Effective customer authentication is paramount in the financial sector because people’s investments are at stake. There’s no doubt that cybercrime is prevalent, and identity theft can result in customers’ savings being compromised in that case.
Thus, financial platforms, particularly online ones, have incorporated a number of different methods for verifying the identity of a customer when they wish to view their assets or make transactions. These customer authentication methods help limit the chances of identity theft and help protect customers’ accounts and assets in turn.
With that said, here are 7 of the best ways of customer authentication for the financial sector, including Know Your Customer (KYC).
1. KYC for Identity Verification
Know Your Customer is a process that includes various customer authentication features, including identity verification. Therefore, it ensures that financial platforms have access to your personal information, such as your name, address, email address, date of birth, and so on. The importance and effectiveness of Know Your Customer have also led to its adoption in the cryptocurrency sphere, with crypto exchanges being required to have it as a means to prevent illicit activity.
2. Global Screening via KYC
Know Your Customer is also responsible for global screening of all customers to determine if they have any international sanctions placed on them or if they are politically exposed persons (PEP). Such persons typically pose a high risk in cases of money laundering.
3. Anti-Money Laundering and Counterterrorism
There are Anti-Money Laundering and Counterterrorism (AML/CT) programmes that are made to report certain entities that are engaged in criminal activity. It checks customer identities and screens them globally for any reported participation in criminal activity such as fraud, money laundering, etc.
4. Age and Identity Verification
Ecommerce companies that sell products to adults only, such as alcohol, tobacco, or entertainment products to customers, can benefit from age and identity verification customer authentication. The purpose of such an authentication method is to limit birth date fraud and make it seamless for customers to seamlessly verify their correct age to purchase age-restricted products.
5. Monitoring Customer Activity via Know Your Customer
While this may not be an authentication method exactly, it is still related to protecting the customer and their assets by monitoring customer activity, such as transactions. Therefore, the customer can be notified of the activity, and if they were not responsible for it, they would know that their identity has been compromised.
6. 2-Factor Authentication
2-factor authentication is not a protocol that’s unique to the financial sector, but it’s used frequently due to its effectiveness. Some platforms may include this feature that ensures that customers attempting to log into their accounts on a new device must verify that it’s them by clicking a link on a registered device, such as a phone.
7. One-Time Passwords
One-time passwords are something that often goes hand-in-hand with 2-factor authentication. So, when you attempt to log into your account on a financial platform or want to make a significant transaction or change in your profile, the platform will send you a one-time password on one of your registered devices or contact number. You will then need to enter this one-time password to continue forward with your activity.
Last Few Words
When a financial sector platform incorporates a variety of customer authentication methods, it can help develop customer trust and improve their business in the long term. Customers will be convinced that
