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Fingerprint Cards CEO Fredrikson explains corporate split as natural next step

Fingerprint Cards CEO Fredrikson explains corporate split as natural next step

A major structural change may not be the most obvious move for a company that is at or near the top of volumes delivered for biometric sensors in its target industries, but Fingerprint Cards began operating as two separate units as of January 1, 2022.

CEO Christian Fredrikson tells Biometric Update in an interview that although all parts of the overall business were growing, they have been evolving in different directions.

The two subsidiaries will function as fully-formed companies, with research and development on each side, with some common platforms, and unified supply chain management for some components, preserving volume benefits.

A gradual evolution

In one sense those different directions are literal. The new Fingerprint Technology Company (FPC) serves the mobile and PC customer segments from close proximity to partners and customers in Shanghai, under a change unveiled in November.

“The whole ecosystem is there,” Fredrikson explains, “from the manufacturing to the packaging to customers and partners.”

The payments ecosystem is served by Fingerprint Cards Switzerland, along with the access control applications, from Zug. The latter includes solutions in development for the automotive industry, which Fredrikson sees as a future growth area for the company.

Although both markets include players around the world, and both subsidiaries will operate as international businesses, their teams and operations had already been developing along separate tracks.

FPC had already been recruiting in Asia for its mobile and PC business for a couple of years, Fredrikson says: “We had leaders there, we had teams, the salesforces had been separated, and they go to different customers.”

He acknowledges that starting point made it much easier than if the company had been separating units that had previously all been established as one team in one place.

The applications addressed by the two subsidiaries are quite different, according to Fredrikson. He refers to the thinner, more flexible biometric sensors, running on lower power that are used in payment cards, compared to traditional fingerprint sensors. The packaging, form factors and technical requirements are all substantially different.

While both are growing businesses, Fredrikson explains that they are in different phases.

They “require their own resources, own sales forces, own ecosystem management and partners” to innovate and address different applications.

“The customer requirements are starting to move a little bit to a different road,” he says, “even if the platforms and the architecture behind it are still a lot of the same, and you’re still doing biometry.”

State of the union

At the moment, the three applications are all in different phases.

The mobile biometrics segment is already in its competitive phase, with huge volumes. FPC supplies fingerprint sensors found in 575 mobile phones and tablets, as of writing. The PC segment is rising on a similar path, Fredrikson says.

Payments and access volumes, in contrast, are just starting.

“2021 you could say was the real breakthrough for finally getting banks to launch payment cards,” Fredrikson muses. “We also have access cards coming in, that we have been waiting for for a long time.”

Fredrikson estimates that the total global mobile phone market is 1.5 billion units per year, with 82 or 83 percent featuring native biometrics, and the percentage steadily increasing. There are around 300 to 350 million PCs sold per year, about 20 percent if which include biometrics, and increasing rapidly.

“We believe it’s going to be the same as in mobile,” he says of the PC market.

In cars, the market is now close to 0 percent out of 50 million per year.

Payment cards is different.  There are 6 billion payment cards issued per year, plus smart access control cards.

For door locks, dongles, watches, and the rest, the potential market is in the hundreds of millions of units per year.

Dividing the business lines allows Fingerprint Cards’ two halves to address different customers and ecosystems with different strategies.

The new corporate configuration also opens up more strategic opportunities from a shareholder value point of view, Fredrikson points out.

New markets and scale

Revenues from the automotive industry are furthest in the future for Fingerprint Cards, in Fredrikson’s assessment.

He says there are “a multitude of digital solutions coming” to the automotive industry to give vehicle owners greater control over a wider range of interactions with biometrics. These are part of “the digitalization of the whole car industry,” he explains, with applications like automated driving just starting to gain in popularity and reach more drivers.

Right now, there are many proof of concept projects, and some single-model implementations, but the market is still deciding among biometric modalities.

How exactly the markets will look when they mature remains highly uncertain. So much digital identity innovation is still coming around knowing your customer in payments, cars, and different connected environments, Fredrikson says.

Different applications mean different requirements, therefore different R&D and partner ecosystems.

“How bendable it’s going to be, or how hard or how big, and how many fingers…” he says.

“Just doing a card was very different from doing biometry on a mobile phone, because it has to be bendable, it has to be thinner, it needs to work with minimal power, just harvesting from the terminal.”

The interfaces, security requirements, and encryption will all be different for the various segments. Some elements of the technology will be the same, but sometimes even the shape of the sensors will be different.

With two different companies under the same corporate parent addressing these innovation challenges, Fredrikson underlines that Fingerprint Cards has ambitious growth plans in both areas.

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