Snippet: Sure, banks need to digitize if they’re to meet their customers’ needs. It’s not that simple, though. Those same customers also want to feel secure and enjoy smooth-as-silk, cross-channel digital banking experiences. So, what happens when regulatory standards and mandates demand a change of course?

Sure, banks need to digitize if they’re to meet their customers’ needs. It’s not that simple, though. Those same customers also want to feel secure and enjoy smooth-as-silk, cross-channel digital banking experiences. So, what happens when regulatory standards and mandates demand a change of course?

 A few weeks ago, as a follow-up to the popular Mercator white paper about authentication in light of EMV 3-D Secure, we hosted a webinar to further discuss the effects of these kinds of regulatory standards and mandates on banks’ digitization efforts.

Our panel of experts, which comprised technology advisor and analyst Stessa Cohen, Mercator’s Tim Sloane, and Entersekt’s very own Gerhard Oosthuizen, came to some thought-provoking conclusions along the way, especially in light of the pandemic-induced uncertainty businesses currently face. We’ve distilled those down into five quick and easy-to-read key takeaways.

1. With pressure comes opportunity

Globally, there’s an immense amount of pressure going around, not only for banks to digitize at speed, but to create low-friction user experiences. At the same time, they’re figuring out how to leverage open banking, combat the ever-changing threat of fraud, and adapt to new payment methods and devices. But the cherry on the top must be contending with various regulatory standards and mandates, all while managing the balance between customer privacy and the value of data – in the middle of a pandemic, when demand for digital banking is at an all-time high! Yes, it’s a tough time to be a bank. But there’s opportunity, too.

2. Standards and mandates do matter

While banks grudgingly spend more than half their time dealing with regulations, there’s no getting around them. So, it’s important to understand their purpose. In Europe, for example, PSD2 is an anchor for both payments security and granting access to accounts. It promotes healthy competition between banks as well. The imminent mandate on EMV 3-D Secure will also help standardize the way in which customer authentication is implemented – and it’s starting to catch on in the United States too. All in all, regulatory standards and mandates create a universal way of doing things; a measure of consistency if you will. In time, they will go a long way to drive app adoption and the creation of better user experiences.

For more on the topic of PSD2, read our latest blog: Balancing user experience with compliance under PSD2

3. Allow for friction but in the right quantities

Some statistics claim that false declines account for more than 50% of declined transactions. In these cases, there’s no friction; in fact, consumers aren’t given the opportunity to authenticate themselves at all. In contrast, two thirds of consumers who abandon their carts do so because of too much friction. In these cases, completing a transaction is made too difficult and not worth the effort, leading to a breakdown in trust, a drop in brand loyalty, and loss of revenue. While we now know that stringent regulatory standards and mandates can impose limitations on user experience, there is some good news…

4. Smart implementation leads to good user experience

Despite how long it can take to implement, customer authentication done right can be of enormous benefit to banks in the long run. But first, it should always tie back to a bank’s app. With that secure mobile channel in place, banks can comfortably move away from OTPs and other outdated authentication methods in favor of a risk-based approach. So, instead of asking customers to authenticate themselves for every single transaction, a device’s ID combined with behavioral biometrics and location services can be used as assurance in most cases. This approach guarantees the delivery of just the right amount of friction – “intelligent friction” if you will – while effectively managing the risk of fraud.

5. Consistency builds trust and brand confidence

Finally, if banks want to maintain top-of-wallet status, they need to apply the same customer authentication methods across all their channels. Whether a customer goes online, applies for a loan, visits a branch, or even contacts a call center; if there’s one consistent authentication method in place that always links back to a bank’s branded app, customers will remain loyal to that brand – not only out of trust, but in continued pursuit of that great user experience they’ve come to expect.

Feel like you missed out on the live action? Watch the webinar recording.


We recently collaborated with PYMNTS.com on a survey report exploring the ins and outs of mobile banking app adoption in the United States. There, too, poor usability was cited as a major driver of dissatisfaction. What’s a bank to do? Get the report now.   

 

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Cara Visser

MARKETING WRITER AND EDITOR

Cara is a high-functioning content strategy and plain language addict whose self-proclaimed purpose in life is to fill the world with good, clean, meaningful content. She loves the challenge of simplifying and translating complex information, especially if there’s something new to learn along the way.

 
Survey report: Mobile banking app
 

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Entersekt is an innovator of customer-centric fintech solutions. Financial services providers and other enterprises rely on our patented mobile identity system to provide both security and the best in convenient new digital experiences to their customers, irrespective of the service channel. With us, they can concentrate on their innovation roadmap, while delivering intuitive, low-friction digital experiences to their customers.