Oberthur became OT-Morpho to strengthen its security portfolio
If payments and security technology continues to advance at the speed it has in the past five years, Oberthur Technologies wants to make sure it has enough fuel to keep its pace.
Oberthur, already a key player in EMV chip card and mobile SIM card development as well as digital security and identity technologies, has spent the last month transforming itself into OT-Morpho in the wake of its acquisition of Safran Identity & Security, also known as Morpho.
The acquisition, which closed May 31, positions OT-Morpho as a global payments and authentication technology provider that can serve financial services and payments, telecommunications, identity, security and the advancement of Internet of Things.
OT-Morpho is only a temporary name for the company, which expects to finalize an official name and new logo by mid to late September. Didier Lamouche, who was CEO of Oberthur will keep that role with OT-Morpho.
Even prior to the acquisition of Morpho, Paris-based Oberthur was a major payment card technology provider, especially for EMV chip card deployments and Near Field Communication projects.
But the EMV chip can take a company only so far, a fact that led Oberthur to consider Morpho's expertise in biometrics and embedded security methods. The two companies complemented each other well in an ever-changing security landscape.
"We feel the leadership in payments markets and embedded security combined with the leadership in biometrics and identification can really catapult us in each of the markets we serve," said Garfield Smith, vice president of marketing, financial services, mobile, identity and connected devices business units in North America.
OT-Morpho plans to push beyond the combined company's annual $3 billion in overall sales, 700 million payment cards sold, and more than one billion SIM cards sold, and the creation of more than three billion digital identity documents.
It has 14,000 employees, of which 2,000 are completely devoted to research and development globally, Smith said. "The company combined has more than 1,400 patents and spent several hundred million dollars in R&D alone in 2015," he added.
The acquisition of Morpho made a lot of sense for Oberthur, said Al Pascual, research director and head of fraud and security for Javelin Strategy & Research.
"[EMV] chips are becoming more pervasive and central to physical and logical security across a wide range of devices," Pascual said. "The Morpho acquisition allows them to capitalize on the phenomenon as a complete, vertically integrated player in the security space."
OT-Morpho brings biometrics to more of its products. Such technology will be vital as the trend toward mobile channels and connected devices adds adopters.
"The more critical the transaction we want to make, the more we need to identify ourselves and the more we need to authenticate the device we use and service we access," Smith said.
The company will research opportunities in the Internet of Things, from smart appliances to smart cars.
"Underscoring all of it will be the security of identity," Smith said. "We have to make sure that a person using an app in a smart car dashboard to order and pay for pizza is actually the person they say it is. Biometrics plays a key role in authenticating who we say we are."
In that regard, the company strives to eventually eliminate passwords through its work with FIDO, the Faster Identity Online Alliance.
While OT-Morpho's main client base — banks and card issuers — won't change dramatically, the company will be able to bring more services to those clients, Smith said. The company also will remain the key supplier of driver's licenses, handling 80% of those issued in the U.S.
"We would typically sell EMV cards, contactless cards, dual-interface cards and our Motion Card [constantly changing CVV] technology to banks, and help them promote security through their mobile or digital payments," Smith said. "Now we can easily see the opportunity to leverage biometrics in various ways, from access within the bank itself to customers logging into an account."
Ultimately, the merger of the companies addresses a business dilemma as well.
"The alternative was to run the risk of having to chase volume sales as the main driver of profitability, as their per unit price has increasingly been placed under pressure," Javelin's Pascual said.
That pressure has come not only from traditional competitors, but from startups often selling software-based alternatives, Pascual added.