IPO Corner: A Beginner’s Guide To Biometrics

As if there isn’t enough upheaval going on… the way you shop, travel, and interact with money in general is also rapidly changing. We’re moving from a physical money, plastic card world to a smart device, biometrics world… a world where shopping sprees and flying don’t require us to carry our wallet, passport, or make sure our debit card is loaded onto our Apple Watch. The future is here, and it’s all about your face, voice, fingers, and eyes.

Biometric technology is any tech that authenticates (verifies identity) using biometrics based on physical characteristics, such as fingerprints, retina scans, or the palm of a hand. While that may sound slightly nefarious, biometrics have been around as long as record keeping has been around… it’s just that now, we’re digitizing them. As a world, we’re moving away from index cards and sheets of paper to computers and more sophisticated ways of gathering, storing, and using biometric information.

And the biometrics market is giant… a giant on steroids… the market sat at $24.4 billion last year and is expected to hit an insane $99.63 billion by 2027. We can expect to see biometric usage increase substantially on everything from phones and tablets to ATM machines… yup, you could pull up to your bank’s ATM, give the camera a big smile, and the ATM pull up your account. Sounds nice… and a little creepy?

We can’t talk about this space without talking about the most controversial aspect of it: a digital ID… want to polarize a room? Bring up a digital ID and watch the fur fly… that being said, it’s looking like this is an aim of governments. In May, the DMI (Digital Monetary Institute) Symposium was held by the Official Monetary and Financial Institutions Forum. This symposium brought together policy makers, experts, and investors to talk about the future of the digital world, and you’d best believe a digital ID was at the heart of discussions.

Among the key players involved were Kay Turner, Chief Digital ID Advisor to the U.S. Treasury Department’s Financial Crimes Enforcement Network and Molly Mahar, Senior Associate Director in the Federal Reserve Board’s Supervision and Regulation Division. While the details are no doubt juicy, the key takeaway is that pretty much all the people involved (with all kinds of power) agree, digital ID programs are the keystone to efficient world trade and commerce… and those ID programs will be biometric.

We Love Shopping And Flying

Another thing in this space that’s for sure… shopping trips could look very different… from now on, your flex may not be pulling out your black card, your flex may be putting on those thousand-dollar shoes, smiling at a camera, and waking out with them… talk about a new level of on fleek… or maybe it’s a hand gesture… either way… it’s new and different.

Mastercard thinks it’s a fantastic idea, and they’re acting. Currently, the company is running trials on a new payment system that allows customers to pay by smiling into a camera or waving their hand over a reader. The technology is being tested out in Brazil, the Middle East, and Asia… the system will replace cash, cards, Google Pay, Samsung Pay, Apple Pay… all of it… every single bit.

Imagine it… it’s late on Thursday night, you’ve been into the wine… one more day to go until the weekend… you’ll just have a little more and treat yourself to a little something off Amazon. SMILE… you just bought everything in your cart! While it sounds like hyperbole, it most certainly isn’t. Just this quarter, Amazon has rolled out it’s One system at several Whole Foods Market locations in California. How do you pay? You guessed it… by scanning your palms, the system is already in place at several locations in New York… Amazon is totally ready to let you binge shop with your body.

No, nothing will be spared, least of all air travel. Think about it, we cut our teeth on full-body scanners and x-ray machines at airports, it only makes sense that we’d pioneer biometric technologies there, right? Delta is currently ramping up testing of a biometric screening technology at the Detroit Metropolitan Airport that will recognize each passenger’s face and tailor content directly to that person using face biometrics. And, it has a super cool name: Parallel Reality technology.

Deals To Watch

Now that we’ve glimpsed our biometric future, let’s talk about some of the companies in this space that have landed on our IPO radar. This week, we’re specifically looking at two companies: Trust Stamp and Onfido.

Trust Stamp (IDAI) is a global provider of AI-powered identity services that empowers organizations against fraud and privacy breeches, they cater to multiple sectors including real estate, banking and finance, and government. Founded in 2016 by Gareth Genner and Andrew Gowasack, the company is located in seven countries across North America, Europe, Asia, and Africa and has now swelled to over 100 people.

The company began trading on the Nasdaq in January of this year, and we wanted to point them out because of the impressive projects they’ve undertaken in tandem with the United States Department of Homeland Security… you can imagine all the possible applications of biometric technology in this space. The company won a $3.92 million dollar contract with them recently to provide services around immigration centers, impressive in itself! Under the contract, the company is tasked with providing mobile biometric services to ICE centered around its data tokenization technology offering.

It’s been a nightmare year for IPO investors and IDAI shareholders, who are down 67% YTD, are no exception. But as I write this, the stock is soaring 15% into the weekend . . . maybe the recovery is underway.

Onfido is a global identity verification and authentication provider that has been doing incredibly well lately as demand for biometrics continues to escalate. The company digitally proves a user’s real identity using AI technology, and their technology powers hundreds and hundreds of fintech, banking, and marketplace clients all over the world. Onfido has been recognized for their prominent position in the market and excellence in performance and innovation many times over and has received substantial funding from big name investors such as Microsoft and Salesforce. A solid IPO date has not been set, but the organization is reorganizing and making changes in preparation.

Whether the thought of walking through the airport and having your personalized flight information and relevant adds popping up on your Delta Airlines application is thrilling or terrifying… that’s the future that now appears to be at our doorstep. Maybe it will be wonderful, maybe it will be dystopian. Whatever it is, we’ll be there looking for those can’t-miss investing opportunities for my Buy List. How many of these future-creating companies will end up there? Keep coming back to find out.