Many American banks are testing and evaluating biometric identification technology; one Colombian institution is putting it to work.

Conavi Bank of Medellin, Colombia, is installing scanners to identify customers by their fingerprints.

By year's end 15 of its 180 branches should be using the technology. The scanners will be installed in the rest of the offices over the following two years.

Conavi, Colombia's second-largest bank, with $2 billion of assets and 1.8 million customers, expects the system to help stem losses from fraud, said Juan Isaza, vice president for branches.

Though he declined to provide numbers, Mr. Isaza said fraud is a major problem for Conavi-particularly in accounts in which signatures are used to authorize withdrawals.

"We started looking at something that the teller doesn't have to think about," Mr. Isaza said.

The bank is using technology from Fingerscan, an Australia-based subsidiary of Identix Inc. of Sunnyvale, Calif. Conavi first tested the company's TouchSafe finger scanner with 5,000 customers in one branch.

About 3,000 people enrolled right away; the others needed an incentive gift to prod them to join, said Celso Fraga, vice president of Fingerscan's Latin American operations.

The test led to the bank's decision to spend $700,000 on this year's 15- branch rollout. The bank initially is enrolling customers with signature- verification accounts into the Fingerscan program.

To use the technology, a customer puts a finger on top of a scanner, which creates an image to be stored on the bank's systems. The scanning takes 25 to 30 seconds.

When conducting business with the bank, the customer uses the scanner at a teller station. The image captured there is to be compared within half a second with the one on file at the bank.

Initially customers will be able to use the scanners only where they enrolled, because each branch will store its own master files.

Eventually customers will be issued smart cards that feature a computer chip on which fingerprint images can be stored. These cards will let customers use the fingerprint identification technology at any branch.

Mr. Isaza said the technology has reliably identified the customers involved in the tests, and the bank has had no major problems with false rejections or acceptances.

And because all Colombians are fingerprinted when they open bank accounts, Conavi is not worried - as some U.S. banks are - about alienating customers with the new technology.

Customers "feel much more secure," said Mr. Isaza. "They even ask for the new system. They think, 'It's safe and it protects my savings.'"

Though Conavi is one of only a few banks worldwide using finger scanning with its customers, financial institutions in several countries are using it internally, said Michael Hilsden, Fingerscan's chief executive officer.

For example, Bank Central Asia in Jakarta, Indonesia, has deployed about 2,500 devices to identify bank employees before allowing them to conduct large transactions.

In addition, banks in Australia and Eastern Europe use finger scanners to identify the employees who refill automated teller machines, Mr. Hilsden said.

U.S. banks are experimenting with a variety of biometric techniques, including hand geometry and voice recognition. But one influential group, Financial Services Technology Consortium, has settled on finger scanning as the most cost-effective technique.

The group plans to test eight finger scanner vendors for their devices' accuracy. Testing should begin by the end of this year, said Adam Backenroth, executive committee member and vice president of Chase Manhattan Corp.'s corporate emerging technologies unit.

U.S. banks are unlikely to use finger scanning with customers before 1999, Mr. Backenroth said.

Among the issues holding up implementation, he said, are privacy concerns and the cost of fraud compared with that of using biometrics.

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