October 25, 2021
A majority of online crimes, especially data breaches, have financial motivations. Nearly 80% of data breaches aim to obtain information such as financial account information, social security numbers, insurance information, and online banking details. Once this information is obtained, hackers misuse it to gain illegal access to bank accounts, defraud institutions, and other such financial and identity crimes.
Companies operating in the financial technology (FinTech) sector, particularly cryptocurrency exchanges, must ensure high levels of security in order to protect their users and themselves from being exploited. FinTech companies, especially, are expected to have higher levels of security and data protection by users. A single factor legacy authentication system is not enough to provide customers with the satisfaction that they are transacting safely, nor does it provide them with reassurance that their login and financial information is secure.
A Tricky Balance
Implementing robust security controls could come at the expense of a smooth user experience. FinTech companies such as cryptocurrency exchanges follow intense regulatory structures with user protection being a top priority. However, having a variety of users with a multitude of technological backgrounds, FinTech companies need to ensure the authentication process is as smooth as possible. Striking a balance between highly secure authentication standards and frictionless customer experiences is a delicate, yet crucial one. Studies have shown that companies can achieve up to 24% increase in conversion rates with a frictionless security system.
Another major challenge to implementing enterprise-wide robust security controls boils down to organizational complexities. FinTech companies, especially cryptocurrency exchanges, need not only to ensure their customer data is well protected, but need to ensure there are sufficient internal security controls as well. Outsider and insider threats are very real, and many organizations find themselves victims of targeted attacks like phishing, due to highjacked employee accesses.
An important factor for all FinTech and blockchain companies to consider is how compliant their security systems are. Open Bank in the UK, the PSD2 directive in the EU, and the ‘additional factor of authentication for all Card Not Present (CNP) transactions’ in India, for example, require all financial transactions to be backed by strong customer authentication (SCA).
Regulatory agencies and policymakers around the world have developed stringent legal frameworks that impose strict requirements on private sector actors operating in FinTech. With the growing number of blockchain, cryptocurrency and FinTech companies pursuing such regulations, having compliant identity access management systems become imperative to implement.
How do I protect my FinTech company?
FinTech firms face a number of interrelated challenges that solutions like LoginID can solve. The inherent sensitivity of financial and payments data, and the fact that this information is highly sought after by bad actors, means that companies must use the most secure and accurate authentication and identity management mechanisms available to keep their customers safe.
The emergence of open banking is creating unprecedented opportunities for financial institutions to innovate and for consumers to gain control over their data. This potential can only be achieved when authentication and identity management are both secure and convenient.
LoginID’s solution provides cutting edge authentication and identity verification solutions that allow FinTech companies to attain the highest level of security and compliance with laws such as the EU’s Revised Payment Services Directive (PSD2), without compromising convenience for the user. The following features of LoginID’s FIDO2-enabled authentication solutions ensure compliance with the PSD2:
- Strong Customer Authentication
The PSD2 requires that users be authenticated using a mix of at least two elements that relate to knowledge (something you know), possession (something you own), and/or inherence (something you are). LoginID’s authentication solution is a two-factor authentication (2FA) method that is explicitly PSD2 compliant. By contrast, other proprietary biometrics solutions on the market are single factor, meaning that an additional safeguard must be added.
The PSD2 requires companies to mitigate the risk that any of the elements used for authentication are accessed by unauthorized parties. LoginID’s solution ensures that the elements reside in the authenticating device – even if the device is stolen, that information cannot be read, copied or transferred, and the user cannot authenticate unless they have the necessary inherent features (e.g. biometrics) or knowledge.
- Transaction Confirmation
The PSD2 mandates that payment services must have a secure mechanism that allows users to review and confirm the transaction. LoginID supports this through a mechanism by which the details of the transaction and a confirmation request are sent to the user, who in turn authorizes payment – e.g. by scanning a fingerprint.
How do I protect my Cryptocurrency company?
LoginID’s biometric authentication solution is designed to help crypto exchanges drive user convenience, maximize security, and achieve regulatory compliance.
- User Conversion
In order to drive conversion, exchanges must address users’ main priorities, which are speedy processing of deposits and withdrawals, a user-friendly interface, and an easy-to-use verification process. Most authentication solutions used by exchanges fail to address these priorities, requiring users to manually enter dynamic passcodes.
LoginID does not - the user experience is as simple as scanning a face or fingerprint, irrespective of the device used. In addition, LoginID’s FIDO protocol-based solution is supported on major operating systems and browsers, including Google Chrome, Mozilla Firefox, Microsoft Edge, and Apple Safari. It also runs on both Windows 10 and Android platforms, and, from September 2020, Apple OS. This flexibility means that users have the same high-quality experience no matter which technology they are using.
LoginID incorporates the World Wide Web Consortium (W3C)/FIDO Alliance official web standard for web authentication (WebAuthn). WebAuthn makes passwords & phishing a thing of the past by authenticating through ‘something a user is’. It is crucial that websites and services implement WebAuthn to create a secure environment without compromising usability – LoginID’s solution achieves this for our customers.
LoginID authentication is a two-factor authentication (2FA) method that is compliant with the Strong Customer Authentication (SCA) requirement of the EU’s Revised Payment Services Directive (PSD2).
Globally, financial institutions and the regulations that govern them are adapting to the growing trend of open banking. By utilizing LoginID’s solution, an exchange can leverage public key cryptography techniques combined with ‘one-touch’ biometrics and/or security keys to enable convenient and secure compliance with open banking standards.
LoginID’s FIDO-based solution makes it easier to comply with the EU’s General Data Protection Regulation (GDPR). In particular, FIDO standards have been developed with ‘privacy by design’ in mind - a key GDPR requirement. In addition, LoginID’s multi-factor authentication enables companies to meet their GDPR obligations to implement strong data protection safeguards.
FinTech, blockchain and cryptocurrency companies need to implement multifactor authentication in order to protect their systems and transactions from a range of internal and external attacks, all while being regulatory-compliant. Everything from applications, resources, networks, and systems could benefit from a robust security solution. By deploying multifactor authentication (MFA) solutions, such as LoginID, financial companies can lower data breach risks, thereby reducing the risk of users churning, all while providing a frictionless experience to their customers.
LoginID is a comprehensive FIDO-based multifactor authentication solution that offers frictionless authentication. Created with developers and enterprises in mind, LoginID is FIDO-certified and adheres to P2D2 principles. With an implementation time of just one hour, LoginID’s multifactor authentication solution is a quick, simple to integrate, cost-effective, and regulatorily compliant tool to give your business peace of mind around security, allowing you to focus on growing your business.