Data Driven Insight for Biometrics, Digital Identity & eIDs

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Will Fintech’s Love Affair With Biometrics End Badly For The Global Payment Giants Touting This Match Made In Heaven?

Posted: January 6th, 2016 | Author:

Originally published by findBIOMETRICS.com

GUEST POST: Will Biometrics Displace Global Payment Giants?2015 was a banner year for fintech, mobile payments, and biometrics. Nearly 100 smartphones are currently shipping with native biometric authentication and nearly every major bank, payment processor, identity broker, handset manufacturer, and leading tech player is hyping their mobile biometric offering. Just a mere 2 years ago, even after Apple’s groundbreaking introduction of the iPhone 5s, biometrics was routinely dismissed as unreliable, frightening, fringe technology—more the stuff of science fiction then the realm of daily consumer experience. However, by the close of 2015, weekly announcements plugging new smartphones, banking apps, and payment players integrating biometrics were routine.

Nowhere was this more apparent than at the Money20/20 Conference in October 2015. More than 10,000 financial service, payment and high-tech industry leaders converged on Las Vegas to hobnob with scores of fintech wannabes and digital money analysts and advocates all clamoring to display expertise and insight into the mainstream adoption of biometrics as an enabler of mobile commerce.

Market legends from Visa and MasterCard to First Bank and Chase, along with Samsung, Google, Facebook, and more too numerous to list were tripping over each other to embrace biometrics as mainstream technology. A year earlier at the 2014 edition of Money20/20, keynote attendees were entertained with a gag biometric video The Future of Dough-PayByAss. But by 2015, as the event’s major sponsors all touted biometric offerings, the technology was clearly no longer a laughing matter and well beyond the crude musings of a satirical video.

Biometrics Embrace Encouraging and Confounding

GUEST POST: Will Biometrics Displace Global Payment Giants?Therefore, as we enter 2016 with biometrics hype gaining steam, a deep breath and some broader perspective is warranted. While the palpable biometric buzz evident throughout the past year in product announcements, on and offline articles, interviews, and analyses, as well as at events such as Money20/20, has certainly elevated biometrics’ prestige, the seemingly endless discussions of biometrics are, in reality, both encouraging and yet somewhat confounding.

Encouraging in that the unprecedented depth and intensity of interest and media coverage reflects a genuine mainstream commercial embrace of biometrics. This is extremely positive news for a technology industry that has been waiting for more than a decade to break free from its niche application in criminal and civil government markets.

Confounding in that very financial service behemoths, the Citi’s, American Express’s, and First Bank’s of the world, along with the chieftains of payment processing Visa and MasterCard, that are flaunting the ‘newfound’ and wondrous capabilities of biometrics to enable a ‘frictionless consumer experience,’ seem almost willingly ignorant to the inevitable impact biometrics will have on the future of their business.

Two Key Adoption Drivers of Biometrics: PIN/Password Replacement and ‘Stealth’ ID

GUEST POST: Will Biometrics Displace Global Payment Giants?According to these newfound financial service converts, biometrics is about two things. The first is PIN and password replacement for mobile device and in-app transaction authentication to reduce friction and increase the completed transaction rates. The second is using ‘stealth’ behavioral biometrics; confirming user identity by capturing data on the way users interact with their devices. There are several companies, including BioCatch and NuData, that provide this capability to ‘unnamed major retailers and financial service providers.’ Providers that do not notify their customers that this data is being captured and used to identify them.

Stealth biometric capture has proven historically disastrous for the biometrics industry and it remains unclear what kind of backlash may occur when consumers discover this information is being captured and used without their knowledge or consent. Facebook is currently facing multiple lawsuits in the US and has had to turn-off features in the EU based on its own stealth use of biometric facial recognition.

Beyond these two drivers, the more compelling rational behind the embrace of biometrics by mainstream players may be purely defensive; a means to co-opt potential threats to their core business. Banking, payment, even e-and m-commerce players are embracing biometrics to expand their reach into the ‘disruptive’ world of fintech and insulate themselves from innovation driven disintermediation.

Cloud Based Biometric Disruption

GUEST POST: Will Biometrics Displace Global Payment Giants?

