Online fraud is one of the biggest problems that banks have to contend with today. For all the benefits the digital world has brought, it’s also created a whole new realm of opportunity for criminals. And the banking industry constantly has to battle it. One of the banks’ most potent weapons against fraud is customer authentication, although even this is proving to be less effective all the time, with fraudsters finding increasingly sophisticated ways to get around the current technology.
The growing problem of online fraud is causing banks across the world to seriously rethink their authentication processes in a bid to provide their customers with a more secure service, and of course save money. Fraud costs the UK economy alone, tens of billions of dollars each year, which makes it a huge problem and one that banks need to tackle head on.
The trouble with current authentication processes is that they’re based on things you know: passwords, date of birth, mother’s maiden name and so on. This type of authentication is known as knowledge-based authentication (KBA) and whilst it might seem secure on the surface, the truth is that any data you enter online can potentially be accessed by criminals. The number of phishing scams out there, where fraudsters essentially try to trick people into entering their data on fake websites, shows how real the danger of fraud is for everyone.
Security isn’t the only problem with KBA, however. Many customers find it very inconvenient to have to memorise multiple passwords and PINs in order to access online banking and make payments. Having to use card readers to send transfers is, at best, a laborious process.
When you combine poor security and a lacklustre customer experience it’s clear to see that knowledge-based authentication is far from ideal. So what is the solution to this problem? As with so many problems faced in the modern world, a big part of the answer lies in technology.
How advancements in technology can improve security and customer experience
Finger print scanners are a piece of technology that nearly everyone is familiar with, at least in concept. They’ve appeared in countless films and TV shows but they’re not just an imagining of Hollywood writers. Finger print scanners actually exist and present an excellent opportunity for banks to improve both security and customer experience of their authentication processes.
Misys Banking Systems’ Retail Channels Director, Alex Bray, recently wrote that “Biometric authentication can provide another layer of control and security for both bank staff as well as for customers. The launch of finger print scanners demonstrates how tablet devices can also replace the need for separate biometric hardware.”
One of the best things about scanning technology is that modern Smartphones already come with the capability to scan your scan your fingerprints or retina, so there’s no additional hardware required. This means that not only can scanners be implemented with ease but also at no additional cost. Of course it does require customers to own a Smartphone but given that so many people now have one, this shouldn’t prove to be a stumbling block to using scanners.
Although scanning technology can certainly help to improve security and customer experience, in all likelihood, it would be used in conjunction with KBA in order to bolster current authentication methods, rather than replace them completely. This is due to the fact that no authentication method is completely fool-proof and criminals are always trying to find cracks in the system, which means multi-level authentication that combines “things you know” with “things you are” is the most likely direction we’re headed.
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