Demystifying Fintech Authentication and Financial Services Authentication

March 15, 2024

Investing in modern fintech identity verification methods can prevent access to financial data by cybercriminals

Protecting customer information from unauthorized access or misuse is an essential part of the financial services industry. Banks, credit unions and other financial institutions must maintain robust identity verification and authentication measures to prevent cybercriminals from gaining access to account information or other related data. Instituting best practices for cybersecurity and identity verification can help fintech companies to protect their customers from data breaches and to preserve their own reputations for security in the public marketplace.

Understanding the tactics used by criminals to gain unauthorized access to financial accounts and the most common cybersecurity threats to fintech firms can allow banks and other financial institutions to protect themselves and their customers. Financial tech companies can provide solutions that verify identity through advanced authentication methods. Here are some of the most important points to keep in mind when instituting a robust fintech authentication program for your financial institution.

What Are Fintech Companies?

Fintech companies offer financial services to their customers through the cloud or other online means. Banks, investment firms, cryptocurrency platforms, online lenders and digital payment processors are all classified as fintech companies and are held to a higher standard of security than companies that do not manage financial information on behalf of their customers.

Implementing accurate and reliable fintech authentication methods is critical to the success and longevity of these companies. This can allow financial services companies to manage threats to user data and financial information that could prove very expensive for customers and companies alike.

Cybersecurity Threats to Banking and Financial Services

The Federal Financial Institutions Examination Council (FFIEC) has identified a number of threats and challenges for cybersecurity in the financial sector:

Fraudulent transactions: Failing to implement fintech strong authentication techniques can allow cybercriminals to impersonate customers and to drain accounts through fraudulent transactions. This can damage public trust in financial institutions and could result in significant financial liability and compliance issues for the affected financial institution.
Hacking: Robust security measures should be put in place to prevent hackers from gaining access to databases containing financial information. Fintech identity verification tools can reduce the risk of unauthorized access to financial data on the part of cybercriminals.
Ransomware: Cybercriminals use malware to infect computers or servers and to encrypt the data on these devices. Ransomware attacks affect an estimated 71 percent of all businesses worldwide.
Identity theft: Preventing identity theft is mission-critical for financial institutions. Instituting advanced fintech identity verification for all interactions with customers can reduce the risks of this issue for banks, credit unions and other financial firms.
Money laundering: Federal and global regulations require that financial institutions take strong measures to verify the identities of their customers to prevent money laundering. Financial services strong authentication methods can help companies stay in compliance with anti-money-laundering requirements.
Phishing: Phishing occurs when a cybercriminal pretends to be a business or an individual to gain access to personal information.
Third-party security gaps: Vendors and support teams can sometimes be tricked into resetting passwords or providing access to cybercriminals.

Implementing the right financial services authentication strategy can help fintech companies protect themselves and their customers against unauthorized access to data. Investing in financial services biometric authentication methods can be a cost-effective strategy that can also protect your company’s reputation in the public arena.

High-risk and Low-risk Users

One of the first steps in creating a fintech identity verification program is determining which users present the largest risk to data and information if their credentials are compromised. Both customers and users can be classified as high-risk or low-risk depending on a variety of factors:

Transactions over a certain dollar amount could be signs of money laundering or other illegal behavior by customers.
Requests for additional access by users or customers could be a sign of identity fraud. These include password reset requests from customers or requests for access to confidential information by colleagues or vendors.
Transactions that cannot be reversed are another sign to be even more cautious and to verify identity more carefully in the fintech field.
Users who can access critical data or systems require a higher level of fintech authentication than those without this high degree of access.
Staff members in high-level management positions should also be subject to fintech strong authentication each time they access sensitive data or information.
Users with remote access to financial systems are also considered at high risk for potential impersonation by cybercriminals.
Security administrators and customer service vendors also require additional authentication and identity verification before accessing account or financial information.

Advanced fintech identity verification is recommended for any customers who trigger anti-money-laundering provisions or staff members and vendors with high levels of access to financial information.

