SIEMENS

Demand for security technologies has increased tremendously in recent years. This is a result, in part, of our awareness of the risks related to public safety issues. Security standards have been upgraded at railway stations and airports, and for commercial buildings. This has been confirmed in recent years by the booming business in biometric solutions — including systems that recognize fingerprints, speech, and faces — and in access control systems (see Pictures of the Future, Spring 2008, Digital Assistants – Facts and Forecasts). Also showing strong growth are security technologies related to video surveillance systems used in subways (Pictures of the Future, Fall 2006, Machine Vision – Facts and Forecasts). What's more, the increasing digitalization of everyday life and stronger measures for protecting sensitive corporate data have generated an enormous demand for solutions that can prevent identity theft. Security technologies are used with authentication and transaction processes for online and telephone banking, and to provide protection against counterfeit medications.

Given this broad spectrum of security- and safety-related concerns in today's information society, analysts of the Hamburg Institute of International Economics and the Berenberg Bank collaborated on a study titled "Security Industry — Strategy 2030." The study forecasts that the worldwide market for security services will reach $231 billion by 2015, doubling its 2005 level. IDC, a U.S.-based market research institute, is also predicting high rates of growth in the security products field in coming years, a prediction that has been adjusted downward only slightly since the emergence of the financial crisis. In a market analysis titled "Worldwide Security Products 2008 — 2012: Post-crisis," IDC forecasts that growth rates will decrease from their 2008 level of 13.2 % to 9.8 % in 2009, before slowly rebounding to about 10.3 % in 2010. IDC analyst Brian E. Burke expects "demand for security products will continue to be stronger than that for other IT technologies in 2009." This is because companies will have to comply with legal requirements imposed by European and international guidelines, Burke explains. For 2010 and beyond, for instance, Burke predicts that additional requirements in the field of data protection and more stringent regulations for financial reporting will lead to a robust increase in companies' expenditures for security solutions.

Analysts at Celent, an international market research firm, expect a big increase in online and mobile phone banking by customers in Western Europe. Today only 6% of bank customers in the region use mobile banking, a figure expected to rise to 25 % by 2010. This development could also result in damages and losses for a growing number of users. For 2007 in Germany alone, the German Association for Information Technology, Telecommunications, and New Media (Bitkom) recorded a 25-percent increase in unauthorized use of PIN numbers compared to 2006, and monetary damages of €19 million. Another important factor in online banking is "phishing." Criminals who engage in phishing send an e-mail containing "malware" (malicious software) that installs itself on a user's computer, where it works undetected, gathering PINs and passing them on to unauthorized users. malware can also direct an online banking user to a counterfeit web site designed to appear legitimate, thus tricking the user into transferring funds to such sites. In December 2007 an anti-phishing initiative, APWG, recorded more than 25,000 attacks per month. And in a series of studies from 2008 titled "Banking IT in 2023," U.S. market researcher Forrester forecasts that convenient use of new types of mobile terminals will become the standard means of conducting banking processes and transactions. In this series, Forrester Vice President Jost Hoppermann sees a two-fold authentication process, for example using fingerprints and passwords, as indispensable.

Another area of application for "digital watchmen" is protection against counterfeit products by means of radio frequency identification chips (RFIDs). Between 2006 and 2016 in Germany, sales generated with RFID components are expected to rise by an average of 19 % annually, from more than €1.1 billion today to €16 billion. And according to an assessment by Deutsche Bank Research in a current study titled "RFID chips: Enabling the efficient exchange of information," annual growth rates worldwide may be as high as 25 %. "Transport of goods and related logistics are the largest areas of application, and use of the chips with costly medications and lifestyle drugs is increasing," says Stefan Heng, an analyst at Deutsche Bank Research.

Pharmaceutical companies are attaching RFID tags and electronic certificates of authenticity to bulk packages of medications. Using a reading device, a pharmacist can quickly check a medication's authenticity. This market is expected to develop strongly. Market researchers at IDTechEx, for example, predict the market for RFID equipment used in the health care and pharmaceutical sectors will grow from its 2008 level of about $20 million to more than $400 million by 2018. This is due to the number of counterfeit medications being produced, which has been rising sharply for years. Statistics released by EU customs authorities indicate they found 2.7 million counterfeit medications in 2006. And the number of such medications seized in 2007 increased by 51 % compared to the previous year's total. In 2008 alone, customs personnel taking part in an EU-wide operation found 34 million counterfeit medications in only two months.

"The market for security technologies overall has grown from what initially were only loosely linked niche markets into a vibrant new sector shaped by its high-tech applications and dynamic growth," concludes Wolfgang Pflüger, chief economist at Berenberg Bank. And there are still areas of potential to be opened up in this market. "Use of new materials and security mechanisms, as well as development of innovative application scenarios for modern high-security technologies, must guarantee improved protection against identity theft," says Ulrich Hamann, CEO of Bundesdruckerei GmbH, in assessing this growth market.