reasons why mobile payment or mobile commerce is an established market in countries like Japan.

That is why you will see significant adoption of biometrics, particularly on the mobile front, and indeed the financial front.

There have been companies like AOptix and EyeVerify who basically have introduced SDKs and verification kits for authentication using the mobile devices.

PBC: That being the case, how would you quantify the biometrics in these strong markets?

Nandini: Within healthcare we a lot of applications. Physical access control is one of them. It is a major one. But then there are a lot of newer and upcoming applications. For example: medicine-dispensing kiosks or medicine booths, pharmacy access for patients and hospital staff, hospital admissions and time and attendance.

We also see some application of biometrics within insurance and healthcare. So, there are a lot of new applications and emerging applications. And of course access control is the primary one, but then people are exploring new areas.

Ram: Just to add on to what Nandini was saying: when we first looked at biometrics it was not a promising market for the very reason that, number one, biometrics is a very costly affair, and the other reason is that it is not the most necessary quality enhancement. So, whether it is a necessary enhancement is the big question which is coming into the forefront.

On the frontier we are actually seeing a little bit of traction in the use of biometrics in healthcare. But when we talk about the technologies in biometrics that are being used at this moment, we probably could say that fingerprint technology is pretty much the commodity at this point in time.

PBC: Education is singled out as one of the markets that will be experiencing some growth. Is this in a time and attendance capacity similar to what we’re seeing in universities?

Ram: Yeah, I would think so.The primary reason you have these schools having a fingerprint scanner or authenticating on an access control system being implemented is because of terrorist activities or recent activities where we’ve seen illegal or unforeseen circumstances in which we’ve seen a lot of people die. So that’s the primary reason why biometrics actually exists in these areas: because, of course, people being more concerned about their children being safe in school.

So apart from access control, or time and attendance, I don’t actually see any new applications at this point in time, and there is no other need or necessity for biometrics. Probably in a school where the food is being matched to the children, they might have specific obligations of providing tokens for the food, and that’s a probable application. But again, you have competing technologies that can be used for this—like printable barcodes which are very prominent at this point in time and can be used for these kind of applications and are cheaper than biometrics.

Nandini: Within education, libraries are areas where we will see more usage of biometrics. Instead of using normal library cards, we will actually start to see those replaced with biometric smart cards. So within education, libraries of course will be seeing more and more deployment.

PBC: Gaming is also identified in a similar way. Will we be seeing more applications in hardware, like on the Xbox One? Or will it be mostly in logical access control, for instance, in online gambling situations?

Ram: When you talk about gambling—you know, from an online perspective—I’m not sure that that is what we consider a big market when we talk about gaming. But if that market is a big market then I’m sure there would be a considerable scope of using biometrics for application. It probably would be a wise use for biometrics – as authentication that a person is actually going to play that game. But I don’t see it generally being used in general with the hardware – just to enhance the actual hardware.

But interesting to the point you said about online gambling or online access to online games: you’re talking about general gaming I don’t think there’s going to be – there’s not any purpose of wielding a biometric application for general online gaming.

But from an aspect… from a gambling perspective, it does actually make sense.

Nandini: One application within online gaming could be a future one for online registration and payments. The only application that we can think of right now is, as Ram mentioned, more to do with gambling, but registration and online payment would be one of the other online applications.

PBC: There are some pockets of resistance towards biometrics, specifically in regard to National ID programs in North America. Do you see this attitude changing? Will it remain an obstacle?

Ram: When you usually look at the Americas, specifically the US, I don’t think that you have any specific national ID program like you mentioned. The driver’s license is probably used as a national ID in the US. So I probably would not say it’s a hindering factor for biometrics in the Americas. But like I was saying, the driver’s license and the SSN that are being issued are predominantly used as national ID in the US right now, so there’s not much of an activity in the national ID option [there]. These drivers licenses and SSN cards are basically one of these smart cards with biometric capability in them. So biometrics wouldn’t have an effect in the national ID in the US.

Adding on one more point to that: when we talk about the Canadian government, they’re actually having a replacement of the SIN (Social Insurance Number) card and the Canadian health card with a national ID card, but that is still in discussion, so that is something that will probably add the option of biometrics.

PBC: How much of a roll do you see policy makers playing in this growth period?

Ram: When you actually look at the American market, when you talk about biometrics in government and education…  applications are border control, national ID, law enforcement and probably military applications. And border control is going to be probably the biggest application. You’re going to have people coming in from different continents into the US… everything going into the airports. This is probably going to be one of the biggest applications in the government sector. The other one would probably be law enforcement – the FBI, the CIA – everybody here is basically going to be mobile. You have a lot of mobile workforce that will be using handheld readers to authenticate ID

So, when you actually look at biometrics as an option in North America, these probably will be the big two applications.

But coming to the question that you said: absolutely, when you talk about mainstream adoption of any technology… the vendors impart knowledge of that technology to the general public and what it can offer to them. And that is true of any technology in the market.

PBC: The report is extremely comprehensive and so you seem to be in a good position to give advice to vendors. What sort of strategic advice would you give to vendors of biometric technology?

Ram: It’s not really strategy when you think about it, but in general I would lean more toward the emerging economies—particularly in Russia, India and China. These are the countries that are going to be the hub of biometric development in the near future. So there will be a lot of traction when we talk about government applications, specifically in these emerging economies.

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