Financial Services Authentication Methods

Upgrading your financial services identity verification methods can prevent data breaches and unauthorized access to user accounts that could potentially cost your company many thousands of dollars and could damage your reputation. Some of the most advanced fintech identity verification methods include the following:

Device-based public key infrastructure: Fintech authentication based on public key infrastructure (PKI) attached to devices like smartphones and computers can provide a basic level of protection. When paired with fintech biometric authentication, device-based PKI is a reliable way to manage financial services identity verification requirements for your customers. Without the biometrics element, however, the device could be used by others to access confidential financial information belonging to your clients.
One-time passwords: One-time passwords are more secure than traditional passwords and cannot be easily accessed in a data breach. They are generated using a software application, however, that may be susceptible to misuse or hacking by cybercriminals.
Multi-factor authentication: One of the most common ways of achieving financial services authentication is by requesting additional information or verification from the end user. Along with providing a password, multi-factor authentication methods also request a second form of identification. Knowledge-based authentication requires users to answer questions about their personal histories. A temporary financial services authentication code may be sent to a mobile phone or email associated with the account. Finally, financial services facial authentication or biometric verification uses the appearance or physical traits of the individual to achieve positive identification.
Fintech passkeys: More secure than passwords, a fintech passkey can be used on multiple devices and provides robust fintech authentication without passwords and logins. Each passkey is tied to a specific location or device, which makes it nearly impossible for cybercriminals to use phishing attacks or data breaches to gain access to financial data. These device-based financial services authentication methods, however, may pose risks if the devices are stolen or lost.
Biometric identity verification: Adopting financial services biometric authentication methods can provide the highest level of protection for customers. Fintech biometric authentication may include behavioral biometrics or facial recognition software that can provide added assurance for your customers that their data is protected. Additionally, fintech biometric authentication can help your company stay in compliance with all identity verification requirements of federal and global authorities.

These financial services authentication methods are vital to the ongoing success of banks, stock trading companies, mortgage and insurance companies, cryptocurrency platforms and many other financial institutions. Implementing financial services strong authentication methods is an important way to protect your company and your customers from fraud and financial loss.

Types of Biometric Authentication

Opting for biometric identity verification can assist your company in managing its security and staying in compliance with all applicable regulations. These passwordless authentication methods typically fall into one of three basic categories:

Behavioral biometrics software analyzes the way in which customers type or move their fingers on computer keyboards and mobile devices. If a significant change is detected, the customer may need to go through additional steps to verify their identity.
Fingerprint scanners may also be used to verify the identity of customers or staff members.
Facial recognition software is one of the most common forms of biometric fintech authentication. These methods allow fast access to financial information for authorized users without allowing cybercriminals to access this data illegally.

Use Cases for Fintech Biometric Identity Verification and Authentication

Understanding how biometric methods for fintech identity verification work in various industries can help you to determine if these advanced security options are right for your company:

Cryptocurrency: Using biometric facial recognition methods for maintaining cryptocurrency wallet security can prevent the theft of these financial resources by individuals or groups posing as the rightful owners. Because it is difficult to prove theft of cryptocurrency, a proactive approach that includes biometric identification of customers before transactions are approved is the best approach for financial services authentication in this sector.
Money transfers: Online banks and digital payment platforms can incorporate biometric identity checks into their money transfer verification process. This could eliminate many instances of fraudulent transactions by cybercriminals that affect the finances of legitimate customers.
Online chats and calls from customers: One of the most common online tactics for gaining unauthorized access to financial accounts is the infamous password reset request. Scammers pose as legitimate customers and, using stolen or phished data, request a password reset or an email change for their account. In most cases, instituting strong biometric financial services authentication for callers and online users can reduce the chance that vendors or online support staff will fall victim to this type of financial fraud.
Age verification for age-controlled purchases or transactions: Alcohol, certain medications and other age-controlled substances require additional due diligence on the part of businesses and the fintech companies that serve them. By implementing biometric fintech authentication for age-restricted purchases and transactions, these companies can prevent underaged individuals from obtaining age-controlled materials and substances through their platforms.
Compliance: Maintaining absolute compliance with anti-money-laundering regulations established by the U.S. government and by global financial organizations is essential for fintech companies. The right biometric identity verification strategies can streamline compliance for financial organizations and can reduce the risk of data breaches and unauthorized release of financial data that could prove costly for companies and clients alike.

Working with a firm that specializes in fintech identity verification and biometric authentication methods can help you to improve your security and to prevent the unauthorized release of financial information. At authID, we work with companies just like yours to create customized solutions for compliance, security and identity verification. Our robust biometric verification methods can reduce your risks while ensuring the best experience for your customers now and in the future.

How authID Can Help Your Fintech Company

As a recognized leader in the field of fintech biometric authentication, authID can provide you with the services you need to ensure positive identification of customers every time they interact with your company. We work with you to find the most practical solutions for financial services facial authentication and other advanced verification methods for your fintech organization.

Our innovative approach to biometric security has made authID a major force in protecting online data and information against unauthorized access and misuse. authID has attracted major investors like Jamie Dinan and has been named Best ID Management Platform for two years running by the Annual FinTech Breakthrough Awards Program.

To learn more about our services or to book a demo with our team, you can contact us online or by phone at 516-274-8700. At authID, we are here to help you protect your customers and your reputation against data breaches and other online risks to your financial institution.