Don't be surprised if securities firms begin to resemble science-fiction movie sets in the near future. The newest development in market data is biometrics, or validation of identification through a user's unique physical attributes. One of Wall Street's most prominent market-data vendors is about to make biometrics a household word.
Bloomberg is exploring the potential benefits of biometrics, both for users and itself. Financial-services firms using Bloomberg terminals to access market data, communicate, plan portfolios and execute trades might find themselves having to log on with a fingerprint scan in the near future.
While many of the details are unclear to Bloomberg users, the bigger question remains: Who stands to gain most from the fingerprint-access points? Is it the user who increases security or the vendor who increases revenue?
USER VS. VENDOR
Bloomberg terminals will soon require a fingerprint for access under its user-based-licensing (UBL) program, which was launched a year ago using simple password access, says a company spokeswoman. She says that the primary motivation for the fingerprinting device is to heighten security and personalization.
"People keep a lot of important information on their Bloombergs," she explains. "We want to be able to guarantee that the person using it is who they say they are."
In addition to enhanced security, fingerprinting may be part of Bloomberg's strategy to add value through personalization. At a recent event, Lex Fenwick, Bloomberg's chief executive officer, discussed this strategy, although not particularly referring to fingerprinting. "We can give you added value on your Bloomberg terminal because we know it is you," he said.
One of the benefits for firms who adopt UBL, the Bloomberg spokeswoman says, is the ability to access this security and personalization from remote locations. The vendor asserts that by now adding fingerprinting to UBL users can access additional terminals free of charge. For example, using the fingerprinting device, a user can log onto a terminal at work, home or on the road, providing that software under the UBL has been installed at that terminal.
One industry source from a Midwest investment firm says that this model is advantageous for a global setup. "We have people that travel every day, so if they have a login, all entitlements follow them," he says. "Before, we were being billed for access at two different locations."
Bloomberg maintains that the UBL system is simply an alternative option, and was created because of customer demand for secure access to terminals, both within infrastructures and remotely.
However, many industry insiders argue that increased security is not reason enough for a rigorous level of user identification. "Point of entry and market data is not really the focus of security right now," explains Dennis Ceru, a senior analyst at TowerGroup, noting that firms are instead focusing on beefing up security of transactional information to prevent problems such as money laundering.
THE PRICE FOR SECURITY
Along with increased security comes increased supervision, according to many UBL-using firms. Janus Capital Management, a Denver-based investment manager, has been using UBL since last August, according to Brian Jensen, the portfolio-systems analyst in charge of market-data management and research applications. He says Bloomberg has recently asked Janus to transition to the fingerprinting device. "It feels like Big Brother is watching over us. I'm not a fan of the fingerprinting concept, and I'm hoping we'll never actually go live on the system," he says.
Yet, the spokeswoman for Bloomberg insists that the technology utilized for the fingerprinting captures only a portion of the fingerprint, ensuring privacy for users. According to a Bloomberg document, "at no time can a copy of one's image ever be accessed by Bloomberg or any other organization."
Jensen adds that administration of the new sign-on procedure may prove cumbersome for users. "I don't like the concept of having to use a fingerprint to access something we already pay for," he says. "I think it will be inconvenient and an unnecessary step for users to get the market data."
Ian Rosenfeld, IT manager at New York-based Capra Asset Management, has also been live on UBL since last year. While Bloomberg did not initially insist on biometric access to UBL terminals, he says, his firm is now expected to embrace the fingerprinting system, a process that he is not looking forward to.
Rosenfeld explains that he often signs on for his boss, a task that could not be completed using a fingerprint system. He says Bloomberg is trying to accommodate him by offering a Secure ID token with a changing password to ensure a similar level of security as fingerprinting.
Rosenfeld adds that it may be difficult to install the biometric devices and adapt the users. "If I was given the choice, I wouldn't do it," he says.
With this system, some argue that Bloomberg is attempting to increase its revenue by eliminating multiple users on one terminal. Yet, Bloomberg insists that it has every right to charge for each user, as its UBL contract clearly states that each terminal is licensed to one user.
The UBL program is an alternative to terminal-based pricing, a system that has Bloomberg customers paying for each terminal, which users can then log into with passwords. While not sanctioned by the vendor, firms often have multiple users on each terminal. "In the past, we paid by serial number and we could create 50 to 100 logins using one terminal and paying only one time," says the industry source. "Now that we are on a user-based-license agreement, we pay per login."
Rosenfeld says that when they signed onto UBL, Bloomberg gave no indication of implementing fingerprinting.
In addition, Rosenfeld notes that his Bloomberg representative claims that fingerprint access to terminals will eventually be rolled out to all Bloomberg users, not just UBL-based users. A spokeswoman for Bloomberg maintains that the future of its progression at larger firms is not yet known.
WILL PEOPLE BUY INTO BIOMETRICS?
While many potential users have expressed frustration with the possibility of using biometrics to access Bloomberg terminals, TowerGroup's Ceru doubts that it would be a determining factor in the search for a data provider. "Bloomberg is absolutely ingrained in the marketplace," he says.
However, other market-data vendors, such as Reuters, have not yet followed suit, possibly in an effort to remain customer-friendly in the downturned economic environment. "One of the reasons Bloomberg's customers are willing to pay so much per month is because each terminal often services three, four or five people. When people start sharing, that's a sign that your price is too high," says Phil Lynch, chief executive officer of Reuters America, a major Bloomberg competitor.
Ceru adds that no vendor's place is ever entirely secure in a changing economic environment. "Many companies are more concerned about keeping customers than making things harder for them," he says. "The market will make its decision on this."
For the past six months, Bloomberg has been slowly rolling out fingerprint scanning for its customers who utilize user-based licensing (UBL). UBL was originally rolled out a year ago with unique logins and passwords. Going forward UBL system users will have to install the fingerprinting device called Bloomberg Secure Access Technology (BSAT) in each terminal. The BSAT device is currently utilized as a separate component or hub that is plugged into the terminal, but a spokeswoman for Bloomberg says that it will eventually offer the fingerprint login as part of the keyboard.
According to a Bloomberg document, users give several samples of their fingerprints to create a representative template when setting up the program. The template is stored within each user's record in the Bloomberg database, then compared to the fingerprint taken when the user logs into the system with a password.
The technology, called Verifi, is made by Florida-based Zvetco Biometrics, a vendor specializing in biometric solutions. The Bloomberg spokeswoman says that Bloomberg will absorb the price of each device, but declined to comment on the incremental cost to its product. While Zvetco lists each device as costing $139 online, Zavi Cohen, chief executive officer of Zvetco, says that corporations such as Bloomberg enjoy better prices when buying in bulk. "When you buy them in the many thousands, the prices are under $100 for each hub," he says. "We have a few clients in financial services, but Bloomberg is our big fish."