Brazilian banks lead way on biometrics
Using a biometric ID at an ATM in one of Bradesco's branches.
About a dozen ATMs beep away in a glass walled room on the sprawling Sao Paulo corporate campus of Bradesco, one of Brazil’s largest banks. In 2006, Bradesco became the first bank in Brazil to start using biometric ID at its ATM’s -- hand vein readers. Nelson Lemos, a manager in the bank’s IT department, demonstrates. He just touches his card to the console, places his hand on the scanner, and tells the machine how much money he wants. The entire process takes less than 20 seconds.
In addition to Bradesco's card-plus-hand ID system, here’s also the option of getting cash without a card -- consumers just place their hand on the scanner and enter a couple of codes. The system is incredibly convenient. It’s also extra secure, says Lemos.
"Since the biometric system, fraud declined. Other ATMs don't show the same improvement since they don't have that system. So it did help Bradesco to avoid fraud."
Brazil is arguably the world leader in the use of biometrics among consumers. The country's four largest banks have all implemented some form of human ID scan, like Bradesco's vein reader or fingerprint scans, at their ATMs. It's not unusual for developing nations to "leapfrog" first world countries in use of technology. In this case, biometrics are not used on a similar scale in first world nations, and they may not be for some time.
Banks in Brazil added biometric ID to deal with challenges the U.S. doesn’t face. For example, government ID’s in Brazil can be easily forged, so lots of people have opened fraudulent bank accounts. And there’s a problem of illiteracy. When folks go to collect their monthly welfare payments, banks see huge lines of people waiting to get reminded of their pin. Jonathan Moyer, director at the Center of International Futures at the University of Denver, says it makes sense to see large scale biometric systems in rapidly developing countries like Brazil and India, which has a huge government sponsored biometric ID program.
"It's these countries that are in this kind of development sweet spot, where you have the demand for this, and you have the overall resources to be able to put something like this in place," he says. "You have to have this interesting confluence of development, yet underdeveloped problems."
Implementing a large scale biometric system is expensive, as much as $50 million for Brazilian banks to retrofit their ATMs. And that doesn’t include the cost of getting people into the database. The project made sense for the banks because it saved them money, possibly as much as 1 REAL, or 50 cents per person. Because banks have led the way, the technology is spreading, says Fabrizio Vargas. He’s head of business development at Biomatica, a Brazilian firm specializing in biometrics.
"For example, if you go to your market and forget your wallet, you may be able to buy with your mobile and your fingerprint. There are some great retail chains in Brazil starting to try that here and there."
There are plenty of American consumers who would undoubtedly love to walk into a store and make a purchase with just their finger and phone. But we don’t have a large scale roll out of biometrics in the U.S. yet. So where could we see the technology really start to touch consumers? Here’s a clue: earlier this year, Apple took out a patent on fingerprint sensors.