Preventing fraud with digital authentication

Aite Group explores emerging security solutions for digital commerce.

Banking and retail transactions are increasingly moving online and on mobile, making digital commerce the new norm for consumers. At the same time, cyber criminals are getting smarter with rapidly evolving and innovative attacks on these digital transactions. This shift highlights a need for better ways to distinguish real consumers from fraudsters in the digital world.

In a recent research report, Aite Group explores new opportunities to enhance the customer journey and evaluates the pros and cons of emerging authentication solutions, such as biometrics, device identity and behavior pattern analysis.

The future of digital commerce means better experiences for users without sacrificing strong, proactive fraud prevention. These authentication technologies can bring together both greater security and optimal user experience. Ideally, consumers should be able to choose their preferred means of authentication.

While these options can be beneficial for the consumer, there is still a lot of work to do on the part of financial institutions and merchants as they begin to understand the value of these technologies and determine the best ways to orchestrate effective solutions. One barrier they face is that a great deal of complexity still exists within the authentication marketplace; technologies do not always work together to create positive user experiences. Financial institutions and merchants may also experience internal resource constraints resulting in multi-year development timelines.

Aite’s report examines these pain points and what the industry needs in order to accelerate adoption of stronger authentication solutions that keep all transactions safe, secure and convenient. See our infographic and request a copy of the full report.

Digital authentication

New opportunities to enhance the customer journey.
An illustration of a city and icons depicts a variety of places that digital authentication can be used.

Customer expectations for seamless experiences are being raised every day, and businesses must focus on delivering superior user experiences — or risk losing business. At the same time, experiences are moving online and to mobile as fraud attacks become more sophisticated.

How can businesses create elegant user experiences with effective fraud prevention?

By intelligently deploying targeted authentication tools that cut through the confusion of the authentication landscape.

Navigating the complex authentication landscape and establishing a common lexicon

Illustration of a magnifying glass.

Detection

The ability to identify suspicious patterns indicative of fraudulent activity.

Illustration of a person with a check mark on the lower right hand side.

Authentication

Assesses the likelihood that a person is who they say they are. This is validated using something they have, something they are or something they know.

Illustration of binary numbers inside a yellow square.

Verification

A subset of authentication. Compares the data input by the user with external data sources to determine the likelihood that the person presenting the data is legitimate.

Authorization

Asserts that the person is permitted to perform an action. The issuing bank then determines whether to approve or decline a given transaction.

Authentication methods — breadth and depth

Authentication methods — breadth and depth. Column 1- device data. Column 2- Behavioral patterns. Column 3- Behavioral biometrics. Column 4- Physical biometrics. Column 5- User data verification. Column 6- credentials. Column 7- Out-of-band.
  • Device location
  • Device identity
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  • Social media
  • Knowledge-based
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  • Email
  • SMS

Device malware
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  • Identity documents
  • Phone data
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  • Phone call
  • App push
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  • Identity data element
  • Suspicious entity
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Transaction signature

Balancing ease of use and security

Businesses want to mitigate fraud, but that's often at the expense of a good user experience. It doesn't have to be. Here is how different authentication solutions balance fraud prevention with user experience ⁠— and which ones can offer the best of both.
An illustration of an arrow and icons are used to depict Visa’s many authentication solutions that help prevent fraud.
Balancing ease of use and security. Column 1- Security. Column 2- High friction. Column 3- Medium friction. Column 4- Seamless experience.

High
  • Hardware security token*
  • Mobile app push
  • Identity document verification
  • Iris biometric
  • 3D facial recognition
  • Behavioral biometrics
  • Device identity
  • Behavior patterns

Medium
  • SMS One-time password (OTP)
  • Identity verification
  • Eye vein biometric
  • 2D facial recognition
  • Fingerprint biometric

Device malware

Low

Knowledge-based authentication (KBA)

Username + password
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* A hardware security token may be a physical device that an authorized user is given to help prove their identity.

The challenge

Every business wants to offer great user experiences while keeping fraud rates low — traditionally, that has been difficult to accomplish.
Illustration of a burglar.

Disjointed solutions

Authentication solutions need to work together in order to ensure there is no disconnect in user experience or fraud detection.

Illustration of a stopwatch.

Constrained resources

Strapped internal government resources can result in long lead times that make it difficult to get projects done.

Illustration of a finger pressing on a tablet screen.

Long approval times

Vetting outside vendors that offer the lowest authentication technology can be a long process.

The solution

A fraud and authentication platform can help address these challenges.
Illustration of a page tag on a browser page.

Universal API

Universal APIs simplify initial integration and allow for connectivity to multiple service providers.

Illustration of a store front with a person at the door.

Streamlined contracting

Streamlined contracting simplifies access to all services available through the platform.

Illustration of three circles with a bigger circle connection them.

Policy and scoring engine

A policy and scoring engine allows authentication services to work together to determine transaction risk.

An authentication platform enables simple access to multiple service providers

Using Apple Pay at a contactless-enabled terminal inside a taxi.

Authentication hub

Businesses can interact directly through the authentication hub with a single communication layer. Multiple vendors are collectively managed by the authentication hub.