Established financial service players have long depended on the highly technical and highly regulated nature of their business to resist disruption. The emerging mobile economy has fundamentally transformed the marketplace by creating a hyper-connected world where fintech innovation threatens their long-standing market stranglehold. Even as these ‘gatekeepers’ embrace biometrics as a means of retaining market power, they seem to fail to fully grasp its truly disruptive nature, which extends far beyond simple pin and password replacement or stealth risk assessments.

Biometrics is far more than an effective way for payment, banking, commerce, or even social media players to ‘kill passwords’ and reduce consumer ‘friction,’ or a stealth way of gathering Personally Identifiable Information (PII). Biometrics—properly integrated, managed, and applied within a consumer centric identity framework that includes both consumer ownership and control of PII and anonymous identification—may indeed pave the way for eliminating the gatekeepers altogether.

Irrefutable biometric authentication at the point of payment will render much of the existing payment processing infrastructure obsolete. Third party biometric authentication delivered via Biometrics as a Service (BaaS) or more broadly Identity as a Service (IDaaS) will offer far more efficient and cost effective fraud and theft mitigation than today’s dated, bloated, and slow (in digital terms) nearly $2 trillion a year payment processing industry. Cloud-based identity services will radically reduce transaction risk allowing this new class of BaaS or IDaaS players to provide direct transaction authentication at the point of payment near instantaneously at a far lower cost.

21st Century Identity Revolution

GUEST POST: Will Biometrics Displace Global Payment Giants?The true disruptive potential of biometrics is likely being been overlooked in the mad rush to jump on the biometrics bandwagon. Perhaps it is the result of a limited understanding of biometrics capabilities or perhaps a strategically driven denial. Either way, this misreading of biometrics is the quintessential elephant in the room and may prove ultimately fatal to those who fail to recognize it for what it is.

In much the same way that the 19th Century was the era of the Industrial Revolution, and the 20th Century was the era of the Digital Revolution, the 21st Century is poised to be the era of the Identity Revolution. Identity is more than a characteristic to be vetted or verified. Identity is becoming the organizing principal of the emerging global digital ecosystem. An organizing principal that is poised to transform many global industries, including payment processing, as consumers, citizens, and employees trust biometrics to secure their digital transactions allowing them to regain control over their PII.

Biometric ‘Love Affair’ Gone Awry

GUEST POST: Will Biometrics Displace Global Payment Giants?Conventional wisdom among biometric naysayers perpetuates a long list of the ‘dangers’ of biometrics Biometrics are unreliable. Biometrics will irreversibly compromise consumer privacy. Biometrics are irrevocable and once compromised forever lost.  The mainstreaming of biometrics will be cataclysmic for both the individuals and organizations that adopt them. The embrace of this technology is irresponsible at best, perilous at worst. . . A litany of context-free, myths based on technical misunderstanding and discredited threats.

The real peril, however, of mainstream adoption of biometrics, particularly for players in the payments arena, may come in quite a different package. A $2 trillion industry reliant on antiquated infrastructure and propped up by outmoded risk models being ultimately displaced by the widespread availability of instantaneously biometric identity verification delivered via the digital cloud. Not exactly a match made in heaven!


Filed under: Biometrics, Disruption, e/mCommerce, Financial Services, Market Insight, Mobile Biometrics, Mobility, Money2020, Payments | No Comments »

Identity 3.0: Mobile Biometrics Redefine Digital Identity and Disrupt Global Commerce

Posted: August 20th, 2015 | Author:

wordle 10The global market for mobile biometrics is at the center of a firestorm of converging market forces driving new and complex relationships between identity, commerce, and the indispensable personal mobile devices that more than 6 billion consumers carry with them at all times. The proliferation of these powerful mobile devices within the emerging global ecosystem connecting commerce, community, and consumers has fundamentally changed the way we communicate, work, conduct business, shop, entertain ourselves, interact socially, and now identify ourselves.

Two central themes provide the context for understanding the scope of this massive market revolution:

The first is the transformation and convergence of commerce and privacy as they relate to individual consumer identity. How do consumers navigate this complex, interconnected world ensuring their privacy is protected and their PII is secure while they maintain frictionless access to the information, communities, and the goods and services they want to purchase?

Mobile iPhone and Watch MEDThe second is how will enterprises that rely on the accumulation, management, use, and sale of PII evolve or be displaced as this massive global platform based on personal mobile devices disrupts conventional business models? Can businesses based on data aggregation survive the creation of consumer centric ecosystems that transfer data ownership from commercial powerhouses to individual consumers?

