Biometric Banking Bides Time

by Christopher Jones

If you're in the banking business, 1999 is all about Y2K preparation. But once that crisis passes, it's on to bigger and better things.

Once 2000 rolls around, financial institutions worldwide will start ramping up services with high-tech kiosks that employ fingerprint scanners, voice-recognition systems, and other biometric identification systems.

Janet Harris, CEO of Riverside Health System Employees Credit Union in Newport News, Virginia, is what you would call an early adopter. Harris said her credit union was one of the first financial institutions in the country to set up a banking kiosk with a biometric fingerprint scanner.

Supplied by Real Time Data Management Services, a Norfolk, Virginia-based software company and Internet service provider, the kiosk handles loan applications, fund transfers, and other such mundane banking transactions.

"It is absolutely radical, and people love it," Harris said. "The 50-year-olds like it because they think it's a really secure form of identity checking, and 20-year-olds like it because no one else has it."

Biometric identification -- which uses biological traits such as fingerprints, retinal patterns, or voice matching -- has been around for years, but only recently has it become cheap enough and reliable enough for commercial use. Harris said that the total cost of the machine they bought was US$12,000. "So many people think it's out of their price range, but we're only a $4.2 million credit union," she added.

Rick Scali, vice president of marketing at Real Time Data, said that a fully equipped biometric kiosk costs about $30,000, which is on par with traditional ATMs. Real Time Data develops the software that handles the fingerprint verification, and he estimates that there are about 1,000 biometric kiosks at financial institutions in the United States. About half of those, he said, conduct tangible transactions, like cash dispensing.
"It's not a matter of financial institutions ignoring it [biometric technology]," Scali said. "It's that 90 percent of them are tied up with Y2K issues. They'll tell you that they're not putting any more load on their IS [information systems] department than necessary, but do have money in the budget for next year."

Aside from the cost of implementing these high-tech kiosks, financial institutions will have to educate their clientele on the advantages of using biometric identification.

Harris realized early on that fingerprint scanning was the only type of biometric device that her clientele would accept.

Since retinal scans are one of the most intrusive methods of biometric ID, Harris said that health-care workers wouldn't use it. "They [hospital personnel] see lasers do all kinds of things," she said.

Voice recognition systems are problematic, too. Because of the diversity of military workers in the area, the software would have trouble recognizing the different accents and inflections. With a fingerprint scanner, she said, the software is relatively cheap and the degree of tolerance for errors can be set from 1 to 10.

Real Time Data's fingerprint scanner system reads 1,084 points on a finger and creates an algorithm to represent these peaks and ridges, which is stored in a database. When a customer places his or her finger on the scanner, the kiosk queries the database and verifies that the image is a match. Of the 500 people who entered their prints, Harris said, only one has had trouble with the machine -- a Vietnam veteran who used lots of chemicals that smoothed out the ridges in his hands.

In addition to standard banking activities, the machine will also print out checks on demand. Often, Harris said, people will come in and apply for loans at the kiosk even though tellers are available. With the help of the new machines, the staff of three at Riverside is able to serve 3,200 clients.

The only banking customers who may have a problem with biometric banking machines will be high school students.

Scali said that when teenagers use mom's cash card to withdraw money from an ATM -- and she sees the "mysterious" withdrawal on a monthly statement -- it then becomes their word against the bank's. In some cases, he said, credit unions will suck up the cost of these disputed withdrawals in the interest of maintaining a good relationship with customers.

"With biometric machines," Scali said, "we'll say, you didnít make a withdrawal ... but your son did."

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