Mercator Blog

New Biometrics Technology Is Reshaping the Authentication Market
Date: January 25, 2017
Tim Sloane
Vice President, Payments Innovation
It’s never easy understanding how consumers think. For example, 50% of consumers aged 18 and over have been notified that their passwords have been stolen, and yet 89% feel secure with their current password creation and management habits. Despite the way consumers trust security, businesses and other organizations that must authenticate their identity for payments transactions and other purposes have a responsibility to protect the consumer’s assets. This responsibility is especially important for financial institutions. Even if consumers are not yet aware of it, passwords are dead as a secure means of authentication. They were clearly vulnerable before Yahoo lost 1 billion accounts, including passwords, to criminals, and they are totally unreliable now that those 1 billion are up for sale.

Despite the failure of passwords, it is fair to say that most consumers feel uneasy regarding the use of biometrics. Perhaps biometric identification (e.g., fingerprint or iris scan) is too personal, perhaps in too many movies a stolen finger or eye is used to open a door, or perhaps people are concerned that a picture of their face or finger could be used to create a duplicate. Whatever the concern, Mercator Advisory Group’s CustomerMonitor Survey Series (CMSS) research indicates that 34% of U.S. adults would not trust biometrics and 18% don’t trust any type of access control technology commonly available today. It gets worse when you consider steps consumers actually take (or fail to take) to protect their data. Almost 22% of consumers are so unworried about security that they don’t even utilize a personal identification number (PIN) or any other lock on their phone.

This forecast takes into account consumer attitudes about security and compares the situation with the track record of another recent technological advance, namely mobile banking. Consumers initially didn’t trust mobile devices to access their bank accounts, but they came to enjoy the convenience fairly soon. In the report, Biometrics: A Market Forecast for Consumer Adoption, Mercator posits that the pattern of consumer adoption of biometrics will mimic that of adoption of mobile banking, for which Mercator has analyzed several years of data from our CMSS consumer surveys. We also expect that as authenticators such as banks become more comfortable with the security afforded by biometrics, they will promote biometrics solutions to their customers. We anticipate that a solution will emerge that enables websites to utilize the mobile-derived biometric service, which will further increase awareness.

In the recent research report titled Biometrics: A New Wrinkle Changes the Authentication Landscape, which is a companion to this one, Mercator shows that biometric solutions are becoming transparent to the consumer and shifting from hardware to an entirely software- and cloud-based solution. This shift will enable increased use of biometrics to protect not only mobile phones and their data and applications but also access to other channels and assets, including call centers and physical access controls. The shift will cause market confusion as suppliers fight for market dominance, but it will likely result in increased availability of persistent identity as the giants use market share as leverage. Mercator also assumes that service providers and app developers will become convinced that the persistent identity solutions are at least equal to passwords with respect to accuracy rates.

We are on the cusp of a huge shift in authentication technology, and market forces will have a large impact on the shape of the market. If traditional business models are applied, the market will invest heavily to establish trust in a persistent identity solution and to deploy that technology as broadly and as quickly as possible.