It’s that time of year when people dust off their crystal balls and take a peek into the new year. I have a prediction for 2016, and it’s based on two things I’m seeing in the payments industry. First, we see evidence of the failure of PII-based fraud prevention methods in the massive amounts of data stolen during breaches and then packaged for consumption on the black market. Second, the growth of mobile platforms continues to skyrocket, and this requires a quick and frictionless transaction experience. How will this improve risk prevention?
Based on these factors, my prediction for 2016 is that adoption of passive behavioral biometrics for user authentication will increase. The only way to protect customer data and accounts and offer a painless user experience is with passive behavioral biometrics. In fact, the mobile space is a perfect pairing to biometric and behavioral analytics technologies because of the increased number of biometric measurement tools built into every tablet and every smart phone.
Identifying Legitimate Customers
The cost of fraud to retailers is $9 billion annually, but that’s nothing compared to the cost of false positives, where legitimate consumer purchases are canceled due to overzealous traditional fraud prevention methods. This represents about $118 billion in lost revenue, according to the report “Future-Proofing Card Authorization” from Javelin Strategy & Research. And as criminals become more adept at successfully jumping Knowledge Based Authentication (KBA) hurdles, legitimate customers push up against ever-greater levels of friction. Risk management leaders need to find a better way to identify their valued customers and identify those who present elevated risk.
Behavioral analytics lets business become better predictors of risk while minimizing the friction legitimate users face. Biometric and behavioral analytics greatly increases industry efforts to devalue stolen data, eventually reducing the number, scale and impact of data breaches worldwide. This greatly benefits users, allowing them a frictionless and safe online experience, while continuing to protect their accounts even if their logins and passwords have been compromised. Allowing good customers to continue to interact safely online will be the most important issue in 2016.
What to Focus On Now to Improve Risk Prevention
The key focus going forward—particularly as users are looking for that fast, no-hassle experience we’ve come to expect on our tablets and smart phones—will be eliminating false positives and removing friction across the mobile ecosystem. By harnessing the power of behavioral and biometric analysis, organizations can predict fraud with a very high degree of accuracy by identifying the real user behind the device. Focusing on the good users—and decreasing customer abandonment and attrition—can put billions back into merchants’ pockets. The ability to move beyond the machine and truly know your customer will be the differentiator that allows companies to bypass the knowledge-based authentication arms race with frausters and and leap ahead in terms of customer satisfaction and retention.
In the new year, there are three focus areas for Chief Security Officers (CSOs) to be aware of in order to achieve this goal of frictionless user authentication:
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