CGAP IT Innovation Series - Biometrics Technology

This note studies the use of biometrics technology for microfinance institutions (MFIs). Biometrics technology measures an individual's unique physical or behavioral characteristics, such as fingerprints, facial characteristics, voice pattern and gait, to recognize and confirm identity.

The paper presents:

• Benefits and costs of implementing biometric technology;
• The requirements for biometrics technology, that include:
  • Reliable electrical power for card for biometric readers;
  • Sound processes and adequate staff for managing card systems and enrolling clients;
  • Software integration between cards, readers and the central MIS.

Further, the paper informs that only a few MFIs have opted for biometrics technology, and illustrates its potential through the case study of Prodem FFP, Bolivia. The use of biometrics, in conjunction with smart card technology, has helped Prodem FFP to deliver better financial services to its clients, and has reduced the incidence of fraud, error, and repudiation of transactions.

Finally, the paper lists the points to be considered before implementation of biometrics technology in MFIs:

• Focus on building positive client experience;
• Carry out phased implementation to test the pros and cons;
• Maintain system security with minimal administrative burden;
• Use proven products and stable vendors;
• Ensure that the implemented biometric system is more efficient than the alternatives.