When considering how to effectively authenticate your customers when they sign into their accounts, the focus naturally goes to methodology, but to ensure you’re using the best authentication methods possible, you also need to consider your purpose.
In other words, what is your authentication process trying to verify about your customers? Ultimately, it should answer these three questions.
1. Who Is the User?
The first layer of authentication should focus on identifying the user. Ideally, your system should go beyond just asking for username and password. Instead, it should create a profile of other data points that can help to authenticate the user such as identifying the device the customer typically uses, their IP address, geolocation, and other factors that can help to establish predictive analytics.
A quality authentication system does this in the background, increasing security without forcing any undue burdens on your customer. As needed, you can prompt the customer for other multi-factor authentication elements such as a PIN or answers to secret questions.
2. Can You Do Business Together?
If a customer deviates from their norm, your system needs to dig deeper and ask more questions. If they’re not on their usual device and are signing in from a new IP address, your system needs to use additional verification measures to determine if you can do business together.
That may include one-time use passwords and biometrics that don’t alter the customer experience or place any significant time burdens on your customer. Or, you may want to bring in out-of-band communication. For instance, if a customer is signing in a new device, you may want to text a verification code to their phone number before allowing them access.
3. Should You Do Business Together?
Once you’ve assessed that you can do business with a user, you need to determine if you should do business together, and your system needs to determine if the actions the user wants to take are legal. Using personal and behavioral data, your system should flag actions that indicate a potential lack of compliance for manual review. By integrating machines and humans in this pursuit, you add a critical layer of defense to your system.
Identity, Fraud, and Compliance
These three questions cover issues related to identity, fraud, and compliance, and an authentication process that answers these questions helps you balance customer expectations, fraud-risk management, and regulatory concerns effectively and affordably in a way that doesn’t place undue burdens on your customers.
Historically, many financial institutions have addressed identity, fraud, and compliance in silos, but that ineffective approach increases the risk of fraud while also potentially degrading the customer experience. To deal with fraud in the digital age, you need a collaborative approach that uses behavioral and internal data to drive fast, quality decisions about when to ask for more information and when to deny access completely.
At SQN Banking Systems, we can help you implement a customer verification process that answers these questions, integrates data from multiple sources, and ultimately protects your bottom line without inconveniencing your customers.
Want to learn more about how the right anti-fraud solutions can drive the success of your financial institution? Then, contact us today.