SA lets its fingers do the talking
Biometrics takes off in SA, thanks to govt and T&A projects, but RFID uptake is selective
While the economic downturn has made a dent in the global revenue of many a technology, several South African biometric and RFID suppliers have escaped relatively unscathed.
ECONOMIC DOWNTURN = FRAUD UP
"Although we have seen delays in the awarding of a number of projects, there has been a huge increase in interest in biometrics. This is mainly due to the market realising the business benefits biometrics could bring to organisations and the associated savings that will result. For example, payroll is the single largest expense for most companies, and using biometrics to clock employee working hours typically results in savings of up to 8% on payroll costs, due to improved accuracy and efficiency," says Marius Coetzee, COO of Ideco Biometric Security Solutions (IBSS), a leading biometric technology distributor.
"We have found that, in a downturn, there tends to be an increase in investment in security products, because a downturn in the economy usually results in an increase in fraud, with normally honest people doing some dishonest things," says Gary Chalmers, CEO of iPulse Systems, a local biometric technology manufacturer and supplier.
"Globally, the adoption of biometrics has fallen short of expectations in recent years. More than the downturn, cost issues and immature technologies are holding up the deployment. Despite the challenges, fingerprint devices have managed to establish a foothold, and I expect fingerprints to continue to be the dominant biometric measurement for the foreseeable future. On the back of government deployments, the global market for fingerprint devices is expected to reach $650 million by 2013. Locally, where we see quite a bit of interest is in linking biometrics to time-and-attendance (T&A) systems," comments Patrick Devine, Security & Identity Management Practice lead at Cornastone Consulting.
Globally, the International Biometric Group's "Biometrics Market and Industry Report 2009-2014", estimates biometric revenue to grow from US$3.42 billion in 2009 to $9.37 billion in 2014, driven in part by government identity management and border management programmes.
"Automated biometrics technology as we know it today has been actively used in a number of government initiatives since the early 1990s, most notably for the purposes of pension payments, Home Affairs National Identification System, the South African Police Service Automated Fingerprint Identification System, and driving licences.
"Both Ideco and Sagem [biometrics company - Ideco acts as a distributor for Sagem in southern Africa] played a significant role in most of these projects. Considering that a number of major international biometrics projects, such as US-VISIT, have been implemented more recently, South Africa has quite a long history of the successful implementation of biometric technologies," adds Coetzee.
SA is also viewed as the world's most progressive adopter of biometrics for commercial access and T&A solutions, he notes.
"Approximately 25% of the formal workforce interacts with a Sagem Morpho biometric reader on a daily basis for the purpose of T&A and/or access control. This equates to over two million employees per day spread across more than 50 000 Sagem fingerprint readers in SA alone.
"Sagem Morpho readers hold approximately 75% share of the South African biometric market. No other country is known to have such a high percentage of the workforce interacting with biometrics in this way. Indeed, SA is often cited as a rich source of case studies for its work in the application of biometrics," he claims.
IBSS's performance bears him out. Over the last four years, it has achieved annual growth of over 80%. November 2008 saw its sales of biometric readers to control workplace access in SA hit new highs of R9 million, with that financial year closing on a record total of R81 million. Due to the fact that Ideco is listed on the JSE and that its financial year ended in August, Coetzee was not in a position to release any financial information [at the time of going to print]. "November months are, however, historically good for our industry and we are forecasting the same for this year."
Through its partner network, Ideco has recently secured some major provincial government projects, and is also a key supplier to the departments of defence, correctional services and police services, for various significant identity management projects, adds Coetzee.
iPulse is also bucking the recessionary trend. "Our revenue is increasing considerably in the face of a declining market. Although we were founded in 2001, it's only in the last two years or so that we've been aggressively taking our product to market. We're an R&D and manufacturing operation, which is not common in SA in the biometrics industry, and we've been building some great technologies. In the last six months we've released a product a month, and our growth is up by about 1 500%," remarks Chalmers.
BANKING ON BANKING
"More biometric readers are bought and sold in SA than in the US; the reason being that we had no legacy systems. The industry started from scratch, and new technology is taken up with no resistance, as there was no old technology to replace," explains Chalmers.
He maintains that the biggest private growth sector is the construction sector, where it's not just about access control and T&A, but the verification of the identity of persons on construction sites.
