6 Months Until PSD2 2.0: The Start Of Strong Customer Authentication

Rene Hendrikse

EMEA MD at Mitek

Views 227

6 Months Until PSD2 2.0: The Start Of Strong Customer Authentication

13.03.2019 09:45 am

“With open banking, consumers can now benefit from better deals, access to new products and services, and better control over their money. For businesses, it has enabled innovation and increased competition in a thriving marketplace. But there is also a dark side of opening up the world of banking – it becomes possible to not only defraud a consumer’s primary bank, but also their other chosen financial providers. As open banking takes off, the potential for fraud will grow exponentially. 

“To tackle this, the regulator has introduced ramped up identity checks, with the addition of rules around ‘strong customer authentication’ (SCA) which come into force in six months’ time. Now is the time for banks to recognise the need to invest in fraud prevention technologies, to combat the increased threat of fraud in an open banking landscape. With SCA, banks will require every customer to be authenticated by at least two of the following criteria: something they have, something they are, and something only they know. This could include an ID document, a biometric identifier, and a security question, going beyond simply a card and a pin – as is the current standard. This introduces an additional layer of security to defend against the threat of fraud as open banking grows – but it also presents a challenge for organisations to implement in the next six months.

“Banks and FS firms must focus on putting the technology in place to be able to verify customer identities in line with PSD2. Regtech, technology that helps achieve regulatory compliance, will play a more important role than ever before as open banking grows. Investing in regtech means that financial institutions will be able to put more emphasis on stopping account opening fraud and monitoring for fraudulent activity.

“For example, identity verification technology handles the “are” and “have” of SCA, by verifying an ID document against a selfie. AI-driven anti-fraud technologies will also be crucial to monitoring for and stopping fraud when it occurs. Within the next six months, investing in the right technologies and implementing them quickly and efficiently should be top of every bank’s agenda.”

Latest blogs

Duena Blomstrom PeopleNotTech

Questioning Agile

I get that request all the time. People from all industries who have had no brush with the concept and who have seen some of my articles and can see my borderline-obsessive passion when it gets mentioned want me to provide a Cliff notes version to Read more »

N/A Red Deer

The hidden problems Europe uncovered during unbundling

This is the second in a three-part series of articles to help US asset and hedge fund managers answer their clients’ questions about the unbundling of payments for research and trading and understand what a best in class research management system Read more »

Sarah Jackson Equiniti Credit Services

PSD2 and consumer credit: how will open banking impact the market for unsecured loans?

15 months after open banking launched in the UK, consumer understanding of what it means remains low. In January this year, research showed that just 9% of British adults had used open banking services, and less than a quarter (22%) had even heard Read more »

Alex Nelson Investec Click & Invest

Spring Statement comment: "UK a land of opportunity for investors" - Investec Click & Invest

The chancellor's Spring Statement confirms that, despite Brexit uncertainty, the strength of the underlying economy means there are great opportunities in the UK for equity investors. British stocks have, over the last thirty years, been the darling Read more »

Danny Healy MuleSoft

PSD2 Deadline Tomorrow - How Should Banks Respond?

Tomorrow marks PSD2’s next deadline – the point by which banks must make their open APIs available for testing by payment and account information service providers. Danny Healy, financial technology evangelist at MuleSoft has thoughts on it. Danny Read more »

Magazine
ALL
Free Newsletter Sign-up
+44 (0) 208 819 32 53 +44 (0) 173 261 71 47
Download Our Mobile App