Smartcard industry set to soar

Increased security demands in government, financial services and healthcare will drive major growth in the smartcard industry over the next three years, according to analysts.

Datamonitor's Global Smart Card Opportunities report predicts that worldwide smartcard shipments will rise from 14 million in 2002 to 36 million in 2006, representing a compound annual growth rate of 27 per cent.

Although the sector has suffered from a major slowdown over the past two years, the current geopolitical situation will increase the corporate and government focus on security and smartcards, said the report.

The US and Canada will be the largest growth areas, accounting for almost half of global sales by 2006. But the report said that security is also a major concern in Europe.

"Due to the recent policies of the Bush administration, homeland security is a massive initiative and this is leading to many organisations revising their security procedures," said Datamonitor security analyst Tim Gower.

"Security is certain to remain a major national initiative given the geopolitical situation throughout this decade.

"In Europe, the Middle East and Africa enterprises and governments will continue to make investments in security solutions."

Network access security will be a key area for smartcards, especially in financial services, according to the report, which claims that 60 per cent of bank fraud cases involve employees.

In the public sector the report suggested that the main uses for smartcards will be for drivers licences and passports.

Just this week the UK Passport Service revealed that it aims to introduce biometric chips into 'smart' passports by 2005.

The report acknowledges that there are still barriers to the adoption of the technology, and said that vendors need to address concerns about integration and smart card management. And manufacturers will need to build readers into PCs.