Do Smartphone-Based Mobile Access Control Solutions Pose a Threat to the Smart Card Industry?

A mobile access solution refers to a system whereby a credential stored on a user’s mobile device, namely a smartphone, is used as the key to gain either physical or logical access to physical premises or sensitive Information Technology (IT) systems, respectively. As the world transitions to digital systems across the board, with the smartphone often as the gateway to services and experiences, mobile approaches to access are seeing growing prominence in various sectors, including in enterprise, events, hospitality, real estate, and education facilities. ABI Research anticipates significant growth of mobile access credentials issued across the 2023 to 2028 period, at a Compound Annual Growth Rate (CAGR) of 15.5%, outperforming the growth of physical access smart card issuance significantly, where a mere 3.5% CAGR is forecast across the same period. This rapid growth can be attributed to the following drivers, where, specifically in comparison to card-based systems, mobile systems yield numerous benefits.

• Mobile access enhances security where it is deployed. The loss of a credential does not pose a risk to the facility’s security, as the credential leverages smartphone biometric authentication or passwords.
• In traditional access systems, lost access cards must be replaced. Mobile access systems reduce operational overheads by negating the cost of replacement credentials.
• Mobile access systems aid sustainability goals, being of particular importance in the corporate world, by negating the associated carbon footprint of materials, energy, and shipping.
• Issuance and reissuance of a mobile access credential is essentially instantaneous, yielding an obvious benefit in comparison to needing to ship and re-personalize a physical card.
• Modular mobile access systems can integrate with smart building software platforms and apps to sit alongside and enhance additional services. Functionality can extend beyond solely the access case.

Mobile credential issuance, in a general sense, can be considered as one of three approaches.

• Physical First: Hinging on a physical credential as a mobile alternative or companion, commonly found in the case of government Identity (ID) and payment cards.
• Digital First: Mobile issuance to enable instant usage, with a follow-up physical credential thereafter, being an approach witnessed in card issuance of challenger banks.
• Digital Only: A solely mobile approach; digital issuance with no physical credential involved at any point.

In mobile approaches to access credentials, the go-to approach is overarchingly digital only, played into by an increase in prominence of Bring Your Own Device (BYOD). Unlike the aforementioned government and payment cases, due to fewer security concerns and simplified issuance processes, there simply is not a need to issue a physical card where a mobile access system is deployed; smartphone hardware components, such as the Secure Element (SE) are leveraged, and the ability to offer a like-for-like contactless experience is enabled by high levels of Near Field Communication (NFC) penetration. The process is often as simple as adding the credential in question to the user’s smartphone wallet through the issuance platform of the issuing body. It is not cost-effective or practical for both physical and mobile issuance together in this application.

Given the benefits brought about by mobile access in comparison to smart cards, the overall market expectation is that, with time, new implementations will more likely opt for digital-only approaches, and upgrades from existing systems to digital ones are probable. This growing prominence can be considered a threat to the access smart card market in the longer term. Key vendors anticipate overall market size for access to tend toward a digital majority within 10 years, creating a priority to extend access solutions into the digital domain from a future-proofing standpoint during a transition of business. While the total market remains healthy, a shift in product mix will prove crucial to uphold market share. At a minimum, disruption to the market in terms of card volumes should be considered, where, given the aforementioned reasoning, a reduction of access smart cards as a result of mobile replacement is very much a possibility.