Payment Companies Need a 'Security Time Machine'
The approach of many payment and financial services companies to security is still stuck in the 20th century. But luckily, firms of all sizes can choose to travel in time to 2016.
Today, modern technology is in the hands of nearly every consumer, making biometric authentication immediately applicable on a large scale.
For too many firms, fraud detection and prevention has thus far been a missed opportunity. But, at last, the move to next-generation identity verification is practical and economical for these organizations. Seven in 10 (68%) U.S. adults now own a smartphone, according to the Pew Research Center. These high-tech handheld devices have high-quality touchscreens, microphones and cameras that make biometric authentication easy. From fingerprint scanning to voice and face recognition, the process can be completed quickly – anytime, anywhere. And right up in the ranks with security, convenience is a top concern for consumers today; biometric authentication technology delivers on both fronts.
Over time, biometric technology has improved, shrinking the price tag for this ironclad form of security – just like the cost of computers has dropped in conjunction with technological progress. According to the American Enterprise Institute, technology has advanced so rapidly that a laptop computer today is 96 percent cheaper than a 1994 model and 1,000 times better. This windfall can also be realized on an enterprise level in the biometrics arena.
But while biometric technology is available to help thwart fraud, it is not being implemented by many institutions, who are simply leaving the door open to fraudsters. In this day and age, is it a tough test for identity verification when a bank asks the color of your car? Absolutely not. Joe Shmoe can see the paint job on your vehicle when you park it, or he can find that information from easily obtainable records.
Many financial institutions continue to use outdated modes of authentication like these static questions, in addition to weak passwords and PINs, despite more reliable security measures being within reach. Federal Financial Institutions Examination Council (FFIEC) guidance recommends and sometimes mandates the use of multi-layered, dynamic forms of customer authentication, such as biometric technology.
Voice biometrics is a proven method of customer verification that is well-suited for multi-layered authentication systems. Through precise analysis of hundreds of voice characteristics, voice biometrics can accurately identify and authenticate a customer in real-time. Today’s criminals can outwit traditional anti-fraud checks, but advanced biometric technologies, including replay attack detection and liveness detection, are capable of thwarting even the most sophisticated fraudulent authentication attempts. More accurate than fingerprint scanning, next-generation voice biometric technology boasts a 99.99% success rate. And the icing on the cake? Even for the smallest banks, credit unions and issuers, voice authentication can be implemented cost-efficiently to fend off fraudsters.
Biometric authentication saves financial institutions money, in addition to being customer-friendly. Call centers and customer service reps no longer have to repeat account verification or identification questions, saving 20% or more of their time. Fast, accurate user authentication delivers cost savings along with a top-notch customer service experience.
Biometrics can also be combined with advanced Knowledge-Based Authentication (KBA) as part of an onboarding and authentication system to competently address security concerns. For example, a verification process could prompt customers to take a selfie with a front-facing camera, which is a feature on most mobile devices today that allows users to capture a self-portrait photo while looking at a live preview of the picture on the display of their device. For user authentication, the selfie could then be compared through face recognition technology with the bank customer’s photo that is stored at a records bureau.
Fraud, identity theft and security breaches have reached epidemic proportions, but financial institutions – prime targets for fraudsters – no longer need to remain vulnerable for want of strong defenses. Payment companies, issuers and financial institutions should take advantage of the opportunity to implement advanced security technology that was once only accessible to government intelligence agencies. In 2016, biometric authentication is a key strategy in the security playbook for the modern bank.
Michael Boukadakis is the founder and CEO of Enacomm.