If you’re running a business, you can’t put a price on security. Customers have become accustomed to assuming the personal information they share with you is safe and secure. If your company suffers a data breach, your customers will hear about it and turn to your competitors. In the financial sector, this fact is amplified because customers trust banks the most with their data. Banking, Financial Services, and Insurance (BFSI) businesses are increasingly adopting biometric technologies to curb the ever-present cyberthreat. The advantage of biometrics in banking is that it adds a form of identity management that is not easily faked. After all, everyone has unique fingerprints, facial geometry, and even voice.
As can be seen in the chart below, BFSI is the third-largest segment for biometric device revenue.
ABI Research’s Biometrics Market: 2023 Annual Update sheds light on the biometric solutions that banks and other financial institutions are adopting and the future outlook for biometric devices. Let’s review some of the biggest takeaways from the research product.
Biometrics Seen as a Key Attack Inhibitor in Banking
Consumers trust banking and financial services firms the most, according to a recent global survey posted on Statista. As cyberthreats become more sophisticated, many banks and financial institutions are all-in on using biometric authentication in addition to passwords and tokens. This multi-factor approach to identity authentication has been especially prevalent as more customers use mobile banking apps. Biometric data will also find their way into in-branch hardware devices for customers to identify themselves securely.
Another reason biometrics will be a mainstay in the BFSI markets is the need for reliable liveness detection solutions to prevent account takeovers. In a world where threat actors can effectively bypass facial recognition logins, liveness detection is essential for banks to confirm a user is, indeed, a real person and not a spoof. For example, users may be asked to turn their head left and right to provide motion.
Liveness technologies benefit both the bank and the customer. On one hand, banks can reduce their reliance on manual staff and security hardware. On the other hand, banking customers are offered a secure, convenient, and user-friendly authentication process that already works with their smartphones and tablets. Moreover, customers don’t have to worry about forgetting their passwords and Personal Identification Number (PIN) codes.
Next, I’ll provide a top-level overview of ABI Research’s latest market forecasts regarding BFSI biometrics.
Re-Establishing Stable Biometric Growth in BFSI
Between 2019 and 2021, the global supply chain experienced a huge chip shortage, subsequently impacting the biometrics market in a negative way. ABI Research reports that the banking, financial services, and insurance market shipped 700,000 fewer biometric devices in 2021 than in 2019.
However, the chip supply has recently reverted to normal stock levels, alleviating the pain biometric vendors, organizations, and consumers felt. The year 2022 marked the beginning of a new, sustained growth trend in biometric device shipments for the BFSI market. We reported 3.6 million biometric devices shipped for the market last year, with another nearly 4 million shipping in 2023.
Growing at a Compound Annual Growth Rate (CAGR) of 10.9%, biometric shipments for the BFSI market will reach 6 million annually by 2027. That equates to a US$1.1 billion market opportunity.
Download the Biometric Technologies and Applications market data product for a full forecast of biometrics across several industries.
Fingerprint Recognition and Facial Recognition Take the Lion’s Share
Banking, financial services, and insurance firms have four biometric modalities to choose from for ID/authentication: fingerprint recognition, facial recognition, iris recognition, and vein recognition. While fingerprint recognition predictably takes the largest slice of the market, facial recognition is not far behind, and is the fastest-growing modality at a CAGR of 11.9%. Annual facial biometric shipments in the BFSI market will nearly double by 2027, compared to 2022—from 1.4 million to 2.5 million.
Meanwhile, iris recognition and vein recognition are less prevalent in the BFSI sectors, with 468,000 and 134,000 annual shipments, respectively, expected by 2027.
Throughout the market forecast, fingerprint recognition and facial recognition will account for 87% to 90% of total biometric device shipments in the BFSI segment.
Biometrics and ID/Authentication Go Hand-In-Hand
When evaluating BFSI biometric device shipments by technology type, ID/authentication leads the way. Last year, ID/authentication accounted for 63% of total biometric shipments in the BFSI market, and will account for a similar percentage throughout the forecast period. This can be explained by user registration and authentication being the main use cases for biometrics in the BFSI market outside of smartphone-centric biometric technologies.
Biometrics Is a Mainstay in Banking and Insurance
In summary, biometrics is a staple in the banking, financial services, and insurance industries. The upward trend in facial biometrics reflects banking and insurance businesses prioritizing contactless identification methods, no doubt influenced by the COVID-19 pandemic. The increased adoption also speaks to the data privacy concerns of modern consumers, with 68% of consumers stating that digital trust is important to them, according to a DigiCert survey. While not covered in this post, ABI Research also expects voice biometrics to play an increasingly advantageous role in banking services. However, there is still a risk that threat actors can spoof banking customers’ voices with Artificial Intelligence (AI)-based deep fakes to bypass account login.
Biometric technologies add an extra layer of cyber protection for customers and are also essential in some heavily regulated industries, notably banking. With General Data Protection Regulation (GDPR) compliance becoming more crucial for banking and financial services, biometric technology is increasingly perceived as essential to ensure customers' data protection/privacy.
Learn more by downloading ABI Research’s Biometrics Market: 2023 Annual Update product, which is part of the company’s Citizen Digital Identity Research Service.
