August 16, 2005

TOKYO (Reuters) - Firms providing the latest in biometric security, using systems that can identify an individual's face, hand or fingerprint, are enjoying a boom in Japan amid an increase in forgery and cybercrime.

Skip to next paragraphThe technology includes ways to combat credit card fraud and Internet offences such as identity theft by avoiding the need for PIN numbers, as well as doors that dispense with conventional locks and instead rely on face recognition.

Some analysts say technology vendors including Fujitsu-Frontech Ltd. have great potential in the biometrics security market which, although expected to grow sharply, is still in its infancy.

``It's certainly a growing market. The growth potential for the technology providers, especially specialized ones, is huge if their products are used by big clients,'' said Jun Morita, a fund manager at Chibagin Asset Management.

Private firm Yano Research Institute says Japan's biometrics market hit 8.76 billion yen in 2004, soaring 39 percent in two years.

It is expected to grow to 27.22 billion yen in 2010, as the technology is adopted for mobile phones, personal data assistants (PDAs) and ATMs.

Interest in biometrics technology for access control or personal identification is growing around the world, with the global biometrics market expected to top $4.6 billion in 2008 from $719 million in 2003, according to the International Biometric Group, an industry body.

In the United States and Europe, companies such as Alcatel, Nuance Communications and SAFLINK Corp. have been developing non-password biometrics security using fingerprints, face recognition or recognition of veins in the palm or fingers.

In Japan, demand for the technology has been spurred by the introduction in April of the Personal Information Protection Law, which calls for companies and organizations to establish and manage company-wide information security.

Japan's second-biggest bank, Mitsubishi Tokyo Financial Group, is receiving over 2,000 applications a day for a credit card launched last year that identifies users by the veins in their palm. It has installed an authentication system, developed by Fujitsu-Frontech, in half of its 3,000 ATMs.

COUNTERING CARD SKIMMING

Japan Post, which includes the world's biggest deposit-taking institution with more than $3 trillion in investment assets, plans to introduce a cash card next year that carries a finger vein authentication system to counter forgery and card skimming.

The number of credit or cash card forgery crimes in Japan rose nearly 6 percent in the first half of 2005 from the same period last year, government data shows.

Internet-related crimes including ``phishing'' -- scams that trick people into providing personal and financial information -- and illegal access to computer networks have more than doubled in Japan in the past five years, police data showed.

T.D.I. Co. Ltd., which plans to launch commercial sales of a facial recognition security system next month targeting such firms as makers of locks and doors, expects the product to help increase sales by 1 billion yen in the business year to next March.

``Each biometrics security measure has pros and cons, and has its most relevant uses. The market will certainly grow if technologies are used in the best and most efficient way,'' said T.D.I. spokesman Hideaki Hoshina.

Another vendor, Sylex Technology Inc., which sells finger print authentication for PC access, expects its sales to double next business year and again the following year.

T.D.I.'s shares have soared 58 percent so far this year and Sylex has jumped 17 percent -- against an 18 percent rise in the Nikkei Jasdaq average for startups.

Fujitsu Frontech is up 47 percent so far this year, compared with an 8.6 percent rise in the TOPIX index.

Heavyweights such as Hitachi Ltd., Omron Corp. and NEC Corp. are gearing up for the market.

Many agree on the bright outlook for the technology, saying it can also target non-security areas such as entertainment industries to provide personal and higher-quality services.

But some analysts are skeptical about whether biometrics security can grow into a wide-ranging market due to privacy and technical problems.

``It's a very interesting market but investors are still unable to gauge how fast and big the market will become,'' said Yasuo Ueki, an analyst at consultancy Poko Financial Office.

``There are also cost and accuracy issues that I think might prevent the technology from spreading widely for a while.''