Consumer security hangs in the balance
In one month’s time, the UK will reach the Financial Conduct Authority’s six-month delayed deadline for the implementation of PSD2, and Strong Customer Authentication (SCA) will finally be enforced for online banking. SCA is applied in many different areas whilst transacting online.
More and more consumers value the convenience of online banking and payment platforms, which are now used by over two-thirds of British adults – with 48 percent using mobile banking. However, this has caused fraud to skyrocket – in 2019 one in five UK adults were impacted by online card fraud – calling for financial services institutions to seriously re-evaluate current identity verification methods.
Jason Tooley, chief revenue officer at Veridium, highlights that the huge growth in digital services means a re-definition of strong authentication is crucial. This should focus on mobile possession, multi-modal biometrics, combined with innovation including behavioural and location intelligence.
Jason comments: “A failure to implement SCA demonstrates a disregard for consumer protection. The ever-rising fraud levels are linked to the consumer preference of mobile e-commerce, and regulation must keep pace. Now that businesses have had an extended period of six months, in addition to the two years since the initial announcement, there is no excuse to not be compliant. SCA should have been prioritised long ago and viewed as a business differentiator.”
Jason continues: “Whilst it is true that consumers will see minor changes to their day-to-day user experience, the additional layer of security on payments will enable consumers to benefit from safer and more innovative electronic payment services. SCA will mean consumers are more confident when making payments – not act as an inhibitor as some have incorrectly suggested.”
Jason continues: “This regulation has meant financial institutions are now under pressure to implement the latest identity verification technologies to protect the abundance of sensitive customer data, whilst delivering a seamless user experience. In our increasingly digitalised world, and with the explosion in cybercrime, identity theft and fraud, online payments must look to set a standard that meets the expectations of the consumer.”
Jason concludes: “If banks are to meet the deadline in one month’s time, they should be turning to technologies in the market which have the potential to alleviate the challenges posed by the regulation. Multi factor authentication solutions can facilitate financial services institutions to enhance consumer confidence and create a secure experience, whilst ensuring the customer has a frictionless user journey. Basing the digital authentication process on combining the customer’s own technology with an open biometric approach and true step-up intelligence, will allow financial institutions to meet the regulatory requirements before it’s too late.”