Snippet: Exceptionally challenging on so many fronts, 2020’s wholesale upsetting of everyday life impacted financial services and payments pretty much immediately. e-Commerce and digital banking rates skyrocketed, especially among demographics who had previously stuck with cash and in-branch shopping, but then so did fraud, an age-old problem that intensified during the pandemic.

Exceptionally challenging on so many fronts, 2020’s wholesale upsetting of everyday life impacted financial services and payments pretty much immediately. e-Commerce and digital banking rates skyrocketed, especially among demographics who had previously stuck with cash and in-branch shopping, but then so did fraud, an age-old problem that intensified during the pandemic.

The fraud explosion

A recent survey we conducted with PYMNTS.com – to discover how US consumers’ mobile banking app usage changed during the last year – showed that, for the first time ever, banking apps are now the preferred channel of transacting in the States, even overtaking online banking, which has outranked mobile banking for years.

While this increase in digital transacting is good news for financial institutions and many retailers, it also presents opportunities for criminals, who seem to be lurking around every corner plotting digital attacks for personal gain. Already armed with millions of stolen user credentials, they now have a wider pool of inexperienced digital users to target. Even the more savvy of us have been exposed to new schemes that are designed to profit from consumers’ fear and uncertainty – even their charity.

A report from NuData Security, a Mastercard-owned provider of behavioral biometrics, found that high-risk mobile traffic grew by 55% in the first half of 2020, representing a jump in attacks on mobile devices. There was also a significant increase in “sophisticated” attacks – those that seek to emulate human behavior with greater care – which accounted for 96% of login attacks on financial institutions during first six months of 2020. The creation of fake accounts also sharply increased. In these fraud schemes, fraudsters use stolen or synthetic identities to set up new accounts so they can obtain credit or purchase high-value items.

As concerning as these statistics are, they are, unfortunately, to be expected. Consumers are interacting on more channels, over new platforms, and with scores of additional third parties, presenting fraudsters with a multitude of avenues to attack.

The “F” word

We’re taking about friction here! To protect themselves and their customers, financial institutions naturally want to upgrade their security systems, but they have to do so intelligently. The long-held belief that consumers are averse to friction is no longer true, if it ever really was. Our US survey showed that consumers do want to be in control of approving a transaction – 67% of banking app users want transaction-specific authentication because of its added security.

Our US survey showed that consumers do want to be in control of approving a transaction – 67% of banking app users want transaction-specific authentication because of its added security.

There’s no denying, however, that user experience is also critical. Consumers want a consistent, predictable experience, regardless of the device on which they choose to transact or interact. They don’t enjoy navigating a different process or set of security measures when they use their computer compared to when they use their phone or their mobile banking app, just as they won’t enjoy a 3-D Secure e-commerce authentication that looks and feels unfamiliar.

Trust in the balance

Trust: difficult to earn and easy to lose. For Entersekt’s clients, a large part of the complexity of digital service delivery lies in balancing trust-inspiring security with ease of use. What’s more, that balance is constantly in need of recalibration as technology and consumer preferences change.

The key to solving this problem, if you ask me or any of my colleagues, lies in the possession factor: the personal devices consumers use every day to communicate with friends and family and access accounts of varying importance. Trusted device identity is at the core of what we do. Technology like this binds a user’s identity to their device, giving banks and other organizations dealing in customer data and other valuable assets the confidence that the user is who they say they are – and vice versa.

 

 

With this level of trust assured in the background, the impact of hardcore security on the user experience is necessarily lower. Using a combination of device ID and, say, behavioral biometrics, banks can authenticate routine transactions in the background most of the time, only occasionally involving the user directly with a low-friction step-up authentication to avoid fraud or a false decline.

Giving consumers the choice to transact on any device they prefer, with a consistent experience and the knowledge that the channel is secure, is what it’s all about. It puts banking customers in control, bolsters trust – and, by extension, loyalty – and helps everyone stay one or ten steps ahead of the fraudsters.

 


Managing fraud the Entersekt way involves intelligently blending active and passive authentication. Find out how our authentication and digital fraud prevention solutions can help you establish a strong trust relationship with your customers through digital channels.

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Mzukisi Rusi

VP: Customer Success

The best customer champion you could hope for, Mzu combines a decade’s experience in mobile and information technology, a keen strategic outlook and problem-solving ability, and that personal spark that sets everyone at ease. He’s also an engaging speaker on the topics that most animate him: digital technology and its role in bridging the gap between the formal financial sector and the unbanked.

 
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.