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Passwords may soon be a thing of the past

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A wave of capital and new technology centered on biometrics, physiological and behavioral authentication is quickly making the world of PINs and passwords a thing of the past, according to "Biometrics: the Future of Mobile Payments," a new report by BBVA Compass economists.

Biometric measures use DNA, fingerprints, eye retinas and irises, voice recognition, facial patterns, vein patterns and hand measurements to authenticate and verify people's identities. The advanced technology has been quickly adopted by smartphone users — Apple's iPhone uses fingerprint device recognition — and it could soon revolutionize banking, the economists write in the report.

"Biometric authentication is growing at a fast pace and shows great potential to protect individual data and enhance customer experience, particularly in the banking industry," said BBVA Compass Chief EconomistNathaniel Karp. "Biometrics in banking is most popular in developing economies inAsia, such asIndiaandIndonesia; the Americas rank second."

Current estimates say the global biometrics technology market in the financial sector alone could reach into the billions by 2020. This includes biometric sensors, biometric app downloads, direct purchase and software development fees and authentications fees from biometrically secured payment and non-payment transactions.

Uncertainty about biometric authentication's ability to guarantee the protection of personal information is common, but a recent survey found that one in five members of generations X and Y would be willing to share their DNA to help secure financial and personal information.

According to the BBVA Compass research report, the benefits of biometrics go beyond strengthening proof of identity and enhancing fraud detection. 

"As biometrically-enabled devices become standard, critical industries such as banking will be able to offer better customer experience, faster processing times, lower costs and facilitate a multi-channel environment across industries in a seamless fashion," said Karp.

Led by BBVA Compass Chief EconomistNathaniel Karp, the bank's research team analyzes the U.S. economy and Federal Reserve monetary policy. For its analyses, the economists create models and forecasts for growth, inflation, monetary policy and industries. The economic research team also follows a variety of issues that affect the Sunbelt states where BBVA Compass operate.

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