The Global Omnichannel Digital Fraud Trends Report 2023 revealed that between 2019 and 2022, there was an 80% increase in digital fraud attempts worldwide. Multifactor authentication (MFA) is growing to mitigate fraud risks and maintain data integrity.
MFA, an authentication method that requires more than one security token to grant a user access, is one-way organizations are working to strengthen the protection of sensitive data.
In this article, you'll discover the benefits of multifactor authentication and how to implement it.
The main types of financial fraud
The methods used by scammers are many and varied, but most financial fraud in the digital environment is based on social engineering. This manipulation exploits human weaknesses and vulnerabilities to gain private information, access, or valuable assets. Some examples of fraud include:
The fake link scam
Scammers send irresistible advertisements and offers to potential victims via social networks and/or email, requesting sensitive information from the user.
The fake call center scam
Scammers use information already known to the victim to fake a contact from a financial institution or company.
In both cases, the scammer intends to access digital accounts and cause financial loss to users or commit crimes using the account holder's identity. Multifactor authentication (MFA) acts as an extra layer of security, allowing users to prove more than once that they are who they say they are.
Below are some examples of applications that benefit from multifactor authentication.
Multifactor authentication alternatives to prevent financial fraud
Multifactor authentication has emerged to replace the traditional combination of username and password. Although difficult sequences that mix different characters strengthen passwords, the techniques used to discover them are still a threat.
Several other authentication methods can be used as additional layers. Combining them can even increase the security of digital accounts. Here are a few examples:
- Security Token: This method gives the user a unique code after the login attempt. This code must be entered to complete and authorize the authentication. The security token can be generated synchronously (synchronized with the server) or asynchronously (based on a timing algorithm).
- Biometrics: Biometric authentication uses a user's unique physical or behavioral characteristics to verify identity. Examples include fingerprints, facial recognition, voice recognition, and keystroke patterns. Biometric data is captured and compared to stored records to confirm the user's identity.
- Push notifications: When a login attempt is made, a notification is sent to a pre-registered mobile device. The user must then confirm the authenticity of the login attempt by responding to the notification.
These are the most common examples of alternatives to the password and user set. Adding these alternatives creates an additional layer of security that requires direct user action to complete the authentication process. This makes the user's presence mandatory when accessing the account, drastically reducing the chances of inappropriate access.
The benefits of multifactor authentication
Implementing multifactor authentication not only increases the protection of user data but also benefits financial institutions by reducing costs and improving the user experience. There are three more benefits to mention:
- Strengthen information security
Adopting multifactor authentication reduces the chances of unauthorized access to user accounts. It also promotes greater peace of mind and confidence in a system's security, drastically reducing the likelihood of the organization being hacked.
- Regulatory compliance
In some jurisdictions, implementing multifactor authentication is a regulatory requirement to ensure system security. Even if it is not mandatory, implementing this solution will enable you to comply with data protection requirements while ensuring the integrity and reliability of your system.
- Efficiency and usability
Multifactor authentication is highly efficient, validating in seconds. As a result, it has minimal impact on the user experience.
How to implement multifactor authentication
Data from Okta's Secure Login Trends Report shows that MFA adoption nearly doubled between 2020 and 2023, establishing the practice as a trend in the enterprise world.
To apply the strategy, start by identifying tools in your infrastructure, such as cloud services and ERPs, that offer native support for multifactor authentication. Then, choose the best method for your scenario, such as hardware biometrics for corporate computers or facial recognition for mobile devices.
To integrate biometrics into an application, you can use BioPass ID's Multibiometrics API functionality package, regardless of the system architecture. With this solution, you can integrate biometrics to authenticate customer access and provide the abovementioned benefits.
More than one way to authenticate, more security for everyone
In this issue, we examined the top scams that compromise online data security and how they contribute to the rise in financial fraud and put users and applications at risk.
We also explored how MFA is used and how it can add an extra layer of security to financial accounts and even personal lives, reducing the risk of intrusion and damage.
