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Mar 21, 2022

The importance of user experience during bank authentication process

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The importance of user experience during bank authentication process

Customer experience, or UX, is a continuous process, which is not defined in a specific action, but is valued by the user in each interaction with the bank, either in an application, on the web or in person. A good experience influences how the bank is valued and, for those institutions, it increases the chances not only of keeping customers, but also of them recommending their services to others.

In the digital world, the experience begins at the access to services. This means that the bank’s authentication methods must be designed with a balance between the accessibility of platforms and the security of transactions.

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What is bank authentication and why do we need it?

Bank authentication is the procedure for the user to access the services offered by the bank. This process is more important in the digital world because fraud and identity spoofing are easier for criminals, but it also takes place in face-to-face interaction.

Basically, authentication is a two-step process:

  1. Identification: the user tells the system who he/she is.
  2. Verification: the user proves who he claims to be.

The face-to-face version of authentication in banking usually consists of identifying oneself by name and surname and showing the ID card, but technology is already involved in these processes, as we will see below.

The growth of digital bank authentication

The growth of online transactions, driven by the need to reduce physical contact during the Covid-19 pandemic, has led to a reinforcement of authentication systems in banks and the diversification of these to cover all kinds of needs, from customer onboarding to everyday transactions.

The simplest form is the username + password combination. However, European regulations contained in the second payment services directive (PSD2) require banks to use more secure authentication mechanisms that protect the privacy of customer data: Strong Customer Authentication (SCA).

According to PSD2, strong authentication is based on using two or more verification elements among a list of three factors:

  1. Something known only by the user (a password)
  2. Something owned only by the user (a credit card, a mobile phone, an ID document…)
  3. Something that is the user (a biometric pattern such as signature, fingerprint, the face…).

Strong bank authentication is mandatory when the user accesses his account online, performs electronic payment transactions or executes any action that may involve a risk (for example, modification of personal data).

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Fraud prevention using bank authentication

One of the biggest concerns of users, regulators and providers of digital banking services is the risk of fraud. Digitalisation has led to an increase in phishing crimes and has unintentionally provided an avenue for money laundering on an international scale.

In the wake of technological advances, the EU has developed increasingly sophisticated regulations to prevent fraud, spoofing, phishing and other digital crimes.

Identity verification and Know Your Customer (KYC) measures are part of the prevention and detection of criminal practices. By making access more difficult with biometric authentication in banking or by sending passwords to a specific device, authentication in banking reduces the risk of fraud.

How does bank authentication impact the customer?

A great customer experience depends on many factors. On one hand, institutions must provide simple, fast, and seamless processes that do not create discomfort for the customer. The development of bank authentication and identity verification systems must consider speed and convenience for the user.

However, customer experience has other added factors: users demand that their security is guaranteed, and their data protected. Banks must therefore build trust in their technological choices and in their good practices in accessing services. 

Benefits of bank authentication for the customer

  1. Privacy of highly sensitive banking information is guaranteed.
  2. Risk reduction of fraud and identity theft crimes.
  3. Trust in the institution: your finances are in safe hands.

You might also be interested in: ETSI standards: identity proofing standardisation

Electronic IDentification solutions for authentication in banks

As a provider of authentication services, Electronic IDentification has developed solutions that combine maximum flexibility in use with the highest degree of security to prevent fraud.

The biometric facial technology behind VideoID and SmileID is compatible with EU requirements for multi-factor SCA. It can be used as a second authentication factor in banking and authorise a payment or transfer in a matter of seconds through face recognition.

It is a system that uses artificial intelligence and is incredibly customer-friendly, requiring nothing more than a conventional camera on a mobile device and an internet connection.

These solutions can not only be used in online or remote banking, but also have multiple applications in offices: SmileID serves as an assistant to the salesperson during a transaction, as the face identification algorithm is more secure and infallible than the classic ID card check, as well as digitally storing the entire identity verification process and reducing paperwork. It can also be used as a contactless banking authentication system at ATMs for cash withdrawals or product purchases.

Authentication needs in banking require a specialised and trusted provider that balances regulatory compliance with a satisfactory user experience. At Electronic IDentification we provide biometric authentication banking services in the most convenient way for our customers.

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