TrendBiometric vein readers gain in popularity, but format war looms
In Japan, more and more banks adopt biometric vein reading as the ATM security biometric technology of choice; problem is, there is a format war brewing between the two main developers of the technology; in the U.S., though, it is a question of cost, not techngology standard, which has so far deterred banks from adopting biometric ATMs
Are you in the business of manufacturing biometric vein readers? If so, then Japan is the place for your products. Tokyo’s Sumitomo Mitsui Bank has outfitted some of its ASTM with vein biometric readers. The readers read the vein pattern in each of the customer’s ten fingers before allowing any transaction to take place. Yes, each transaction now requires some added hassle and time, but to make it up to customers, the bank has lifted the limit banks typically place on ATM withdrawals. (Sumitomo Mitsui allows verified customers to withdraw the equivalent of tens of thousands of dollars at a time from all of the customer’s accounts).
The last two years have witnessed many Japanese banks installing biometric verification systems in their ATMs. The trend accelrated last year, after legislation was passed which made banks liable for withdrawals by criminals using stolen or counterfeit bank cards. Today, more than 20,000 of Japan’s 110,000 ATMs have vein scanners, and sales of the technology in Japan reached $70 million in 2006.
Note that vein reading technology practically did not exist three years ago, but has gained considerable momentum since then, gaining over other biometric technologies such as iris, facial, and fingerprint scanners. Two of the major makers of vein reading technology, Fujitsu and Hitachi, say that the error rate of their readers is less than one in a million.
As the technology becomes more popular, it also faces a format war between the two rival — and incompatible — technologies: Fujitsu’s palm-vein readers and Hitachi’s finger-vein scanners. Fujitsu claims its palm-vein technology analyzes more data in the process of confirming a customer’s identity, and is, therefore, more secure. Hitachi says its finger-vein scans are just as reliable and that they have the added advantage of confirming a customer’s identity in 0.5 seconds, compared to Fujitsu’s 1.5 seconds.
Hitachi’s finger scanners are, so far, ahead in the race: The company has signed up Sumitomo Mitsui Financial Group and Mizuho Financial Group, and back in October Japan’s soon-to-be-privatized postal system chose to adopt the company’s technology (the postal service also runs a bank serving 117 million customers). Fujitsu can claim only one bank — Bank of Tokyo-Mitsubishi UFJ — which has opted for its palm-vein scanners.
It is less skirmish about this format and more the issue of cost which so far has caused U.S. banks to be slow to warm up to the technology — or, for that matter, to any biometric ATM technology. U.S. banks have so far selected cheaper options such as a second password to gain access to an account.
-read more in Kenji Hall’s Business Week report
