Beating the mobile banking conundrum with secure transactions and an easy customer experience

19. September 2017.

By Christina Luttrell, senior vice president of product of client solutions and marketing, IDology

In the past five years alone, the number of consumers using mobile banking apps has doubled. And with 80 percent of the world’s population projected to own a smart phone by 2020, this growth isn’t expected to slow down.

Across the globe, financial institutions are under mounting pressure to meet high consumer expectations, capture and retain market share, and secure mobile transactions – all at the same time. Some are lagging, while others are upgrading technologies and investing in innovation and testing departments. So, how did we get here?

Fraud prevention and customer experience go hand-in-hand

The way we bank is rapidly changing. According to CACI, consumer visits to retail bank branches are expected to drop 36 percent between 2017 and 2022. It’s not surprising that many financial institutions are feeling the pressure to rethink and, in some cases, revolutionize their approach to mobile banking.

Money transfers, bill pay, check cashing and a long list of other banking transactions that were once carried out at a branch or on a desktop computer, are now taking place purely on mobile devices. Largely driven by the fact that mobile is more convenient, it’s especially relevant to digital natives and millennials who are simply more comfortable with transacting on mobile devices.

With this move to mobile comes increased vulnerability, but many banks and credit unions make the mistake of separating fraud prevention from customer experience when in reality, the two should go hand-in-hand. They rely on legacy identity verification and authentication processes that are based in desktop or even in-branch experiences, which for mobile, can be inconvenient, require too many steps and work against a positive customer experience. Too many steps can be off-putting and result in abandonment and attrition, while doing too little to protect accounts increases risk.

Mobile fraud prevention is more complicated

From account opening to reviewing documentation, processes need to be re-thought with the mobile customer in mind.

As mobile becomes more popular with consumers, it also becomes more popular with criminals. Identity thieves are constantly testing new ways of exposing device vulnerabilities by masking their identity and device attributes.

As transactions move away from the branch, Know Your Customer (KYC) isn’t going away, instead it is extending to the device, ushering in a new requirement to KYD or “Know Your Device.” Increasingly, KYC applies not only to the consumer, but also to the mobile device.

Further complicating authentication, data breaches have created a huge marketplace for identity and account data to be sold and purchased on the Dark Web. As a result, a “perfect identity” or a seemingly legitimate and matching set of ID credentials, can no longer be taken at face value. This is why “knowing” the device has become so important.

At the same time, many of the older password or two-factor authentication options are easy for fraudsters to compromise and are no longer viable. Even one-time passcodes for two factor verification delivered via SMS are now considered less secure due to the proven ability of fraudsters to intercept those messages. Not to mention the clunky often frustrating user experience.

The answer to the mobile banking conundrum

Meeting high demand for quick, easy access to accounts while addressing the complexity of security vulnerabilities that come with mobile is possible. Innovative financial institutions are striking a balance between secure account access and a fast, seamless experience by combining device and activity attributes to create a more complete digital footprint of the customer. And, they’re doing it behind the scenes, making mobile transactions effortless for customers.

When the dust settles in the mobile banking marathon, the winners will be the ones who really know their digital customers. So how can you step up your mobile banking game?

Simplify mobile security. Make customer experience part of the fraud prevention conversation. Just because a customer is interacting with your business on a mobile device, doesn’t mean they should have to go through a lengthy, multi-step process to verify their identity. Rethink how you interact with mobile customers and leverage technology and innovative ways to make verification quick, effortless and safe.

Rethink identity. Go beyond static attributes and think about customer identity as more than a name and address. With advances in technology, it’s possible to profile and authenticate a customer behind the scenes using elements like mobile carrier data and attributes of their mobile device.

Stay on top of trends. Don’t be afraid of advances in technology and the dynamic ways that they are being compromised by fraudsters. Knowledge is power.

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