In 2017, eMarketer predicted that nearly 60% of the US population will consist of digital banking users and that over 150 million adults would access their bank, credit card, or brokerage accounts at least once a month via digital channels. In addition, an increasing percentage of customers are performing financial management activities online or on a mobile device. This means financial institutions that want to distinguish themselves must refine their online and mobile services.
However, financial institutions must also surmount security risks and guarantee an equally safe and convenient experience for such digital platforms. As part of a survey, Fiserv reported that security is critical when it comes to digital banking: 64% of consumers who don’t use mobile banking say it’s due to security concerns. So in order to have more people be comfortable with actively using digital banking, banks must ensure effective security.
Not too long ago, banking leaders convened at the American Banker’s Digital Banking Conference to discuss how they can reassure customers about security. Together, they shared their thoughts on the future of security for digital banking and the following are the next three trends to expect:
ATMs with No Cards or Pins
Some large banks like Bank of America and Wells Fargo have already began making improvements to customer experiences with the ATM by allowing customers to perform transactions without removing a card from their wallets. They have introduced new ATM apps that do not require the customer’s card, making customer experiences quick and efficient. Customers can simply make deposits with their digital wallet or use their smartphone to pull out cash.
Yet, these services require a very basic method of security: the use of a PIN and/or One Time Passwords (OTPs). Such passwords can be difficult to remember, inducing users to record them or use the same one for several accounts which will inevitably compromise strong security. This simplistic method of security will most likely be phased out, especially after the National Institute of Standards and Technology (NIST) stated that OTPs delivered through SMS are inherently insecure.
Meanwhile, the collaboration of Samsung’s SDS Nexsign™ FIDO-certified biometric authentication solution and Diebold Nixdorf ATMs will enable customers to complete ATM transactions without any card, PIN, or OTP. Authentication to the ATM will be made possible by customers’ biometrics (fingerprint, voice, facial scan, etc.) and such technology will offer more user friendly and convenient services to customers. Even more, this solution will also offer equal or better security compared to using PINs or OTPs.
Improvements on Frictionless Authentication
Many enterprises have already implemented biometric authentication into their security platform. This is a step in the right direction for user experience and new developments promise to continue to make authentication more convenient and user friendly. Before long, a formal authentication process will no longer be necessary at all for users to access secured applications/tasks. Digital platforms will constantly verify users based on their intrinsic behavior and actions. For instance, a user’s grip on his or her phone, typing pattern, or parlance of saying a given passphrase.
Recently, there has been a decreasing trend in the number of bank branches. DepositAccounts of Lending Tree posted that there’s been a decrease of almost 8,000 branches between 2009 and 2016.
Sooner or later, banks will perform their traditional branch functions, like loan initiation, from a central location and communicate with customers online through secure video chat technologies. This will require new authentication methods and security solutions. And new solutions are currently produced to allow banks to provide secure authentication for these remote banking procedures. For example, some solutions will use facial recognition as well as live action to ensure users are who they claim to be. The digital platform will ask the user to take pictures of certain forms of ID and take several selfies.
After the platform verifies the user’s identity, biometric authentication can be continually used throughout the customer’s remote banking session. Throughout the remote session, banks will offer e-signature technology for customers to safely sign electronic documents. In addition, there will be e-forms of application forms for new credit cards, loans, and accounts.
As digital banking continues to serve as a distinguishing factor amongst financial institutions, these new security solutions will provide the assurance and convenience customers need to be on board with these technologies.