Digital Banking Goes Passwordless
The COVID-19 pandemic accelerated the growth of digital financial services as most people shifted to digital banking because people were forced to stay indoors. The growth challenged banks and financial technology firms to provide a secure method of authenticating their customers’ identities and prevent other people from accessing their bank accounts.
Many people used passwords to secure their accounts and continue to do so today. Passwords are a knowledge-based authentication method used to keep unauthorized people from accessing their accounts, and the only way to use them effectively is by using different strong passwords to different accounts. Unfortunately, most people experience password fatigue and use one password for multiple accounts.
Cyber thieves can easily access many different accounts after a successful phishing attack due to how frequently people use one password for multiple accounts. Banks can secure their customers’ accounts even after phishing attacks by shifting to a passwordless approach for identity verification.
Using passwordless login solutions allows firms to comply with different regulations, including Anti-Money Laundering (AML), Know-Your-Customer (KYC), and Payment Services Directive 2 (PSD2) as part of their due diligence. Complying with such regulations allows firms to ensure that only their legitimate clients can access their accounts while providing seamless account access and authentication experience.
Banks can implement passwordless logins using FIDO2 authentication, which leverages biometrics, cryptographic keys, and pattern swipe knowledge-based authentication. FIDO2 uses iOS and Android mobile devices that support facial and fingerprint recognition for device authentication, which allows for mobile biometric verification.
Firms can secure their customers’ accounts and have a more reliable authentication method by switching to passwordless logins. Passwords are no longer effective as an authentication method since hackers can easily figure out people’s bank account details once they find out their social media logins. Passwordless logins can eliminate the risk of fraudulent takeovers. For more information, see this infographic by authID.