Mobile devices have permeated almost every part of consumers’ lives, making buying and selling online easy. And the finance opportunities are growing fast in an aggressive online market. This also means the scammers are lining up trying to take consumers’ cash or infiltrate their device to steal money and identities. Organisations have to fight back to protect their customers, themselves, and their brand and ensure customers have a good experience.
Know your device (KYD) can play a big part in online security. By using software to analyse the device consumer’s use to connect to e-commerce mobile sites, banks can assess the risks. They do this by assessing hundreds and sometimes thousands of individual attributes of the digital devices. This allows them to analyse and reveal the risks that could expose a customer to potentially fraudulent activity. This is vital for the future of financial institutions and maintaining their trusted relationships with their customers.
There has been emphasis on know your customer (KYC) since the first credit cards went mainstream. Before people could apply for banking services via computers, they had to apply in-person to their bank manager for a loan or mortgage. Credit cards were part of the beginning of financial automation. Today, application providers add additional layers of security (such as dual authentication, verification codes), while users subscribe to strong password application managers (such as LastPass). Today we have mobile wallets and digital currencies like Bitcoin, disrupting traditional bank-customer relationships, and have passwords stored in a mobile device that often lie outside a bank’s control.
The missing element that is gaining traction in the market is know your device (KYD – or even know your customer’s device). There must be a distinction between the device that hosts the application and the security of the information the financial app contains.
Combining the principles of KYC and KYD should give banks greater confidence that their customer’s digital transactions are secure and can also improve the customer experience.
KYD will become increasingly important over time as more transactions are mobile-originated. A US Federal Reserve report shows mobile wallets grew in popularity over the past three years. Mobile wallet use increased from 300 million transactions in 2012 to 1.3 billion transactions in 2015. This growth came when Apple and Android Pay’s precursor Google Wallet hit the market along with retailers launching mobile wallets to encourage customer loyalty.
But mobile wallets still only made up less than 1% of all non-cash payments. Consumers made a total of 106.7 billion card and ACH transactions in 2015. Though the numbers still don’t show transaction volume impact, the awareness of and methods used for mobile wallets are changing the way people make payments as big tech companies work hard at protecting consumers’ privacy and security.
Mobile wallets have three levels of security:
These mobile wallets use a combination of KYC and KYD to validate that the user and their devices have a high level of security which effectively address most consumer concerns about the safety of using mobile or other devices for payment and other financial transactions.
As the payments technology market becomes increasingly complex, IA360 can help you navigate the challenges of building and operating safe, secure and efficient solutions.
IA360’s diverse background in finance, technology and marketing positions us as a leader in new payment technologies. These can enhance the security of trusted services like credit, debit and prepaid cards. Contact us today at info@IA360.com to discuss how we can help improve the services you offer your customers.