Instead of using keys and codes for security this device that Ankur Thakkar, Darshan Shah and Saisrinivasan Mohankumar built as part of their ece4760 Final Project uses gestures to grant access. The system uses IR sensors to determine the movement of a persons hand within the detection area, after you train the unlock pattern you can simply repeat the pattern to activate the device. I think a small miniature version of this that can detect a finger instead of a full hand would be a great replacement of a typical keypad and would probably be able to retain a similar form factor. Nice thing about this technology is that it is contact free, these days no one likes touching things like keypads that thousands of others have potentially used before them.
“The IR proximity sensors gave us an analog voltage proportional to the distance of the sensor from a flat object placed in the user’s hand for drawing the patterns. The analog voltage from each of the sensor is given to the ATMega1284P, which utilizes the internal Analog to Digital Converter, to convert this analog voltage to digital signal which can be utilized by the microcontroller for further processing.”