Will `Smart Cards' replace plastic stripe variety?

MIAMI-A conference held here recently offered a challenge to credit unions: prepare for the advent of smart cards or risk being late to the party. Claiming to be the first credit union technology conference on the subject, the CU Smart Card & Biometric Summit was held in conjunction with the CardTech/ SecurTech Conference, the world's largest smart card and biometric meeting. Speaker Emer Natalio, CEO with Network Decisions, Inc., urged credit unions to start planning for smart cards now, asking the audience rhetorically: "Why now, rather than later?" and proceeded to answer the question. "Today, cards provide for the member's account number. It serves one purpose, is used at point-of-sale and is not very flexible. Tomorrow's cards will contain a consumer's record; will be multi-functional and used for multiple applications. They can be synchronized with intranets and extranets and offer more power to the consumer," said Natalio. Speaker Bill Mangino, vice president of sales and marketing for the ICL Smart Card Group, offered the smart card challenge. "What problems do you want to solve?" Mangino said that "forced carding" or mandatory use of smart cards, like programs instituted at universities and on corporate campuses will continue to lead the way in smart card use, but that other applications will become popular as acceptance takes hold. "Why implement a smart card system?" Among the answers Mangino offered was staying ahead of the banking competition. The advent of biometrics- the ability to positively identify members and employees using facial recognition, fingerprint, voice, signature, iris recognition and other unique physical characteristics, poses numerous advantages, presenters asserted. Not having to remember several codes and/or PINs (or, at least one "lifetime password") that can be universally applied has popular appeal. (None of the speakers addressed the privacy issues that might be engaged with biometric identification or having a consumer's credit history embedded on a card, however.) "Biometrics for Financial Institutions" was the theme presented by Joel S. Lisker, vice president of security for MasterCard International. Lisker provided a wide range of data on worldwide fraud statistics, (up 33% over 1998) and reviewed card authentication methodology and other anti-fraud solutions. Lisker said that MasterCard began testing fingerprint identification in the fall of 1996 at their headquarters in Purchase, New York. MasterCard on-premises security has been upgraded to offer visitors the opportunity to enroll finger minutiae to facilitate future visits. Selected staff has been enrolled for controlled access to special locations. To date, nearly 9,000 visitors have enrolled, and response from users has been very enthusiastic, he said. Visitor and technician comfort level seems to be very high. The system enrolled over 98% of all visitors, he said. Recent reports from the GAO to congress on failed security at government installations and airports where false police and FBI badges and identification was used to infiltrate secure areas (entrants were admitted carrying guns) serves to highlight the need to have more precise identification procedures. Paul Frank, vice president of Fiserv's e-commerce division, pointed out that while the Internet is booming, Internet "banking" is not. Frank discussed Internet applications for financial institutions, including Internet banking, insurance, bill payment and bill presentment. He urged credit unions to position themselves as the destination site on the Net for financial services. This includes personalized content for the individual member, he said. The conference's moderator, Bill Rogers, said attendees who visited the CardTech exposition said they "saw more future technology in one day than many have during their entire credit union career. There were more than 60 biometric technology displays; with most all offering hands-on demonstrations along with a like number of smart card suppliers." William Rogers & Associates, a consulting service company located in St. Louis, Mo., co-sponsored the conference with CU Conference (www.cuconferences.com). -caburger@cutimes.com