Biometrics in BFS to reach $8.9b by 2026

By Puja Sharma

Biometrics for Banking and Financial Services is expected to reach $8.9b by 2026, growing at a CAGR of 12.8% over the analysis period from US$4.4b in 2020, according to a study conducted by Researchandmarket.

One of the measures being actively pursued by banks is biometrics, since the technology assists in the creation of a secure banking environment by reducing instances of identity fraud, establishing an audit trail of transactions, and protecting financial data. The shift towards biometrics is also being driven by the inability of traditional security measures such as PINs, passwords, and tokens to effectively offer protection, particularly against the growing sophistication of intruder attacks.

As technology advances and security breaches become more sophisticated, banks and financial institutions are expected to face greater challenges in the next decade. Approximately 2-5% of global GDP is related to money laundering today.

Banks are now actively pursuing biometrics to increase security in their banking environment since the technology assists with the reduction of identity fraud and the establishment of audit trails of transactions. Traditional security measures such as PINs, passwords, and tokens are not able to offer effective protection against increasingly sophisticated intruder attacks, which is driving the shift to biometrics.

The growing realisation among banking customers about the inadequacies of PINs and passwords in offering protection against sophisticated bank frauds and online threats is leading to high demand for strong security solutions such as those involving biometrics.

Further, a steady increase in the number of password hacks in recent times reflects inadequate security associated with the use of passwords as an access method. Driven by the growing need to offer protection against the rising instances of fraudulent transactions and identity thefts along with the ever-widening scale of frauds, banks are opting to invest in strong authentication measures.

Fingerprint Biometrics, one of the segments analyzed in the report, is projected to grow at a 13.4% CAGR to reach $6.2b by the end of the analysis period. After a thorough analysis of the business implications of the pandemic and its induced economic crisis, growth in the Face Biometrics segment is readjusted to a revised 11.6% CAGR for the next 7-year period. This segment currently accounts for a 22.8% share of the global Biometrics for Banking and Financial Services market.

The face biometrics segment

Face Biometrics utilizes unique facial characteristics to recognise and identify individuals. Face recognition is the most successful form of human surveillance and it includes the measurement of eyes, nose, mouth, and other facial features. The commercialisation of face recognition systems increased owing to an upsurge in the usage of multimedia video technology.

This technology is generally used for applications such as surveillance, screening, criminal and law enforcement including kiosks and booking stations. It could be also used in passport issuance applications, driver`s licensing, and registration of voters. The global market for Face Biometrics is estimated at $996.6m in 2020 and is projected to reach $1.9b by 2026 reflecting a compounded annual growth rate of 11.6% over the analysis period.

The market in US and China

The Biometrics for Banking and Financial Services market in the U.S. is estimated at $1b in the year 2021. The country currently accounts for a 22.84% share of the global market. China, the world’s second-largest economy, is forecast to reach an estimated market size of $1.8b in the year 2026 trailing a CAGR of 17.1% through the analysis period.

The global market for biometrics in the BFSI sector continues to grow at a robust rate driven by the increasing focus of BFSI companies on offering the highest security to customer transactions through the use of biometrics-based authentication measures. The use of biometrics technology has the potential to reduce instances of fraud attributed to identity duplication.

As consumer preferences change and new payment methods are introduced, banks are being compelled to move towards the digital transformation of payments and card operations. Technology advancements are also leading to an increase in several forgeries and frauds, whereby the need for a solution that cannot be replicated is gaining prominence in the banking and financial services industry.