Banking is a close second, says Chalmers, followed by the telcos, which are using biometrics in their data centres for access control. "We'll see huge changes in this sector in the next few years," he says.
Coetzee agrees: "Although many banks are using biometrics at various levels within their operations (such as access control and secure sign-on), there is a new drive to use biometrics at the point of transaction. Fingerprint identification will soon be a reality in the account opening process, replacing PINs at ATMs, and even to 'sign' for your credit card transaction. This is mainly driven by the financial losses as a result of identity fraud."
One bank already making the most of biometric security technology is Capitec Bank. When opening an account, the bank issues clients with a biometric token, and captures their personal information electronically, including fingerprints.
"The initial reason behind using paperless banking in our business model was to handle high volumes of a largely semi-literate market and to heighten security. Using biometric technology, we can store a client's personal information electronically, which greatly reduces costs. In addition, by taking paper out of our branches, fingerprint fraud has been curbed. Tools like digital pens are also used to sign contracts, which increase security and are the best evidence to be used in court should fraud arise. Currently, 200 of our 365 branches have access to digital pens. All new customers will be enrolled using this technology, and among the existing [two million] customers, 200 000 have already been enrolled," explains Riaan Stassen, CEO of Capitec Bank.
He points out that because Capitec Bank started using technology-driven processes from the get-go - no paper, in real-time - there is no need for staff to check balances as the system is automated and balances itself. Thus, it has no need for a back office. "It is also the reason we can stay open till 5pm and focus on client service instead of administration. It drives service in three ways: manages productivity; measures consultants, and requires less time for training."
As for industry standards, Coetzee says Ideco is actively involved in the activities of a number of standards committees under the South African Bureau of Standards, namely: SC71F, which focuses on information security; SC71J, which focuses on cards and personal identification; and chairing SC71Q, which focuses on the local adoption of international standards on biometrics.
"Currently, we are seeing the more mature first generation standards, such as those for the data interchange of fingerprint, face and iris data, as well as interfaces such as BioAPI, being reviewed, while newer standards on the horizon focus more on conformance testing as well as new data interchange formats for DNA and voice modalities. Of great interest to the standards community are the results from the IREX study recently released by NIST, in the US. These results will have a direct impact on the review of the iris data interchange standard, as well as implementation of iris-based systems. Further in the future we can expect XML-based representations of data interchange formats, which have traditionally only been in binary formats," elaborates Coetzee.
RFID - CHEERFUL WHEN CHEAP(ER)
The prospects for the older radio frequency identification (RFID) technology are not as rosy as those for biometrics.
"It is unlikely that RFID in SA will see the same adoption rate as seen in the US, as local retailers are unlikely to set up RFID 'mandates' like they did in the US. In addition, the cost of importing tags and the complexity of deployment are likely to deter many potential RFID customers," says Max Stone, distribution and partner manager at Motorola Southern Africa's Enterprise Mobility business.
RFID is well established in certain niche environments, such as access control, he continues. "Biometric access control has started to encroach on the traditional high-frequency RFID tag access control, but the higher cost of the biometric readers will limit adoption, especially in tough times. Motorola focuses on the ultra-high frequency RFID market, specifically electronic product code (EPC), which is a global standard for driving open-loop RFID systems in the supply chain. EPC RFID is still very much an emerging market, with North America leading adoption in the supply chain. SA regulator ICASA only approved suitable EPC RFID frequencies for SA last year, so significant deployments are yet to happen. There is no doubt the additional cost of adopting an RFID system, over a traditional bar code system, will limit the take-up of RFID until the local economy begins to recover," maintains Stone.
Andrew Hutchison, head of Telecommunication Services & Business Development at T-Systems SA, is of the opinion that the recession has "not really" slowed down the adoption of RFID technologies globally or in SA. "We are still seeing international interest in this technology in at least three areas: retail, healthcare, and automotive. RFID has been deployed very selectively in SA, in our experience. In particular, the cost of the tags has been too high for retail organisations to see benefit from using this type of 'active tracking'. We believe this is changing, however, and in Germany, T-Systems is working with some retail customers; its clothing suppliers in China are providing garments with low-cost (and low-profile) RFID tags sewn into each garment. This is changing the opportunity around RFID usage, and we are in discussions with some of our local retail customers to determine how they can also leverage low-cost RFID devices of this type," he concludes.