eBook: Beyond the Basics: A C-Suite Checklist for Banking Security Strategy
To guide you toward developing and maintaining a secure banking security strategy, ASEE offers a detailed security checklist to assist you in the process.
As we look ahead, considering both new legislative developments and the progression of cutting-edge technology trends, the challenge of securely verifying customer identities online becomes increasingly complex. Consequently, it's imperative for financial institutions to actively explore innovative solutions.
To assist you in understanding this environment and guiding you in making the necessary strategic adjustments, we have compiled a guide to the top authentication trends to keep an eye on in 2024
Globally, the banking and finance sector is witnessing significant growth. As this expansion continues, consumers are increasingly adopting tap-and-go payment technologies, presenting a challenge for IT security leaders.
Traditional password-based customer authentication methods have been the norm for decades. However, the escalating frequency of cyber-attacks renders these methods unreliable. The shift towards passwordless authentication offers a solution to mitigate the risks of account fraud and hijacking, making it an optimal choice for the fintech and banking sectors.
Implementing passwordless authentication in the banking sector offers several business benefits beyond enhancing security.
Passwordless authentication methods, such as biometrics or single-use codes, simplify the login process for users. This streamlines access to their accounts, reducing friction and frustration associated with remembering and entering complex passwords. A smoother, faster login process can significantly improve both customer and employee satisfaction and loyalty.
Password-related issues, such as resets and recoveries, often account for a substantial portion of customer support tickets. By adopting passwordless authentication, banks can significantly reduce the volume of these requests, leading to lower operational costs. This efficiency not only saves money but also allows customer service resources to be allocated to more complex and valuable client interactions.
As digital banking evolves, offering innovative and user-friendly authentication methods can set a bank apart from its competitors. Adopting passwordless authentication demonstrates a commitment to using cutting-edge technology to enhance customer security and experience. This forward-thinking approach can attract tech-savvy customers and position the bank as a leader in digital banking innovation.
PSD3 and PSR are major revisions of the European payment regulation. As these updated regulations approach, platforms and marketplaces must reassess their reliance on certain exemptions like commercial exemptions or continue to utilize regulated payment service providers for their payment solutions.
With the introduction of PSD3/PSR and forthcoming guidance from the EBA, businesses will need to constantly evaluate their compliance with Strong Customer Authentication (SCA) requirements. Payment service providers that have integrated SCA enhancements into their authentication systems can assist in optimizing the frequency of transactions requiring SCA and improve the effectiveness of two-factor authentication, thereby reducing fraud.
Also, the new regulation mentions spoofing fraud. The banks will be liable for scams committed through spoofed calls and messages that contain their masked caller ID. By implementing spoofing protection, they minimize the consequences of fraud and are staying aligned with the latest directive.
Throughout 2024 and 2025, the European Commission, the European Parliament, and the Member States of the EU will complete the formulation of these new regulations. Following this, PSD3 will need to be incorporated into the national laws of EU Member States. Although the exact timeline for negotiation and implementation is currently unclear, it is not likely that these regulations will be enforced before 2026.
Social engineering threats, including phishing, identity theft, and notably, caller ID spoofing, persist as significant challenges for organizations. These schemes exploit human weaknesses to obtain confidential information. To counteract these threats, it's essential to employ a dual strategy that emphasizes both staff education and the implementation of advanced security protocols. Caller ID spoofing, in particular, has emerged as a prevalent form of fraud in the banking sector. The attackers mislead individuals by disguising malicious calls as legitimate communications from trusted institutions.
To the average bank client, an incoming call from a familiar phone number does not pose a threat. As the displayed phone number is coming from a trustworthy source, it makes the attacker’s job that much easier. Unfortunately, there is no security awareness training that can equip the bank’s end users with the tools to recognize if caller ID spoofing is present. However, there are solutions that can help financial institutions remove human error from the equation – Spoofing Protector.
In 2024, a notable trend within the banking sector's security measures is the application of Artificial Intelligence (AI) for mitigating fraud. The finance industry faces substantial challenges due to fraud, which incurs significant annual financial losses. More than a decade ago, leading banks have been employing AI and anomaly detection techniques to identify irregularities and outliers. These methods and technologies have significantly advanced over time.
Currently, AI is instrumental in uncovering various types of fraud, including those related to payments, loans, and the customer onboarding process. Cybersecurity professionals are developing sophisticated machine learning algorithms capable of identifying suspicious and fraudulent activities instantly. Also, AI solutions are being utilized for comprehensive behavioral analysis and the creation of detailed profiles for each customer, tracking their activities to provide valuable insights for mitigating risks and preventing fraud. Therefore, in the year 2024, AI is expected to play an increasingly vital role in the detection and prevention of fraud within the financial sector.
Behavioral authentication is becoming an increasingly important trend in banking security, offering a unique way to secure user accounts. This method relies on analyzing users' behavior, such as how they type, move their mouse, or navigate through apps and websites, to continuously confirm their identity.
This means that even if someone else knows a user's login details, they would still have a hard time accessing the account because their behavior would differ. For banks, incorporating behavioral authentication means they can enhance security against fraud while keeping the user experience smooth and hassle-free. It represents a practical step forward in protecting customers' data and transactions in real-time, without adding extra steps for users to access their services.
The emphasis on secure authentication in banking is driven by necessity rather than being ''just'' a trend. This approach has gained traction primarily due to mitigating security threats and the importance of safeguarding confidential data.
Consequently, there's an increasing call for digital identity verification, leading to the adoption of sophisticated secure authentication strategies. Notably, biometric verification has proven to be an effective countermeasure against fraud in online banking. Beyond enhancing security, biometric methods streamline the transaction approval process, saving valuable time. Banks are also leveraging user-friendly verification interfaces that rely on digital identity technologies.
Digital identities and authentication mechanisms are now critical for protecting users' sensitive information and ensuring they maintain control over their personal data.
Reflecting on the top banking security trends for 2024, it's evident that the banking industry is facing a significant transformation. With the movement towards passwordless authentication, the adaptation to PSD3 regulations, tackling sophisticated social engineering attacks, leveraging AI for fraud prevention, and the standardization of biometric authentication, the sector is actively responding to the changing dynamics of cybersecurity threats.
These initiatives are crucial for enhancing security, streamlining customer interactions, and maintaining the integrity of financial transactions. As financial institutions adapt to these trends, their focus will be on implementing practical, innovative solutions that protect against evolving threats while ensuring a positive customer experience. The road ahead involves balancing security with convenience, a challenge that continuously shapes digital banking.
To guide you toward developing and maintaining a secure banking security strategy, ASEE offers a detailed security checklist to assist you in the process.
Feel free to contact us – zero obligation. Our ASEE team will be happy to hear you out.
