Digital-only banks, by providing banking services through digital platforms, offer convenience. However, the majority of consumers remain reluctant to shift to digital-only banks due to concerns on data security. In light of these concerns and the continuous cybercrime attacks on financial institutions, digital banks have a duty to strengthen their cybersecurity capabilities through passwordless authentication.
Data Security Woes
The US Consumer Affairs reports that cybercrime instances have doubled since the start of the COVID-19 pandemic. Since digital banking and e-commerce have become more commonplace in the past few years, data security issues have also increased for end-users. Cybercriminals have evidently begun to target end-users more often. Consumers are worried about password breaches, property theft, identity theft, and fraud, among others. Digital-only providers are, thus, at the forefront of the fight against cybercrime.
A survey by Pymnts.com revealed that the low-friction user experience offered by digital-only banks is enticing for consumers but the fear of cybercrimes is the number one deterrent. The distrust in digital-only banks is particularly strong among baby boomers and Gen Xers, but also exists among millennials. The good news, however, is that with such heightened awareness of the risks, consumers are more willing to forgo convenience for the sake of safety.
Fortifying Security With Passwordless Authentication
Cyber security has always been a primary concern for the finance sector. Financial regulators have established strict security standards for digital banking to ensure the safety of consumers. However, with ever-evolving methods and sophistication of cyber-criminals, cyber security capabilities must be strengthened continuously.
Strengthening cyber security capabilities for digital-only banks is no longer just about fortifying their organization’s internal data, but more importantly, focusing on protecting the end-users. Knowledge-based authentication have proven to be quite insecure, and less secure over time. Consumers often struggle with creating and remembering strong passwords, the ease with which hackers can decode passwords, in addition to techniques like phishing where users could unknowingly reveal their usernames and passwords, making this security and authentication method a thing of the past.
Passwordless authentication is a modern type of authentication that uses public-private encrypted keys combined with device biometrics to replace knowledge-based authentication. A global alliance known as FIDO supports a set of passwordless authentication standards that leverage public-private key pairs. While the public key is shared with a service, the private user key remains safe as it is protected by the user’s PIN or biometrics, such as a fingerprint or facial recognition.
Passwordless authentication is incredibly convenient for end-users but also among the safest and most secure methods for consumers or employees. If you’re interested in strengthening your organization’s cyber security capabilities, read more about Nok Nok’s industry-leading FIDO platform.