This is the framework for evaluating the critical role biometrics has begun and will continue to play as the mobile identity ecosystem is conceived, constructed, and deployed across the globe over the next five years and beyond.

Got your attention?   For more register for Acuity’s Mobile Biometrics Webinar: Redefining Digital Identity and Disrupting Global Commerce on Sep 3, 2015 11:00 AM EDT.

The Webinar will draw extensively from Acuity’s latest research report The Global Biometrics and Mobility Report: The Convergence of Commerce and Privacy.


Filed under: Biometrics, Data Driven Analysis, e/mCommerce, Market Insight, Mobility, Payments, Smart Devices | No Comments »

Mobility Fuels Biometric “Boom”!

Posted: June 10th, 2015 | Author:

Acuity just released revised forecasts for the mobile biometrics market. Annual revenues from biometrics embedded in smart mobile devices, biometric app downloads, and biometric authentication of transactions are projected to grow from $1.6 billion in 2014 to $34.6 billion in 2020 representing a CAGR of nearly 67% with total forecast period revenues exceeding $117 billion.

MBimage Today’s mobile biometrics are primarily a convenience factor; a pin alternative for device, application, and account access, as well as mobile payment authorization. I believe that by 2017, hardened biometric security on mobile devices will begin in earnest and we will see a genuine transformation in identity and commerce and the true end of “the password as we know it.”

The potential for consumer use of mobile biometrics and the associated revenue is magnitudes greater than any previous application of biometrics. This massive, globally available platform will provide an unprecedented opportunity for sustained sensor, software and app based revenue as well as enormous potential for biometric authentication services for high-risk and high-value transactions.

Acuity also projects that by 2020, biometrics will be standard on 100% of the nearly 3 billion consumer smart mobile devices sold each year. With an installed base of 4.8 billion, more than 89% of all smart mobile devices in use will be biometrically enabled. In addition, more than 5.5 billion biometric apps will be downloaded annually, and more than 800 billion transactions that require some level of biometric authentication will be processed on mobile devices each year.

For detailed forecasts and analysis of the consumer mobile biometric market, preview and purchase “The Global Biometrics and Mobility Report: The Convergence of Commerce and Privacy” at www.acuity-mi.com/GBMR_Report.php


Filed under: Biometrics, Data Driven Analysis, e/mCommerce, Market Forecast, Market Insight, Market Research, Mobile Biometrics, Mobility, NFC, Payments | No Comments »

Retailers remain skeptical of ApplePay. Really?

Posted: June 5th, 2015 | Author:

The top reasons retailers cited for not accepting Apple Pay were insufficient customer demand, a lack of access to data generated in Apple Pay transactions and the cost of technology to facilitate the payments. Some merchants said they were holding out because they plan to participate in a new mobile payment system to be launched by a coalition of retailers later this year. applepay

Yes, Apple Pay usage it limited because consumers can’t remember to use it because the behavior has not yet been ingrained because there are not enough retailers offering Apple Pay.  This doesn’t mean Apply Pay is not fantastic. It truly is. If I could use Apple Pay everywhere I shop, I would. So convenient. But I can’t…at least for now.

How amazing is it to walk into a store with a phone that has my shopping list, coupons, and credit cards inside it. No bulky purse or wallet. Now, if I could just get my drivers license in there  – as my insurance card already is – and my car’s key fob, life would much AWESOME!

OK, so it takes time. But if retailers are waiting for CurrentC, I would suggest they not hold their collective breath.

All US retailers have to upgrade to EMV (chip and pin) readers anyway by Oct 2015 or be responsible for card fraud. Why not spend just a little more and get an NFC reader. For small business with a few  card readers, it is not a major investment and big businesses have to make the EMV investment anyway. So, why would any business make the decision not to go ahead and just get NFC enabled card readers at this point?

Whole Foods seems quite pleased with Apple Pay which is now accounting “for 2 percent of its sales dollars as of March” and this figure is expected to continue to rise. “Shoppers are really enjoying the speed, convenience and security of Apple Pay.”

But for other retailers and consumers, Apple has yet to answer the question “what is in it for us if we use Apple Pay?” said Alberto Jimenez, program director for mobile payments at IBM, which provides technology to mobile wallet makers and retailers.

What’s in it for you? The same thing that was in it when you upgraded from cash registers to computers, dial-up to cable internet connections, entering purchased data manually to bar code readers. It is call the future and it now knocking at your door. It is faster, more convenient, and just pain inevitable.

