Biometrics industry stocks: 2017, the year that was
What a weird era we inhabit. The Internet of Everything, learning-based software and artificial intelligence are coming together to create a radical transformation in the global economy.
Digital networking technologies developed in the ‘90s have matured and become much more sophisticated. A new generation of sensors and processors are being built right into the physical infrastructure of the global economy, allowing an amazing new level of automation. Some have taken to calling this shift the Fourth Industrial Revolution. And that’s an interesting idea.
Today, machines for the construction industry are now under development that will see the device download a blueprint and then move around, say, the floor of a new condo building, drilling hundreds of holes where needed. These vehicles, a true merger of the physical world and information technology, will do this menial labor fast and accurately. Google is about to build a new neighborhood from the ground up in Toronto that will see residents rely on AVs and bot-based deliveries. GM just announced it will launch a rideshare fleet of self-driving cars by 2020. Big mining companies are already employing self-driving tech to automate industrial processes. That is, the digital utopia promised by so many during the dot-com boom of the 1990s is finally coming to be in a real and substantial way. Biometric devices are a key piece of the tech puzzle–they are the things that will allow the system to confirm who is doing what and where–and so no wonder the rapid evolution of the biometrics sector in 2017.
It seems a reference to biometrics popped in almost every story published this year about the emerging Internet of Things. One big theme in the biometrics space was the remarkable expansion in markets and demand.
On a trip to India earlier this year the CEO of Microsoft, Satya Nadella, said that India’s Aadhaar identity system (the world’s largest biometric program) rivals the growth of other tech major tech platforms. A press report documenting Nadella’s trip quoted him as saying, “Aadhaar now has scaled to over one billion people, rivaling the growth of other platform innovations such as Windows, Android or Facebook.” That’s big. And now many other countries are beginning to follow the lead of India.
Previously, the Brazilian Superior Electoral Tribunal (TSE) was granted the right to collect biometric data for voter identification as a means to prevent fraud. Now the government has announced it wants the TSE to collect biometric information from 140 million citizens by 2020 with a final goal of creating a single citizen database and unified ID card. This effort will require thousands of biometric readers and scanners. A similar build out is underway in Mexico where the National Banking and Security Commission has issued a rule demanding every bank in the country introduce fingerprint scanners for clients within the next twelve months. A report from the NAFTA member notes banks have also been mandated to make use of facial and speech recognition technologies when it comes to online identity verification. In Russia the central bank is rolling out a major biometrics program this summer. A state-owned firm, Rostelecom PJSC, will run the database that will collect face, voice, iris and fingerprint data across the country. Sberbank PJSC, a state-owned bank, just acquired a 25% stake in VisionLabs as the country builds a national biometric platform. These are the kinds of one-time shifts that will see the biometrics sector flourish in the years to come. In the United States, DACA applicants will begin to provide evidence they have lived in the United States, at times claimed through biometric data. The Inmate Recognition Identification System (IRIS) is a registry that will eventually identify inmates through biometrics. BI2 Technologies announced it will donate biometric identification devices and systems to sheriff departments along the US and Mexico border as the existing market for these devices blossoms like no other time in history. The build out is happening now.
But even as markets for existing technologies expand, the technology itself continues to evolve in fascinating new ways. This year, in the UK, a grocery chain known as Costcutter has become the first supermarket in the world to offer payments using finger vein biometric technology. A new Samsung patent may indicate that company is considering incorporating palm biometrics into future mobile devices. A team at a Buffalo-region university has developed a computer security system using the dimensions of the heart as a biometric identifier (through the use of low-level Doppler radar). Even the organization that runs the Formula 1 racing series is getting in on the action. That organization is planning to introduce biometric gloves for drivers next season. The devices will monitor a driver’s pulse rate and blood oxygen rates and will be stitched inside every driver’s gloves in 2018. So this is an exciting time for tech in general, and the biometrics sector in particular.
Sure, some of the big tech stocks are getting expensive. Google’s parent company, Alphabet, was up almost 35% this year, to $1,030. But the so-called FANG stocks (Facebook, Apple, Netflix and Google) are still popular among investors. This group of companies increased total market capitalization by more than $1 trillion in 2017. That’s a massive increase in value. But fund managers are clearly looking through those high values to the see potential of a future automated economy. Which is a rational way to think about why it is Google is trading at the levels it is.
The very well-regarded investment publication Barron’s recently ran its popular end-of-year round table discussion. Fund managers talked about how they were thinking about the amazing changes taking place in the economy. One of the participants pointed out that inflation has remained low at at a time the economy is growing quite rapidly in some sectors. This is a good thing. Low inflation will allow the economy to continue to grow. But the low inflation may itself be an effect of current economic shifts. As one of the fund managers taking part in the round table put it, “… McDonald’s could reduce a third of its employees inside of a year. I’m becoming more convinced that, even with an increase of jobs, we are not going to see wages increase rapidly, and wages are a principal component of inflation. It’s an interesting question: Has technological disruption permanently removed the inflationary forces from the U.S. economy?” Are humans moving into a post-work, post-labour world in which the machines will do all the menial tasks? Let’s hope so.
Sure, the job category of truck driver may cease to exist. And that’s a political problem when you consider the most common occupation among North American males is ‘truck driver.’ But let’s not lose sight of the potential gains to be had from greater automation. Politicians need to emphasize the need for those laid off in areas to move into new career categories that are opening up in this new era.
Also recently announced is a deal between Intel and Warner Bros, which will see the two work as partners in the autonomous vehicle space. According to a report of the deal carried in the Hollywood Reporter, there is a new type of “consumer space” opening up around AVs. According to a quote in the story attributed to the CEO of Intel, “the rise of the AV industry will create one of the greatest expansions of consumer time available for entertainment we’ve seen in a long time.” The entertainment executives are hoping that time can now be, “… spent consuming content rather than driving.” That’s exciting, and there’s a biometric angle. According to the story advertisers are looking forward to a time when they can deliver interactive, geolocated advertising. As a rep from the National Association of Broadcasters put it, “If passenger biometric data recognizes that the passenger is generally too hungry to wait, he or she could be served with ads and offers for nearby restaurants.”
There is even biometric potential in the burgeoning marijuana industry. U.S. investors may not be aware, but the stock price of pot companies listed on the Toronto stock exchange have boomed this year. The stock of many of these companies were up several hundred percent as a new and massive industry emerges. The biometric angle? Integrated Biometrics is selling truckloads of fingerprint scanners to a South American country that will use the tech to manage a legalized marijuana distribution program. If 2017 saw many sophisticated investors realize a new IoT is emerging, this coming year will see that good news spread even further, wider. The coming year of 2018 is going to be a really interesting one in biometrics.
Next week watch for a round up of the year’s biggest deals at specific public and private biometrics companies.
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