As we clock 25 years into the 21st century, the advances in banking technology are worth reflecting on – and celebrating.
From the rise of digital banking in the 90s to multi-factor authentication, and the first peer-to-peer (P2P) payments. Then the introduction of mobile banking and application protocol interfaces (APIs), the first mobile banking app in the 2000s, and now data-driven authentication that can silently tell friend from foe using risk intelligence.
To help FIs keep a step ahead, here are five trends that industry experts say could shape this rapidly evolving landscape.
From the rise of digital banking in the 90s to multi-factor authentication, and the first peer-to-peer (P2P) payments. Then the introduction of mobile banking and application protocol interfaces (APIs), the first mobile banking app in the 2000s, and now data-driven authentication that can silently tell friend from foe using risk intelligence.
To help FIs keep a step ahead, here are five trends that industry experts say could shape this rapidly evolving landscape.
1. Risk-based authentication: Next-gen fraud detection
Mastercard’s Chief Services Officer, Craig Vosburg, predicts that by 2030, digitization in banking will “... accelerate further, offering consumers more payment choices and personalized experiences. However, with this increased digitization, we also foresee growing risks around fraud and cybersecurity.”
Today, the use of real-time data in banking security is enabling FIs to proactively detect potential fraud. Data-driven fraud prevention technology, like risk-based authentication (RBA), can identify anomalies, and automatically flag suspicious behavior, to reduce the risk of fraud while improving the customer experience.
RBA assesses a range of signals, such as device, location, and typical customer behavior, to determine the level of risk for each transaction. If the customer is trying to log in from a new device, for instance, even though the other signals reflect low risks, the system could flag that action as high risk for that customer, and request further verification via biometric authentication.
2. From static rules to personalized customer experiences
Collecting risk data enables FIs to create a detailed profile of each customer. As a result, they can deliver personalized customer experiences by, for instance, using the customer’s preferred authentication method to verify their identity.
In addition, by understanding a customer’s typical behavior, and analyzing their transaction history and other signals, an RBA solution can more accurately decide what is unusual or high risk for that particular customer. Based on that context, it can provide the appropriate authentication response for each action, minimizing friction, while protecting against fraud risks.
"... by understanding a customer’s typical behavior, and analyzing their transaction history and other signals, an RBA solution can more accurately decide what is unusual or high risk for that particular customer."
Conversely, FIs that use static authentication rules cannot provide such a tailored risk response, employing a fixed set of rules across their entire customer base. Unfortunately, this can lead to unnecessary friction, or too little friction, both of which can be detrimental to the customer and FI.
The Financial Brand echoes this sentiment on the pros of dynamic, personalized authentication, predicting that “those banks and credit unions who can steadily mature their hyper-personalization capabilities stand to not only win hearts and minds, but also win new customers, deposits and overall share of wallet.” And even more enticing for FIs, they share that “...studies have shown that personalization in banking can lower rates of user churn and increase sales, leading to annual revenue uplifts of 10%.”
3. The role of context in preventing modern fraud, like ATOs and APP scams
Fraudsters are masters at playing on customers’ emotions and manipulating them into doing something they ordinarily wouldn’t do — like sharing a one-time passcode over the phone with their alleged ‘bank manager.’ These scarily convincing social engineering scams can easily result in authorized push payment fraud or account takeovers, causing devastating losses. However, when banks have more context — visibility of the bigger picture — they can unveil a fraudster’s trickery.
"... when banks have more context — visibility of the bigger picture — they can unveil a fraudster’s trickery."
For example, a customer receives a call from a fraudster posing as their bank manager, saying that they’ve noticed some suspicious activity on their account. The fraudster convinces the customer to approve their login so they can help them prevent the potential ‘fraud’ incident. Once the fraudster has access, they placate the customer, saying they’ll be able to resolve the situation now. After the call has ended, however, the fraudster stays logged in to the customer’s account and drains the account without the customer being aware.
In the above example, things could have gone differently if the transaction was authenticated with a push notification sent to the customer that included transaction details. The customer would then have the context to spot that real fraud was about to happen. And they could decline the transaction and save their funds!
So, context isn’t just king — it’s a fraud-fighting superhero!
4. Passwordless biometric authentication: Consumers expect convenience
In the ongoing battle against fraud, outdated authentication measures, like passwords, are a very weak defense. Fraudsters can crack common passwords in seconds. FIs still using passwords as their primary customer identity verification tool (without employing additional layers of security) are leaving the front door open for fraudsters to not break in, but merely log in! What’s more, it creates a clunky user experience (UX) at the same time.
A passwordless authentication approach, on the other hand, delivers both strong security and intuitive, convenient UX. Passwordless tools, such as biometric authentication or passkeys, create familiarity and enable customers to safely transact.
5. Supporting frictionless on-the-go banking
Today’s consumers want to access their financial services, when and how they want them. And that means banking that’s neatly woven into services outside of the core digital banking sphere. Or as American Banker describes it, “...banking you don’t have to think about.”
Basically, banking services that are so convenient that customers barely know they’re conducting banking transactions. However, for that to be a reality, banks need technology that can verify a user’s identity in the background, without requiring any actions from them. These silent authentication measures, like Entersekt’s Browser ID or App ID, enable frictionless, secure logins through advanced cryptography that silently signs the transaction, without requiring any user intervention.
Innovate today to compete tomorrow
To wrap up, banks need to “innovate today to compete tomorrow,” as tech consultants, West Monroe shared in their 2025 Financial Services Industry Outlook report. Find a partner who can take you to the next step of your journey and bring your FI closer to your customers. Let’s unite the ecosystem to fight banking fraud together, with the help of innovative, data-driven authentication solutions.
