Friday, August 20, 2004

Moving Toward Biometrics Smartcards

The U.K. government recently unveiled plans to introduce biometrics national identity cards in 2007 on a voluntary basis. These high-tech ID cards, which bear data such as electronic fingerprints or iris scans, aim to curb fraud and identity theft as well as deterring terrorists.

As more and more public-sector offices embark on biometrics-smartcard projects, industry players wonder if the market is really all roses. Jason Tan reports.


This year, some 86 million biometrics smartcards will be sold worldwide. The figure is expected to grow to over 160 million by 2006, marking compound annual growth of 104 percent from 2002 to 2006, said Frost and Sullivan.

“The market is definitely growing healthy,” pointed out Jafizwaty Ishahak, an industry analyst with the research group.

The Sept. 11 attacks and despicable terrorist acts, like the Bali bombing, have had an impact on many industries. Security issues have suddenly been propelled into the spotlight as never before, she said.

Security has become a high priority, and national authorities and governments have begun searching for the best options available. “It will be a matter of time before all of them find it necessary to fit themselves out with advanced security technology,” she added.

Although various alternatives may be available, more sophisticated methods and intensified security dictate more advanced technology.

“Hence, these criteria may welcome a new era of biometrics smartcards. Integration of the two technologies provides a higher level of security, convenience and portability,” she stressed.

Challenges

Government and ID applications are the largest potential market in the biometrics-smartcard industry. This has been the case in diverse nations and regions such as Malaysia, Hong Kong, Japan, Singapore, India and Australia.

Meanwhile, use in travel and transportation projects is also gaining momentum.

“Secure air travel has become a global necessity, as it cannot be restricted to the confines within one country. As a result, several international efforts using biometrics smartcards for secure passenger identification and processing have been put together to address the issue,” said Jafizwaty.

“However, people still have the perception that biometrics will encroach on personal freedom, and this leads to public discomfort,” she said, adding that the high cost of biometrics-smartcard infrastructure has also discouraged investment.

For instance, the cost of multi-application smartcards—depending on memory size, chip type and application number—is around US$4, while smartcards with biometrics applications start from US$4.50.

“While biometrics shows promise, realization has yet to reach the level that many have expected,” observed Cedric Collomb, marketing director at Asia, Axalto.

In the field of biometrics deployment, a significant challenge is lack of standardization.

“Obviously, the question of which biometrics (fingerprint, iris or face) authentication is based on is important, but more significant is which formats for storing biometrics templates and application programming interfaces (APIs) for doing biometric comparisons are used,” he commented.

North America Catching Up

According to Frost and Sullivan, the Asia Pacific had the highest percentage of unit shipments of biometrics smartcards in 2002 at 53.3 percent; North America trailed at 13.3 percent.

All this set to change in 2006. Unit shipments in Asia are forecast to drop to 39.2 percent, while those in North America rise to 21.6 percent.

“North America has immense potential in the adoption of the technologies,” Jafizwaty said, adding that enterprise security, in particular, is gaining in popularity.

Large multinationals, such as Microsoft and Boeing, have started to utilize smartcards-based corporate ID cards in a bid to secure access to office buildings.

This will boost confidence of other medium and large corporations, prompting them to follow suit.

However, figures from the International Biometric Group revealed that about only one-third of the U.S. biometrics industry's US$719 million in revenues last year came from the private sector.

A newly-released report from Burton Group supported this, indicating that despite the much-touted benefits of technologies, such as fingerprint, voice, iris and facial-recognition systems, the private sector has been slow to embrace them.

It predicted that over the next two to three years, biometrics will remain a niche solution in enterprises rather than a technology that is deployed to the masses.

Jason Chaikin, director of business development at Identix Asia Pacific, said though the technologies are currently experiencing “exponential” growth, the industry is facing difficulties in scaling them to the national level.

As technologies become more mature, there is a need to ensure that supporting systems, such as passport-issuance systems, are fully ready for biometrics implementation, he commented.

In terms of adoption, the health-care sector in the U.S. is fast catching up as regulations to mandate the industry to ensure privacy of patient medical records are put in place, he said.

Echoing this was Paul Beverly, Axalto’s president for North, Central and South America, “A lot of attention is being paid to passports and travel documents, obviously driven largely by the U.S. program mandating use of biometrics e-passports for visa-waiver countries.”

“We are also seeing interest from government agencies, particularly military, for use of biometrics as an alternative or supplement to conventional smartcard PINs and passwords.”

A Different View

However, Norman Chen, sales manager of Gemplus Taiwan, is reserved about the hype.

He pointed out that the industry still faces privacy-intrusion issues—especially obvious in the controversy over biometrics national ID cards.

As individual fingerprints are stored digitally in government databases, there is no guarantee that information will be 100 percent safe from hackers. As such, the decision to embark on national-ID-card schemes, is sparking a tussle between government agencies and civilians.

In view of low demand, Gemplus has reduced production of biometrics smartcards since the first half of last year, he revealed.

“It is not economical to smartcard vendors like us as the major cost doesn’t come from the smartcards themselves, but from fingerprint applications,” he added.

Hence, it does not really benefit smartcard vendors as they are merely pushing products for biometrics partners. However, Gemplus has not ruled out mass production if demand picks up, he said.


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