We’re seeing massive changes in the authentication landscape today, with a shift away from passwords toward biometrics, as well as a focus on mobile and other innovative technologies to enable these trends. This movement is readily apparent in many industries, from government to healthcare, but none so strongly as financial services. The rapid pace that biometric authentication is being adopted for mobile banking and credit card transactions is astonishing, and that’s to match the equally impressive fraud that this industry sees.
Combatting Digital Transaction Fraud
For financial services companies like Mastercard, combatting fraud and improving user authentication is an essential part of business. The credit card provider presented research at connect:ID last week that shows digital fraud is three times higher than physical fraud, even with a lower approval rate for authentication challenges.
This shows that not only are customers being inconvenienced by declined purchases, but those declines aren’t actually helping combat fraud. One in six US consumers experiences card declines for legitimate purchases, resulting in loss of business for retailers and up to a 25 percent drop in card usage. The implications go well beyond a single, failed authentication attempt, which is why we need stronger solutions for proving the identity of the person behind the card. Simply canceling a transaction for suspected fraud isn’t enough, and is only damaging the end user experience and economy.
Where Biometric Authentication Helps
What biometrics provides as part of the solution to this problem is actionable proof of who the person behind the transaction is. This improves authentication success and helps to drastically reduce fraud rates. These new payment technologies, be it mobile biometric authentication or Mastercard’s proposed new fingerprint sensor built into the card itself, are considered to be more trustworthy and convenient for all parties involved.
What we’re really seeing here is an evolution not just in authentication, but biometric technologies as a whole. The more these techniques improve, the better we’re able to secure our financial data and privacy, without making it a hassle to purchase our morning coffee.