Why 53 Percent of Banks Think Security Controls Negatively Impact Customer Experience

How do you tell if a legitimate customer or a fraudster is signing into your online banking platform? How do you know if the authentication measures your organization is using are effective? How important is it to your organization to provide a seamless customer experience while maintaining adequate security controls?

The Problem With Customer Security

These are all important questions to consider when trying to create a balance between cybersecurity and a positive customer experience. In ISMG’s “Preserving the Customer Experience Survey,” half of the respondents didn’t know or were only somewhat confident in their company’s ability to authenticate legitimate customers online. Additionally, about half also believed that some of their security controls are perceived as inconvenient. However, 99 percent think that preserving the online customer experience is going to be a high priority in 2017.

The one thing that cybercrime experts do know is that cybercriminals and fraudsters are very adaptable. They will leverage, to their advantage, the services and offerings that financial institutions deploy to satisfy customer convenience and experience. They also use new technologies to further their schemes and circumvent security measures, such as using 3-D printers to create cutting-edge skimmers. When it comes to online banking the same is true: Cybercriminals will find ways to get around today’s security controls. In fact, they already have!

Today’s Security Controls

According to the survey, most organizations meet the baseline controls set by the FFIEC’s 2011 guidance. While those baseline controls are important to have in place, they are now 6 years old. For example, one-time passwords delivered via SMS are a popular security measure, often used today in two-factor authentication. While this is an effective control, it can be defeated by malware and fraudsters employing a man-in-the-middle (MitM) attack.

According to Shaked Vax of IBM Security, “I would not be surprised if in the next year or two, these SMS messages will no longer be considered secure — much like passwords are today.”

The Balancing Act

Almost all respondents to ISMG’s survey indicated that creating a positive online customer experience was very important. At the same time, approximately half said they felt that their security controls were somewhat inconvenient to customers. About one-third of the respondents said that customers have left their organizations because cybersecurity controls degraded their experience.

Fraud prevention and security controls are not unlike a seesaw, with security controls on one end and the customer experience on the other. As more security controls are put in place, weighing down the security end of the seesaw, customer experience is left stuck in the air.

More and more organizations are adopting behavioral biometric solutions that offer customers a transparent and seamless experience. These solutions allow your organization to adjust the fulcrum on the seesaw, giving way for both enhanced security and a good customer experience. These solutions analyze the customer’s patterns of behavior while interacting with your website, including mouse movements and clicks in context. The solutions operate in the background and are therefore transparent to the customer and much harder for fraudsters to compromise.

One Size Does Not Fit All

The key is identifying the right type of control to maximize fraud prevention for the individual customer. Not all customers are the same. Millennials have different expectations of their online banking experience than do their baby boomer parents. Similarly, not all online banking interactions carry the same risk. So why treat customers and the way they engage your organization online the same way?

The companies that can offer experiences tailored to the customer, and their individual needs and expectations, will lead the way in the coming years. Behavioral biometric solutions using cognitive technology to effectively assess identities throughout the online journey eliminates the need to perform overbearing authentication for certain transactions.

Conclusion

The ISMG survey provides good insight as to how banks view the importance of preserving the customer experience online. However, it clearly illustrated that many banks believe they are not hitting the mark, with about half indicating that they believe their security controls are inconvenient. But one thing is crystal clear: Almost all banks put a very high priority on improving the customer’s online experience.

Download the complete ISMG Report on Preserving the customer experience

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Steven D'Alfonso

Senior Financial Crimes Intelligence Specialist, IBM Red Cell

Steven D'Alfonso joined IBM in April of 2013 as an inaugural member of the Red Cell team. Red Cell is a team of highly skilled subject matter experts in the field of counter financial crimes. The primary purpose of the team is to become a key thought leader in financial crime intelligence. Red Cell is tasked with identifying current and emerging trends, development of thought provoking research papers, strategy development, creation of profiles to detect/prevent financial crimes, and providing input into the creation of application/software to maximize the use of inherent and external intelligence.