Risk-based authentication, or RBA for short, is a method used by organizations to identify the level of risk for every financial transaction and the level of customer authentication required for each transaction. RBA helps organizations prevent account takeover fraud and other types of fraud attacks by matching the authentication needed for transactions with the risk level. It is also known as adaptive authentication or step-up authentication.
The Rise of Cyber Attacks
Cyberattacks on organizations, especially financial institutions, are increasing. In 2018, there were about one billion cyber-attacks on financial institutions alone. In the first quarter of 2019, about 4.1 billion records were stolen and revealed in about 3800 different cyberattacks. Every episode costs an organization a substantial amount of money in the form of:
- Regulatory fines
- Litigation
- New cybersecurity technology to be implemented
- Negative media coverage
- Protection against identity theft and credit monitoring services for customers affected by the theft
- Damaged reputation causing a loss in sales.
As cybersecurity and technology get more advanced, cyberattacks are getting more targeted and sophisticated. The greatest challenge for financial institutions today is cutting down on fraud losses and meeting compliance requests.
Risk-based authentication offers three main benefits to your organization.
Advantages of RBA to Organizations:
1. Winning Conditions for Growth:
The easy fix for security threats seems to be additional security methods and more robust authentication measures. However, adding too many security layers can be frustrating for customers and ruin the user experience.
When it comes to virtual finance and transactions, the experience needs to be very straightforward and easy. The customer does not need to be reminded continuously that their money might be at risk or under attack.
Studies have revealed that customers do not think about security online until there is a breach. Once that happens, customers directly blame the organization itself. Therefore, better security will improve customer experience and result in customer loyalty, retention, and increased bank services usage.
An RBA solution helps financial institutions implement frictionless authentication techniques like biometrics by leveraging machine learning and personalized rule sets. As your institution grows and expands its offerings and services, RBA helps you to stay ahead of malicious attacks and create a better customer experience every day.
2. Robust Defense Against Fraud:
Cybercriminals are getting better every day. As technology advances, they are improving their skills to become more adept at breaching these technologies. It is easy to hack static passwords, so they became the weak link in a financial institution’s defence system. These attacks used several malware tools to break into a network and establish their presence across servers. They also use Brutus, RainbowCrack and other methods to fake credentials, disarm security systems and keep themselves hidden till it’s too late.
The best way to counter these malicious attacks is to combine risk-based authentication and a risk analytics engine. This will help provide a more flexible, layered, risk-based approach to authentication. A good RBA platform can analyze a wide range of inputs across channels and decide the level of authentication and security required for each transaction in real-time.
RBA collects a series of risk scores to evaluate every transaction. As their predictive models learn more, this risk score accepts various inputs and becomes more accurate as a result. Over time, this becomes a highly reliable indicator of emerging fraud patterns. The risk level is based on an entirely contextual perspective that includes user behaviour, transaction data and device data. This makes it difficult for fraudsters to impersonate all of these factors without getting found out entirely.
3. Regulatory Compliance Achievement:
Banking regulations are constantly changing to help banks fend off hackers. The security compliance rules can be quite extensive, with significant repercussions for non-compliance. Organizations need to be agile, vigilant, and consistently improve compliance strategies by implementing new technologies.
One of the main benefits of an RBA solution is achieving regulatory compliance. If it uses a combination of a risk engine and machine learning to detect fraud better, the result will be a significant amount of time saved in testing and deployment.
Implementing Risk-Based Authentication In Your Organization:
Global card losses due to fraud amounted to almost $23 billion in 2016. This problem is particularly significant in the US because it currently leads the world in losses due to card fraud. In 2016, the losses suffered within the US alone was $9 billion, about 40% of all global losses. The number of bad transactions and frauds also rose by 34% from 2013 to 2016. The larger share of this burden falls on e-commerce and m-commerce vendors as compared to physical retailers.
Your organization needs an intelligent risk-based authentication solution that can help you leverage data insights for real-time decision-making. This will help you gauge transaction risk, mitigate fraud and ensure seamless transactions for your customers.