Biometrics – an expanding global market
In recent years, smartphone fingerprint sensors have evolved into a mature mass market. Simultaneously, biometrics are being applied across an array of new segments.
There is a pressing need for biometric verification and authentication methods, which is continuing to grow with the IoT. In our view, the big advantages of biometrics mean that this technology is now proliferating into a wealth of new segments, notably cards and payments.
CAPACITIVE SENSORS IN SMARTPHONES AND TABLETS—A MATURE MASS MARKET
Fingerprint sensors for smartphones and tablets have evolved into a mature mass market very rapidly, with more competition and falling pricing. At present, some 60% of smartphones have integrated fingerprint sensors. As the pricing of sensors declines, devices in lower-end price segments are increasingly integrating them. Sensors are mainly used to unlock phones, make payments and control access to apps. Generally, security and user-friendliness are considered the biggest positives of biometric ID technology.
The total market for capacitive smartphone and tablet fingerprint sensors in 2017* was some 700 million units. Fingerprints’ market share for the full year was some 40% at the OEM level. A number of concurrent technology trends and uncertainty factors caused Chinese smartphone manufacturers to take a more hesitant approach in the year than previously.
Fingerprints are the most common biometric modality in smartphones. Capacitive sensors dominate the market, although more sector players are developing optical or ultrasound-based sensors. The purpose of these in-display sensors, as they are known, is to enable more complete integration of fingerprint sensors into device displays. This enables display sizes to be maximized, so displays cover the whole of the smartphone chassis front, while still embedding fingerprint recognition functionality. The first large-scale in-display sensor launches were announced at the end of 2017. If the technology gains a positive reception with end-users, the demand for capacitive sensors for mobiles in the premium segment may be adversely affected.
In tandem with this progress, we are seeing how fingerprint sensors are starting to be supplemented by alternative biometric modalities, such as face and iris recognition. Apple’s introduction of facial recognition in one of its iPhone models in fall 2017 triggered significantly increased interest in this touchless technology. Fingerprints expect that this modality will become more widespread, i.e. that phones or tablets utilize fingerprint recognition, as well is one or more other biometric technologies.
BIOMETRIC SMART CARDS—AN APPROACHING MASS MARKET
Much of the evidence suggests that biometric smart cards—mainly charge cards—with user fingerprints replacing PINs, will become the next major biometrics market, the primary drivers being:
- User-friendliness—payments should be easy, quick and convenient
- Security—security standards for card payments are becoming ever more stringent, while greater security cannot be a threshold against ease of use.
- The need for contactless cards with higher transaction limits
- Biometric charge cards may be the key to reducing the incidence of fraud
- New potential for innovation and revenue for card producers, issuers and other market participants
Fingerprints’ definition of the smart card market is all cards with chips. The yearly volume of new cards is some 4 billion units, of which 3.5 billion are charge cards. Half of new cards have dual interfaces, supporting contact and contactless transactions. Much of the remaining volume consists of ID cards and access cards to open doors and log in on devices. Half of new cards manufactured are dual interface, supporting contact and contactless payment transactions.
Card manufacture is dominated by three major players, which control some 70% of the market— Gemalto of the Netherlands, Idemia of France and Giesecke & Devrient of Germany. Charge cards are issued by banks, who have contracts with credit providers who serve as transaction intermediaries. Visa, MasterCard and China UnionPay represent some 80% of this market. The
chip providers for cards are a fourth player, although this segment is also dominated by a small cluster: NXP, Infineon and ST.
In 2017, card manufacturers, issuers, chip producers, biometric companies, and collaborative and certification bodies were highly active in their efforts to get the conditions in place for creating a mass market for biometric charge cards. Several market test schemes were executed and prepared for 2018, which marks another milestone towards the creation of a mass market for biometric cards. However, it will be some time before market volumes are expected to be comparable to those currently in smartphones.
AUTOMOTIVE & EMBEDDED
The market for biometrics in the automotive sector and other embedded system solutions covers a large and growing array of application segments. Potential applications include vehicles, locks, entry systems, manufacturing technology and medical devices, as well as everyday home usage. The growing IoT accentuates the need for secure and user-friendly systems to verify personal identities. Obviously, there is also a need to identify individuals quickly and easily, for entry systems in airports, hospitals and workplaces. Overall, this means systems need to be user-friendly, cost-efficient, and obviously, secure.
This is urging the need for biometric solutions. In this segment, most progress has been made in Asia, notably in the demand for door locks with integrated fingerprint sensors.
Biometric vehicle solutions can be applied in different ways, and associated with different functionality—access, personal settings such as driving positions, infotainment or mileage reporting, leasing, linking to insurance, etc. The implementation of biometrics in vehicles is expected to start in the higher-end segments.
* Excluding Apple