The commercial sector is set to be the next high growth driver for biometrics industry, with an expected CAGR of 21.76% in the near future. Convenience, reliable performance, and PIN-less transaction authentications are among the top reasons for adoption of biometrics in the commercial sector. Fingerprint, Voice, Facial recognition, Finger and Palm vein, and Iris are the key technologies slated to have a significant presence in this segment. As the growth of biometrics industry is set to rely heavily on the commercial sector, it is important to understand its market dynamics. This study will attempt to explore the key drivers and restraints as per the current trends and assess their impacts for the short-term.

MARKET SEGMENTATION BASED ON APPLICATION

KEY MARKET DRIVERS

  • Improved Operational Efficiency and Customer Satisfaction Boost Market Growth across End-users

Financial services and Telecom are among the customer oriented verticals where business performance heavily relies on customer satisfaction and operational efficiency. While access to the services such as ATM, Branch and mobile banking needs to be highly secured, it is also inevitable to shed away the reliance on traditional PINs. A look into “forgot password” statistics might reveal interesting facts about the growing number of PINs we have to remember and the stress caused by trying to recover it. Biometrics solutions such as Fingerprint and Voice are proving to be trusted alternative to overcome this hassle. These PIN-less authentication systems had proven to be faster and secure over the years, and this had lead to increasing adoption. For example, fingerprint authentication in ATMs proves to be cost-effective for the banks as well as improves transaction experience among the customers.

The impact is not only observed in branch banking, but also in non-branch transactions. For instance, call centres in Telecom and Banks have installed voice biometrics to authenticate their customers remotely. Voice biometrics, widely used for remote authentication utilizes voice prints of the customers which are unique to each for verification. From the customer-end, this eliminates the necessity to give personal information to a stranger, which improves the sense of privacy and customer satisfaction, while from the end-user verticals perspective, the call centre operators can concentrate on the client needs rather than authentication. Furthermore, banks also report that they can authenticate customers within 20seconds. In summary, this significant improvement in operational efficiency and customer satisfaction will continue to drive the adoption of biometrics with a high impact in the near future.

  • Rise in Cyber Attacks and Identity Thefts Forces End-users to Adopt Biometric Solutions

Cyber-attacks, identity theft, and insider perpetuated data breaches are among the key issues faced by verticals across the commercial segment. For instance, in financial services, there are reports of skimming of PIN passwords through installed CCTV cameras in ATMs. While there are other phishing activities such as hacking of card details through malware introduced into the machines, skimming operation remains the top concern. The trend indicates that European and American markets witnessed a spike in fraud cases in 2015, among which majority occurred at convenience stores. To overcome this situation, financial services vertical prefers biometric solutions such as fingerprint technology to secure the passwords of individuals. Furthermore, in Healthcare industry data breach is a key concern as it can lead to substantial monetary loss, or even sometimes risk life by altering medication. A Frost & Sullivan research which finds that existing or former employees perpetuate at least two-third of the cases. Similarly, in verticals such as Retail, IT, and Telecom data centres, loss reported due to employee theft, overpaid salary, and so on remains a grave concern. As per the report published by Crossmatch, at least 43% of total loss in the retail industry is due to theft by employees as well as wrong salary remittance. These issues compel all the verticals to switch to biometric solutions for access control, time, and attendance capturing. Hence, the impact of fraud activity will continue to be an active driver for the market in the short-term.

  • Regulations that Mandate the Use of Biometric Solutions

Regulations such as Health Insurance Portability and Accountability Act (HIPAA) that mandate the use of biometric solutions require the healthcare providers to use Electronics Health Records (EHR). EHR has the advantage of accessing files from any computer any time. However, it requires right people to access the data, for which biometrics plays a crucial role in identifying and authentication.
In the retail sector, many countries have initiated e-Payment drives such as by Thailand and India. As the e-Payment or cashless transaction increases, the necessity to secure trade is of paramount importance. Hence, payment service providers and mobile segments resort to biometric solutions for authentication, which boosts the market growth.

