In my previous blog post, I discussed the differences between a static and dynamic approach to leveraging biometrics for fraud detection. The second part of this blog series will focus on behavioral biometrics, a form of dynamic biometrics that many financial institutions have adopted in recent years to drive continuous protection and banish friction in digital channels.
In the last two decades, the use of biometric security applications has catapulted alongside digital innovation. This is due in large part to digital transformation in traditional industries, identity-based functions shifting to mobile applications, and a steep rise in fraud and identity theft in new digital channels.
According to forecasts by Acuity Market Intelligence, 98% of all smart mobile devices in use will be biometrically enabled. Moreover, Accuity’s research has stated that more than 16.7 billion biometric apps will be downloaded annually, and more than 1.37 trillion transactions, that require some level of biometric authentication, will be processed on mobile devices each year.
Financial institutions regularly use device identity for fraud prevention and to authenticate users at login. It is one of many controls that can be used to safeguard online interactions. But as with other security tools that rely on static measures, cybercriminals are finding ways to circumvent device ID. Taking over user accounts is one of the largest tactics, and in 2019 alone, account takeover fraud cost U.S. businesses nearly $7 billion in losses. Secondly, financial institutions are experiencing significant rates of fraud in the account opening process and have difficulty accurately separating genuine applicants from cybercriminals. Because new customers have never been seen before, their devices haven’t either, making device identity unhelpful for account opening protection.
The pandemic provided many financial institutions with a digital reality check as they scrambled to accommodate the surge in digital channel usage. As the future of money is changing, this has also presented financial institutions with an opportunity to rethink current technology investments as they adjust their business models and take a step closer to a digital-first strategy. With an expected increase in digital channel investment, preventing digital fraud while improving customer experience will be the key to attracting new customers and retaining existing ones.
Mobile apps, online banking, P2P payments, and more are delivering the simple and fast online experiences today’s consumers desire from their financial institutions. However, many fraud detection solutions continue to undermine the customer experience, adding unnecessary friction in the quest to reduce account takeover, new account fraud, and social engineering attacks.
Fraud and security teams are facing an uphill battle as the COVID-19 pandemic continues to spread around the globe, including the need to secure a remote workforce and protect customers from coronavirus security risks and threats as well as everyday financial fraud, while working remotely themselves. The rapid spread of the virus left organizations little time to prepare, and much has been written about the security concerns of the large-scale shift to a work-from-home world.