UID Project: Huge Opportunity for Mobile Industry

Recently, I attended the India Telecom Meet in New Delhi where Mr Nandan Nilekani talked about how mobile phones can be used for authentication. Mr Nilekani is the head of India’s ambitious unique identification number (UID) and is planning to issue biometric based identity numbers to a billion citizens of India. The authentication would be online and since the mobile phones out number the computers, he is hoping that most of the authentication would happen on mobile networks using a mobile device. I normally do not write on any country specific issue but this opportunity is too big to be missed by any telecom player across the world.

There are two parts of the UID project – Issue of unique identification number and authentication services for verification of records. This means that after a number is issued, the record would be maintained in a database which can be fetched online anytime. This is a huge task and the huge opportunity has caught the interest of many companies including Microsoft, Yahoo and Cisco.

There are many use-cases of authentication services that UID is likely to provide. If anybody wants to confirm the identity of a person, all he has to do is to take the fingerprint of the person on a cellphone and send it across to the central database and receive authentication within seconds.The services can be used by a wide spectrum industries like the financial sector, health sector, mobile operators, etc. Many villages do not have a bank branch but banks have appointed their business correspondents (BCs) to help people transact. These BCs can use a mobile device to authenticate the account holder. Mobile operators and banks can use the authentication service to conduct KYC (know Your Customer) . The Government itself can use the authentication to distribute the money of schemes to the right person only after the claimant has been authenticated using his biometrics. This would help in reduction of corruption and the money would indeed reach the right person.  Such projects would go a long way in alleviating poverty in poor nations.

The benefits are likely to accrue to all the mobile ecosystem players. Device vendors would benefit from the demand of authentication enabled devices, the mobile operators would carry the authentication data between the server and the device and the developers would benefit from developing applications that use the authentication APIs. The APIs would be easily available to any developer for embedding them into a mobile application or an internet application. The opening up of APIs is the most interesting part of the UID project. This would enable the developers to create innovative applications which in turn would put the UID database to maximum use. Utility applications utilizing the power of identity of the user would give a big boost to the application economy. The overall opportunity for the various players is said to be around $4-5 billion.

I can think of a few applications (apart from the ideas mentioned earlier) that the developers can work on

  • mGovernance – There is a huge potential for developers in the area of Governance. Applications can be developed to enable users to fetch land records, court case records, health records, etc. after proper authentication of the user. Open APIs from UID project can be embedded in the application for this purpose. Recently, addressing the community of developers, D Shivakumar, MD, Nokia Mobile phones and VP, Nokia said, “Government will be a major player in buying applications from the developer community” and urged developer community to think and build innovative applications, which will help government to implement in different sector.
  • Micro-Finance Institutions provide loan to poor people to help them overcome poverty but themselves lack the basic productivity tools. This results in high administration costs and ultimately high interest rate for the borrower. Simple applications can be build with authentication mechanism to enable the money collectors to directly upload the data on collections.
  • mEducation – Education is the biggest need of the country and I foresee a big role for mobile phones in imparting education and right skill-sets. Developers can work with the content providers to develop applications that enables authentic users to learn and appear in the examination.
  • Mobile Banking and Commerce – This is yet another upcoming area that has huge potential but is most susceptible to fraud. Biometric authentication would go a long way in convincing the users and giving them the peace of mind. Again developers have a great potential here.

Global Scenario on Authentication

To put the entire opportunity in context, it is important to look at the Global Market Size for authentication products and services. A report by Goode Intelligence forecasted that mobile phone-based authentication products and services will generate $153 million in 2010 and that the market will grow to almost $760 million in revenue by 2014; an increase of $607 million. My view is that Goode has grossly understated the market and the market is likely to be much larger. As per another report, the market for fingerprint sensor chip alone is expected to grow from $40 million in 2008 to $428 million by 2013.The mobile phone with biometric authentication would be increasingly demanded by enterprise users so that data is safe. Biometric sensors on mobile phones not only protect private data stored on the device, but also can block unauthorized use of mobile phone services,  create personalized user interface shortcuts, and eliminate the need for remembering and typing passwords.It would not be wrong to say that the drivers for biometric sensor on mobile phone are stronger than that on laptops.

In the opportunity captured by various analysts, I am not sure how many have been able to size the authentication requirements of the Government and hence there could be huge upsides there.

Devices Readiness

The biometric includes fingerprints, iris and voice but currently the fingerprint sensors are the most popular form on mobile phones.  The cost of adding finger print module to a mobile handset is less than $10 and with economies of scale, it would come down even further. The biometric authentication phones are not available from the big handset vendors like Nokia and Samsung and if the big brands can come on board, the cost of biometric sensor would come down significantly.

25 phone models with authentication are shipping today, mostly in Asia Pacific regions. In Japan, phones truly lock down the FeliCa NFC payment function with biometric authentication. The Osaifu Keitai operators, DoCoMo, KDDI and SoftBank insist on having eWallet phones secured by “ facial detection”, “finger swipe”, handwriting, or voice recognition for authentication.

Atrua Technologies is the largest provider of fingerprint chips for mobile phones with other providers being Fujitsu, Authen, Atmel and UPEK.

in Japan, phones truly lock down the FeliCa NFC payment function with
biometric authentication. The Osaifu Keitai operators, DoCoMo, KDDI and SoftBank
insist on having eWallet phones secured by “ facial detection” “finger swipe”,

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