Banks, financial services firms and insurers should switch to orchestrated ID and authentication management

Payments Cards & Mobile spoke to Martin Zeisel, Principal Consultant, Payment and Identity at Netcetera, about the impact of upcoming regulation on authentication and identity management – and how banks, financial services providers and insurers (BFSIs) should prepare. 

PCM: How will upcoming regulation change BFSI approaches to authentication?

Martin Zeisel (MZ): First of all, it’s important to look at why regulation is changing. New forms of fraud are rising at an alarming rate – and traditional fraud defenses are not coping that well with these new challenges. For instance, card fraud is set to rise by more than 21%* over the next four years, as fraudsters adopt new AI-driven fraud methods.

In response to the changing and growing threat to financial services firms – plus the fact that a growing proportion of business is being conducted online – regulators are introducing tighter requirements. In Europe, we already know that the third payment services directive, PSD3, is intended to enhance the requirements of its predecessor when it comes to authentication, while the Digital Operations Resilience Act (DORA), due to be implemented from 1 January next year, will place growing responsibilities on BFSIs to manage identity not just across their digital estate, but also to strengthen security with their suppliers and partners.

“BFSIs should see this as an opportunity to pick up more customers and grow revenue, rather than a compliance requirement.”

Martin Zeisel, Principal Consultant, Payment and Identity at Netcetera

BFSIs need to have solutions in place that meet these growing regulatory requirements – and respond to heightened threats – while offering better convenience, speed and security to users. That’s because users continue to drop out of online onboarding and transaction processes, put off by what they see as excessive inputs and authentications. BFSIs should see this as an opportunity to pick up more customers and grow revenue, rather than a compliance requirement.

PCM: What role does authentication play in an BFSI’s relationship with its customers?

MZ: Most obviously, BFSIs act as the providers of consumer protection throughout their relationship with consumers. Authentication helps to underpin consumer confidence and trust in their bank, insurer or financial services provider, whether that’s through Strong Customer Authentication (SCA), multi-factor authentication (MFA) in combination with biometric and passwordless authentication methods.

“Where ID and authentication are orchestrated they increase customer confidence and brand loyalty, leading to higher revenue, adoption of a wider range of products, and better long-term customer profitability.”

Martin Zeisel

Principal Consultant, Payment and Identity at Netcetera

The good news is that, if properly designed and implemented, these systems can deliver user benefits across the board, including faster, less complex and lower friction onboarding; faster, smoother log-ins to trusted websites and faster, smoother and less complex checkout online. Where biometric factors are used, these benefits can also apply in the physical world as much as for digital experiences. The authentication and activation of new products and services – from payment cards to new account enrolment – is also improved.

Study after study tells us that where ID and authentication systems are properly designed and implemented, they deliver all these benefits – and increase customer confidence and brand loyalty. That leads, in turn, to higher revenue, adoption of a wider range of products, and better long-term customer profitability.

PCM: How does orchestrated authentication benefit a business?

MZ: I’ve outlined some of the operational benefits above, but there are also wider strategic benefits. For instance, the ability to flexibly configure authentication workflows opens up the opportunity to provide more automated customer journeys, reducing the cost of customer service.

Secondly, orchestrated digital ID and authentication give BFSIs access to more data about how customers use their services, enabling the BFSI to perform better analysis of usage patterns and continuously improve user experiences. With more orchestration, BFSIs can also support more authentication options and modernize long-standing authentication methodologies. Finally, orchestration makes it easier to offer multi-channel customer access options, from physical kiosks and branches through to mobile and web access.

PCM: What is Netcetera doing to help BFSIs respond to these opportunities?

At Netcetera, we have created a Customer Identity and Access Management (CIAM) solution called Netcetera Identity that focuses on establishing, managing, and controlling a consumer’s engagement with a business or other organization’s applications, web portals, and digital services.

This is a white-label solution ready for BFSI’s own branding and logos, as well as tailoring for the specific B2B and B2C needs of their business. It is fully scalable in terms of user numbers and usage volumes, and compliant with industry standards such as PCI-DSS.

Ultimately, our goal is to act as a single provider of all BFSI digital identity requirements on an “as a Service” basis anywhere in the world. As customer expectations of smoother, faster authentication and identity management grow and new threats continue to arise, we expect the need to orchestrate better authentication experiences can only increase in the years ahead.

Get to know more about how to strengthen digital relations with your customers:

* Merchantsavvy, February 2024: Payment Fraud Statistics 2024:

Future Proof: Digital identity with Martin Zeisel

In this episode of Future Proof, we deep-dive into the world of digital identities with Martin Zeisel, a pioneer in the digital payment ecosystem across Germany, Austria, and Switzerland. Martin has spearheaded the implementation of a mobile wallet solution for Payment Services Austria and is currently playing a crucial role in major national payment card network, enhancing the security and usability of cards for e-commerce.

Martin Zeisel

Principal Consultant Payment and Identity

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