As part of the CGAP IT Innovations Series, this technical note analyses the costs and advantages of adopting Biometrics technology for use in Microfinance Institutions (MFIs). Biometrics technology measures an individual’s unique physical or behavioural characteristics captured and stored at an enrolment stage with the purpose to be compared at a later verification stage, such as account access. The most commonly used physical characteristic by biometrics technology is fingerprint technology.
The author has completed an analysis of the different biometric applications and prepared a basic cost-benefit anaylsis of a biometric fingerprint system based on the assumption of a coupled smart card technology. This analysis suggests that biometrics technology may be an option for any organisation that uses physical cards, documents, passwords, or personal identification numbers (PINs) to secure data stored in electronic format on a computer or Automated Teller Machine (ATM). For some of these organisations, low cost biometrics technology may be more convenient and secure than the passwords and PINs that are currently used. The popularity of fingerprint indentification technology has helped to drive down the cost of readers and associated software components, thus making biometrics more attractive to MFIs in particular.
The case study of Prodem FFP in Bolivia provides valuable experience, from which the author has compiled the following Lessons for Implementation.
- Positive client experience
- Phased implementation
- Maintain system security