Strong security with frictionless customer onboarding

In financial services, how do you balance robust authentication and a smooth, frictionless onboarding experience for customers?

Thanks to innovations like FIDO Passkey authentication, balancing strong security with a frictionless customer journey is achievable. Traditional methods, like passwords and one-time passcodes, often frustrate users because they are forced to create and manage complex passwords, and this does not solve the problem that a knowledge-based authentication factor is vulnerable to phishing attacks.

The move to Passkeys is accelerating across industries. For example, Google is pushing 2 billion Gmail users to adopt Passkeys over passwords. In contrast, Dashlane, a leading password manager, recently launched an option that lets users create an account without a password. These shifts reflect a broader industry recognition that the future of authentication is passwordless, and financial services must lead that change.

Fraud during onboarding and account access continues to evolve. What are the main weaknesses in legacy authentication systems, and how does your organization address these vulnerabilities?

Legacy authentication systems suffer from fundamental design flaws. Password reuse across multiple platforms creates systemic vulnerabilities. When one service experiences a data breach, criminals can access accounts across the entire digital ecosystem. This credential stuffing represents a persistent threat to financial institutions during customer onboarding and beyond.

Modern passwordless Passkey authentication eliminates these vulnerabilities. Passkeys are designed to work both within native applications on mobile phones and with web browsers, following the FIDO Passkey standards, which creates an unbreakable link between the user’s biometric identity and their trusted device. Transaction-specific authentication takes this further, binding each payment approval to unique cryptographic signatures that cannot be replicated or reused.

This approach significantly reduces fraud vectors while meeting different countries’ regulatory compliance related to Strong Customer Authentication using multi-factor authentication, i.e.  PSD2’s Strong Customer Authentication requirements in the EU.

Instant payments demand real-time fraud detection. How do you implement this without disrupting the fast, smooth user experience that customers expect?

Instant payment systems require fraud detection within milliseconds of transaction initiation. The key lies in sophisticated behavioural analytics that operate transparently in the background. Machine learning algorithms analyse transaction patterns, device characteristics, and user behaviour to identify anomalies without impacting legitimate users.

Risk-based authentication ensures that additional verification steps only activate when genuinely suspicious activity is detected, maintaining seamless experiences for legitimate transactions while blocking fraudulent attempts.

Real-time fraud detection helps balance the risk of the transaction with the amount of friction applied to protect all parties in the transaction.

How do Passkeys outperform both passwords and traditional multi-factor authentication (MFA) methods (i.e. OTPs) in terms of security and user convenience?

Passkeys deliver superior security and usability compared to legacy authentication methods. Unlike passwords, which rely on shared secrets vulnerable to theft, Passkeys use asymmetric cryptography with private keys that never leave the user’s device. Authentication occurs through biometric verification or device PINs, eliminating the need for memorized credentials.

This technology particularly benefits financial institutions that are subject to strong customer authentication (SCA) requirements. Passkeys inherently provide multi-factor authentication, combining something the user has (their device) with something they are (biometrics) while delivering a streamlined user experience.

All customers need is the touch of a thumb or a glance at a camera, and, thanks to the FIDO-based technology under the hood, the second factor remains invisible to the user. That’s how banks can provide two-factor authentication that feels like one, a perfect balance of security and simplicity.

For banks,  Passkeys used during account login provide seamless SCA (Strong Customer Authentication) while satisfying regulations like PSD2. The concept of SCA is that fraudsters would have to break not just one authenticating factor, i.e. gain physical access to the device (possession factor/something I have) and replicate a user’s biometrics (inherence factor/who I am), an incredibly difficult task.

And this isn’t just theory, real-world results are emerging. Mastercard launched Passkey authentication in Europe, achieving 50% e-commerce adoption among participating merchants. That’s a clear sign that Passkey enhance security and boosts conversion by removing friction.

How do new technologies like Secure Payment Confirmation (SPC) for e-commerce payments and the integration of Passkeys into Click to Pay contribute to both security and user experience in the payments ecosystem?

Secure Payment Confirmation (SPC) transforms e-commerce authentication by enabling transaction approval directly within merchant websites while maintaining bank control over the authentication process. This approach reduces cart abandonment rates while ensuring robust Passkey security standards.

Integration with Passkey-enabled Click to Pay creates a seamless checkout experience. Customers authenticate using device biometrics, while payments benefit from cryptographic protection significantly reducing transaction failures and fraud attempts.

This combination addresses merchant and customer pain points: merchants see improved conversion rates, while customers enjoy faster, more secure transactions without compromising their financial data.

Modern authentication technologies like Passkeys offer financial institutions an opportunity to eliminate security vulnerabilities while improving customer experiences. The transition to passwordless systems requires careful planning and expert implementation to ensure success.

Successfully implementing passwordless authentication requires more than technology deployment; it demands expertise in security, compliance, and customer experience optimization combined with a holistic authentication strategy. Financial institutions need partners who understand the intersection of regulatory requirements, fraud prevention, and user experience design.

The most effective partnerships deliver comprehensive solutions that protect customers while meeting evolving compliance standards. This includes support for emerging regulations, integration with existing systems, and scalable architectures that adapt to changing security threats.

By partnering with authentication specialists who understand financial institutions’ unique challenges, banks can confidently implement passwordless solutions that enhance security and customer satisfaction while maintaining regulatory compliance.

Ready to transform your customer authentication? Contact G+D Netcetera to learn how our authentication solutions can help your institution balance security requirements with customer experience expectations. Get in touch with our experts.