Japanese FI’s and Post Office (a major bank too) are pressing ahead with biometric ATM’s.

SMBC has installed a total of 1,026 compatible ATM’s at about 460 staffed branches and about 1,000 ATM’s at convenience stores.

Mizuho plans to put compatible ATM’s into operation at about 450 staffed branches by September.

Resona Bank plans to begin introducing biometric identification in October.

The Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking Corp. and Mizuho Bank plan to install ATM’s with biometric recognition functions at all their staffed branches by September.

Japan Post, which will also begin introducing the system in October, plans for all of its 27,000 ATM’s to have biometric recognition capability by March 2009.

However there are significant issues to overcome, and despite the reward of fraud reduction, its a good lesson for others to learn from.

Lack of standard biometric identification and consumer adoption are two issues, and they may be related.

One problem, industry observers say, is the use of two incompatible formats: one identifies card holders’ palm vein patterns while the other checks fingertip vein patterns. That means depositors cannot use incompatible ATM’s, even if the machine is on a multi-bank network.

Besides the incompatibility between the two technologies, the slow acceptance is attributed to the burden of registering vein patterns and the still small number of compatible ATM’s.

Both systems compare vein patterns registered on the cards with those scanned by an ATM’s reader.

Consumer adoption is slow, although I happen to know that BTM UFJ charge ¥10,000 (US $100 +/), but the article makes no mention of that point.  Seems that would be a big deterrence to me.

The Bank of Tokyo-Mitsubishi UFJ and SMBC have together issued biometric authentication cards to only about 700,000 customers, about 1 percent of the total.

Finally the logistics of vein pattern registration are another hurdle to success.

Besides the incompatibility between the two technologies, the slow acceptance is attributed to the burden of registering vein patterns and the still small number of compatible ATM’s.

The reason for the shift to biometrics shouldn’t be forgotten.

The systems, therefore, can help prevent illegal withdrawals even if the card and the PIN number are stolen.

Relevance to Bankwatch:

Chip card is a big move requiring co-ordination of much change, and adding biometrics is probably as big again in terms of change management.  The Japanese experience suggests that change management is a bigger issue than the problem being solved (fraud) for now.

tags: chip+card, biometric, card+fraud