The idea that the skepticism, or  reluctance, of retailers is going to prevent payment innovation, be it Apple Pay, Andriod Pay, Samsung Pay, etc., is absurd. They can hold out if they choose but they would be much better off upgrading now and influencing the development of the technology and how they can work with Apple, Google, etc to leverage the opportunity. After all, once the competition sets in, these payment enablers may be much more open to incorporating loyalty programs, finding a privacy enabled way to  track sales, etc.

Dear Retailers, don’t be luddites. Get on board folks, the payment world is changing. Why not get in early and use it to your advantage!


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Will Biometrics be the “Undoing” of the Monetization of Consumer Data?

Posted: April 8th, 2015 | Author:

The headline from Business Insider UK reads : Facebook is being sued for amassing the world’s largest stash of facial-recognition data

The article states …

The lawsuit alleges that this facial-recognition program violates the privacy of its users, citing an Illinois law called the Illinois Biometrics Information Privacy Acts, which requires companies to get written content from a user if it is collecting biometric data.

Further, according to the statute, the company must state the purpose and length of its data-collection program.

The idea being that Facebook collects and uses biometrics data without the requisite knowledge or consent of it’s 1.35 billion monthly users, or at least the ones in Illinois. Europe has actually prohibited the use of Facebook’s facial recognition technology,  but I have to wonder how exactly does this work? Does i apply to individuals who use European addresses for their profiles? Or does it apply to all traffic on European servers and networks?

Facebook says the templates are “useless bits of data,” that only work with their own software and “users can opt out of the feature and their data will be deleted”.  But this kind of explanation, regardless of its voracity, has never been convincing for any kind of personal data collection. Not even from leading biometric vendors or government agencies with large civil and criminal biometric databases.

Though it must be said that government biometric databases, at least within democratic and many not-s0-democratic societies, are generally accompanying by clear (and hopefully) transparent rules regrading the collection, storage, management, use, and disposal of biometric data. And to date, there have been no known major breeches of  government biometric databases that have led to catastrophic results. At least none that we know about.

Facebook and other commercial enterprises whose business model relines on collecting and monetizing  personal data are, as yet, generally not subject to the same rules, transparency, or  scrutiny. Though clearly European regulators did limit their use of biometrics, at least by Facebook, and the same is now being attempted in the US with the Illinois case.

 

What I find fascinating is that as companies, especially innovative hi-tech behemoths like Facebook, Google, embrace biometrics to simplify, secure, and enhance their social media, payment, and other services, not only do biometrics become demystified but the inherent capabilities of biometric technology actually begin to threaten the underlying business model that is driving their adoption.

Facebook and Google have voluminous knowledge of individuals who access the internet – preferences, friends and professional connections, shopping habits, games, information searches,  overall internet footprint, etc.   These massive data gathering machines have been parlayed into multi-billion dollar global enterprises. Corporate ownership, management, and sale of consumers’ personal information – information that is often far more difficult and costly to come by and far more intimate and invasive than biometrics – has become the foundation of the globalization of consumer marketing.

However, by integrating biometrics into mainstream consumer life, these companies may be threatening the very economic model that has allowed them to achieve meteoric success monetizing personal data. In essence, the integration of biometrics into IT based social media, finance, payment, and health ecosystems has the potential to deconstruct traditional ideas about and models of personal data ownership and control.

By enabling reliable anonymous identification, biometrics can greatly reduce, even eliminate, the need for the kind of personal information that is routinely required to conduct business, complete transactions, or engage in online interactions or research activities. Enabling this level or anonymity could fundamentally change consumer perceptions regarding their own personal data and the level of control they should have over who can access it, how it can be used, and certainly who can make money off to it.

This kind of “awakening”  round “consumer centric privacy” could force companies like Facebook, Google, and other consumer knowledge based information brokers to transform their business models to align with new consumer expectations or become mere shadows of their former selves.

For more perspective, download Acuity ’s market brief The ABCs of Mobility: Apple®, Biometrics and the promise of Consumer Centric privacy .

And, stay tuned for the upcoming Global Biometrics and Mobility Report: The Convergence of Commerce and Privacy.


Filed under: Biometrics, e/mCommerce, Market Development, Market Insight, Market Research, Mobile Biometrics | No Comments »