In summary, government regulations help to drive the growth of biometrics in the commercial sector, and the impact is considered to be low to moderate in the short-term since this kind of service is in its early stages of adoption.

KEY MARKET RESTRAINTS

  • Lack of Infrastructure and High Implementation Cost Hinder Adoption in Developing Economies

As commercial segments embrace biometric solutions for cloud-based payment authentication, infrastructure is a key growth factor. Developing Asian economies such as India, Sri Lanka, Bangladesh, and so on lack reliable service quality, resources, and budget to adopt such solutions. For instance, call drop and the need for citizen back end data to access and authenticate are among the key challenges to be addressed. Furthermore, the cost associated with hardware deployment is one of the key hindrances for biometrics adoption across various segments, especially, in Healthcare. Even though the security and productivity offered by biometric technologies will outweigh the cost factor, the extent of implementation is at the discretion of healthcare organizations given their budget constraints and differing priorities. Hence the impact of this factor will moderately restrain growth.

  • Privacy Concerns and Lack of Knowledge among Select Demographics Resist Biometrics Adoption

Increasing digitization is a key backbone for the growth of biometrics. With over 200 million elderly population in People’s Republic of China (PRC), Asia has the highest old age population as per the United Nations’ data, 2015. The aged population in the APAC region cite privacy concerns among others to be a restraining factor in adopting digital transactions. They also prefer to do cash transactions over card or online transactions. Similarly, the aged population in emerging Asian economies cite lack of knowledge and familiarity to use digital purchase. While few older adults resort to Gen Y to make transactions on behalf of them, in other cases they avoid choosing this option. Furthermore, the UIDAI program which has registered close to 90% of the adult population is suffering data leaks at frequent intervals. This issue will further fuel privacy concerns to adopt biometric based authentication if extended to financial services for digital payment drive. However, as elderly population does not raise similar concerns in the European and American market, the impact will be moderate on the global scale.

Key Emerging Opportunity

The automotive sector is a key emerging opportunity in the commercial sector. Application areas will include Health Wellness and Wellbeing (HWW), Advanced Driver Assistance System (ADAS), and security for individuals to analyze the vitals and driving patterns. Cars will come with biometric sensors built-in the steering system, seat belt, and so forth which will help to collect a broad range of data. The data can be utilized for personalization such as automatic seat height adjustment, steering position, rear view, retrieve health records, play favourite music and so forth. Similar to other end-users, automotive owners also face theft issues. Statistics from National Vehicle Crime Intelligence Services reports, US, reported about 151,582 stolen vehicles in 2015. Biometric technologies such as fingerprint, facial recognition, palm vein, brain waves, and heartbeat can resolve the issue by authenticating vehicle access and ignition. Furthermore, as the trend is moving toward keyless access, use of voice biometrics in automotive is in development for applications such as activating engine, infotainment and so forth. In summary, the auto sector promises tremendous growth opportunities for the commercial biometrics market.

Conclusion

In conclusion, commercial biometrics poses significant growth opportunities to the biometric industry. Employee access, time and attendance, stolen or lost identities leading to data breach are among the major concerns that dictate growth in the commercial sector. Furthermore, emerging opportunity in automotive sector leverages growth to the biometrics industry.

About Frost & Sullivan

For six decades, Frost & Sullivan has been world-renowned for its role in helping investors, corporate leaders and governments navigate economic changes and identify disruptive technologies, Mega Trends, new business models and companies to action, resulting in a continuous flow of growth opportunities to drive future success.

Frost & Sullivan

For six decades, Frost & Sullivan has been world-renowned for its role in helping investors, corporate leaders and governments navigate economic changes and identify disruptive technologies, Mega Trends, new business models and companies to action, resulting in a continuous flow of growth opportunities to drive future success.

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