MOBILES TO PLAY KEY ROLE IN THE FINANCIAL SERVICES BUSINESS

Arun Iye, Bangalore, August 11, 2008
The Economic TimesTechnology has become a buzzword in the banking industry. Biometrics is one of the key technologies finding acceptance among banks, and solutions, which use voice recognition, are expected to play a major role in the Indian banking industry.

Chuck Buffum, vice-president of authentication solutions at California-based Nuance Communications, a key player in voice-based biometrics, spoke about how this space is evolving.

How do you look at the market for voice-enabled biometric products?

Voice as a component in a biometric product in the financial services space is gaining ground as it combines the issue of literacy with finance. Banks are realising they have to address this issue (of illiteracy) by devising products. The mobile phone is perhaps the most customer-friendly and acceptable product. In some markets like the Gulf, banks are using mobiles to enable blue-collar employees to remit monies back home.

While a biometric product is acceptable, doubts still linger about the cost.

As mentioned earlier, mobiles are becoming the key in the financial services business, notably in case of transactions like wiring monies back home. The cost of using a biometric product, which is voice-enabled, needs to be seen in the context of other available solutions like setting up of a physical bank branch or putting up an ATM. Voice enablement as a cost is, hence, not substantial.

But there has been, for instance, a proliferation of debit cards in India. How do you think the spread of plastic can impede the growth of voice-enabled biometric products?

Nearly 10 years ago, there was a rush among banks in the US to issue debit cards to its customers to ensure that they got monies credited into their account instead of the government issuing food stamps (for the unemployed). However, banks suddenly found themselves battling an avalanche of issues relating to “PIN” re-sets and “PIN” card disbursement. A voice-based biometric product, on the other hand, is more secure.

So, you believe that only mobile phones would be key in spreading financial reach to the unbanked?

Take the case of India, which has monthly subscriber addition running close to 8 million. Today, it’s the most affordable product for communication and can be tapped for providing banking. But, there are some regulatory concerns in terms of overlap between mobile phone companies and pure-play financial institutions in terms of how much finance a non-finance entity like a mobile phone company can handle. Mobiles also score over other devices like a PDA, in that they would not require constant software upgrades.

How big is the market for voice-enabled biometric products?

The market is expanding and it’s opening up—from those, which purely involve financial transactions to ensuring secure transaction-based ones. We believe that besides the banking industry, voice-based biometric products will find applications in those industries, which need to address data protection, such as insurance and even satellite/cable TV channels.