With Payments Getting Faster, Banks Look to Consistent, But Flexible, Identification Routines

Financial institutions are realizing that a smooth experience is as important to consumers when identifying themselves as the authentication strategy itself, regardless of the channel consumers use to access their accounts.

This finding is part of a new study from NICE Actimize, a Hoboken, N.J.-based provider of risk-management and compliance solutions for financial institutions. The study reveals 83% of financial institutions surveyed say the customer experience is a key business driver for investment in omnichannel authentication management.

“Previously, financial institutions invested in authentication technology in individual customer channels, but they didn’t orchestrate the investment across all channels,” says Rivka Gewirtz Little, director of product marketing for fraud and cybercrime management solutions at NICE Actimize. “What ended up happening was that financial institutions created inconsistent customer experiences across each customer touch point because each channel was siloed, even though they were secure.”

A consumer used to authenticating himself on a smart phone using a fingerprint scan, for example, might encounter a more cumbersome experience when accessing his account using a computer, such as entering a password and PIN then answering a series of knowledge-based questions. Having disparate authentication experiences across multiple customer channels at the same institution creates an inconsistent, and unsatisfying, user experience. It can also result in unnecessary customer challenges and friction in the authentication process, which results in customer calls to the contact center, the survey says.

“Financial institutions need to remove the friction to authentication without sacrificing security by orchestrating their authentication strategies to identify the right authentication and fraud-prevention tools in each channel to create a better customer experience,” Gewirtz Little adds.

Currently, just 28% of financial institutions have implemented cross-channel authentication-management strategies, NICE Actimize says. But the need to reduce friction across multiple touchpoints has 61% of financial institutions surveyed planning to invest in an omni-channel authentication-orchestration solution within 12 to 18 months, the survey says.

Key to reducing friction during authentication is to integrate risk and fraud analytics.

“Analytics help make decisions about how strong an authentication challenge should be based on the risk of the transaction and what is known about the customer’s digital identity, such as the type of device he is using, whether the device has been rooted, his location, and how often he makes these types of transactions,” says Gewirtz Little. “Someone simply checking a balance will not require as strict authentication as someone looking to transfer funds from an account. This allows financial institutions to apply one or more authentication methods based on the risk of the transaction.”

Mobile-device rooting is a process by which a hacker gains access to the device’s operating system through malware to remotely take over the device.

With the ability to integrate data and analytics that provide a wider view of transactional behavior and a typical banking journey, 59% of financial institutions plan to invest in authentication-management solutions that enable them to integrate fraud or risk data and authentication history into the challenge-decisioning process to alter the authentication policy as needed, the survey says.

In addition, 63% of financial institutions say they will invest in continuous or persistent authentication methods that rely on sophisticated analytics to verify consumer identity and assess risk without requiring active authentication. Doing so reduces friction by cutting active authentication and producing fewer unnecessary challenges, thereby improving the customer experience, the survey says.

Making that kind of investment is important for financial institutions as they prepare to support faster and emerging payment options likely to result in fraud spikes or send consumer usage rocketing.

“It is important to be able to change up strategy on who and when to challenge when fraud is moving quickly,” Gewirtz Little says. “As payments become faster, financial institutions are becoming fintech companies, so they need to provide easier, but secure authentication to deliver a satisfying customer experience across all channels.”