Today’s consumers can pull up Amazon on their phones and order exactly what they want with a single click. When they sign in to Netflix, they get viewing suggestions tailored to their preferences that they can watch instantly. And when scrolling on Facebook, they see handpicked ads for exactly what they want and need.
These experiences shape customer expectations in every arena including finance, and to attract and retain customers, financial institutions have to offer experiences that are just as intuitive and frictionless. But maintaining a quality customer experience can be tricky when you also have to think about security.
Here is the key question for bankers — How can you provide your customers with the experiences they expect, while also keeping their data and your assets as secure as possible?
Stronger Passwords Are Not the Answer
On average, consumers have 70 to 80 passwords and over a third of them forget at least one password per week. Choosing simple passwords or reusing the same password is a common strategy consumers use to avoid forgetting passwords, but this practice can put consumers and their data at risk.
When consumers open your banking app to deposit a check, check their balance, or complete other tasks, they want to do so quickly and easily. Prompting customers to choose more complicated passwords or having them change their passwords frequently adds unwanted friction to the sign-in process.
To preserve both security and the quality of the customer experience, your financial institution cannot exclusively rely on passwords. Instead, you need to bring in strategies such as multi-factor authentication, biometrics, and behavioral analytics that protect your customer without placing any undue burdens or expectations on them.
Authentication Tools Should Work in the Background
Ideally, you should implement security solutions that verify your customers’ identities in the background, and the following techniques can help.
- Shared information: Traditionally achieved through questions about your mother’s maiden name or your first pet, this authentication method involves customers sharing secret information or images with your financial institution and using this info to authenticate their identities.
- Device authentication: By creating a profile of the devices consumers use to sign onto their accounts, you can verify their identity just by ensuring they are on their usual phone, tablet, or computer.
- Geo-location: The location of the consumer can also help to verify their identity and alert you to potential issues. If your customer usually accesses services in Ohio but the current access request is from New York or Nigeria, your system may need to deny access or request more information.
- Internet Protocol: Going a step further than geo-location, this strategy authenticates the customer based on their unique IP address.
- Encrypted cookies: When your customers sign onto a site or an app that uses cookies, your financial institution effectively has the ability to place specific bits of data onto your customers’ devices that can be used to authenticate that device.
In addition to using background authentication strategies, you may want to explore strategies that can be used quickly and easily by consumers. In particular, out-of-band communication is a great option. When customers sign in to their accounts or try to access certain digital services, you send a verification code to their phone or email, and they must enter the code to go any further.
Machine Learning Is Critical
Traditionally, banks used static rulesets to identify potential cases of fraud, but this strategy creates a lot of false positives. What if that customer from Ohio is really on vacation in New York or Nigeria, and by shutting off their debit card or denying access to their account, you inadvertently ruined their vacation and put a lot of friction into the customer experience?
To eliminate the risk of false positives with your anti-fraud measures, you need dynamic solutions that assign the risk of fraud based on thousands of different data points. You also need tools that compare the differences between legitimate and fraudulent transactions and use machine learning to improve efficacy over time.
The Bottom Line
For your financial institution to be competitive, you need to provide high-quality security but you cannot let your security efforts degrade the customer experience. To that end, you need to carefully examine every new application feature, offering, and security tool for its effect on the customer experience.
Ready to protect your bank’s data and assets with quality tools that improve the customer experience? Then, contact us today. At SQN Banking Systems, we handle fraud detection and prevention so you can focus on the other aspects of running a financial institution.