Security: Biometric Reality Check

They're cool, they're futuristic, but can banks find a business case for biometric ATMs? While high-tech devices like Sensar's iris identification ATM and Diebold's machine that layers Visionic's and Keyware Technologies's face and voice

recognition systems have definite star quality, they don't necessarily have practical applications. "If fewer than all the ATMs get equipped with an iris scanning device, and I steal somebody's debit card, wouldn't I just go to (an ATM) that doesn't have an iris scanning device?" asks Barbara Smiley, research director at Meridien Research.

Diebold acknowledges that banks won't be flocking to implement the new devices. "We don't expect in the near term that financial institutions would move to an entire placement of biometric ATMs," says Tom McBride, director of worldwide product marketing.

If one bank did convert entirely to biometric identification, does that mean its customers would no longer use other ATMs? That's not realistic, Smiley says. "It runs counter to everything that's been accomplished in terms of networks over the past 15 to 20 years."

Sensar, bolstered in 1997 by a $3 million investment from Citibank, tells prospective buyers that biometric ATMs have a three-tiered value proposition. The first is in attracting higher-value customers. "We perceive initially this technology in ATMs would be rolled out like a gold card offer," says Robert Van Naarden, vp of sales and marketing at Sensar. The second component would be to reduce transaction costs, possibly because higher value transactions, like large withdrawals, could now be done at an ATM. The third component is eliminating fraud, particularly check fraud.

That said, Sensar officials believe fewer than half the financial services implementations of biometrics will likely be in ATMs. Other leading candidates include teller stations, bank vaults and ID verification for electronic funds transfer. "One of the biggest applications in banks, which is a big security risk issue, is (in) electronic funds transfer," Van Naarden says. "This is done today with passwords and pin codes. It's nuts. Security just doesn't exist."

Sensar says it will run pilots with 500 machines worldwide in 1998, and plans to roll out between 10,000 and 12,000 stations in 1999.

-sausner tfn.com

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