The pandemic has fundamentally changed the way many consumers behave. Particularly, the lockdowns resulted in increased use of digital platforms to carry out day-to-day activities and transactions. Many businesses were also forced to increase their digital engagements to remain competitive in light of these challenges.
On the sales side, organizations had to reshape how they deliver customer experience by managing their supply chain and ensuring hassle-free transactions. With regards to marketing, companies responded by developing excellent customer relationship management systems and increasing campaigns across multiple touchpoints.
Companies must establish trust and loyalty to retain existing customers while bringing in new ones while juggling changes in the competitive environment. However, creating certainty in these challenging times is a difficult endeavor.
The increased use of digital platforms also magnified the risks of fraud and other cyberattacks to both the organization and the customer. Consumers want to do business with institutions that can provide both privacy and security while transacting online. Therefore, companies need to address digital safety in their digital transformation.
One way enterprises can undertake this matter is through compliance with the industry and regulatory requirements. A few of the regulations and standards entities may have or want to follow are PSD2, FIDO2, and eKYC.
Strong Customer Authentication
The Revised Payment Service Providers Directive (PSD2) in Europe requires payment service providers to implement strong customer authentication (SCA). With it, companies have to employ more than one user verification method on their checkout flow.
Under the SCA, online identity verification must be based on at least two of these elements: inherence, possession, and knowledge. The knowledge factor refers to something the user knows, requiring them to input a password or PIN. The element of possession necessitates something the user owns, like a phone or hardware token. Lastly, the inherence asks for something that the user is like biometric authentication (i.e., fingerprint or face recognition).
The policy aims to improve customer protection and reinforce security in the payments market. Transactions covered by the SCA requirement are customer-initiated online and contactless offline payments within Europe. This includes most card payments and all bank transfers.
Moreover, the recent revisions of PSD2 mention that third-party payment service providers (TPPs) must also be compliant with the regulation. TPPs allow vendors to accept digital payments without needing a merchant account. Under PSD2, they have the responsibility to ensure customer transaction security with SCA.
FIDO2
Another standard presently shaping user authentication is the new Fast Identity Online or FIDO2 protocol. This set of specifications enables users to use mobile devices and biometric authentication to verify their identities online. The great thing about it is it addresses the issues with passwords and other traditional authentication methods.
With FIDO2 passwordless authentication, input login credentials never leave the user’s device and are never stored on a server. This means that the model eliminates the risks of phishing and replay attacks. Additionally, its WebAuthn protocol allows companies to maintain a transaction’s security across many web services and applications.
e-KYC
The know-your-customer or KYC authentication is also a requirement that applies to many financially sensitive sectors. It is a set of standards that allow companies to verify customers and identify their risk and financial profiles. In the digital onboarding process of financial institutions, eKYC permits digital identity verification without the need for physical documentation.
EKYC makes sure that the company is dealing with legitimate clients while boosting identity theft and fraud prevention measures. Employing eKYC systems fulfills customer identification verification (CIV) obligations, Anti Money Laundering (AML), and other Customer Due Diligence (CDD) processes.
User Identity Verification and User Trust
Merchants and service providers can more easily comply with regulations like PSD2 by utilizing standards such as FIDO2 and eKYC. Salesforce Research indicated that one of the main expectations of customers today is data protection. 84% of the respondents remarked that they are more likely to engage with a company that understands their goals.
Furthermore, following industry standards gives consumers an indication of the company’s dedication to protecting their interests and data. The Financier Worldwide’s survey disclosed that consumers have serious concerns about their financial information. 40% divulged that they are not confident that their data are protected from being hacked. Meanwhile, 30% fear that operatives can steal and store their information elsewhere.
It is understandable why customers are hesitant about trusting companies, especially online. Identity Theft Resource Center (ITRC) research revealed that data breaches in 2021 already exceeded the 1,108 cases from last year by 17%. Big companies with extensive security systems are often victims of these attacks, reflecting how much more vulnerable entities with weak protection are. But authentication compliance, in addition to other safeguards, can show a company’s commitment to prioritizing the customer’s needs and concerns.
For example, by implementing a FIDO2-certified identity verification solution, companies can better protect their data and resources while making the brand more trustworthy to customers. Users can be more confident with using devices to transact without worrying about their privacy. It also eliminates the vulnerabilities and inconveniences that passwords generally pose.
Comply with Authentication Standards with LoginID Solutions
The effects of the pandemic have not been easy on businesses. They accelerated the need for organizations to embrace digital transformation and to adapt to the changing landscape of consumer behavior. Many firms who were initially hesitant to adopt advanced systems are now scrambling for technology that allows workforce flexibility, automation, and customer engagement.
And with the remote setup, trust is now more critical than ever. On the organization’s side, they need to confirm their client’s identities. On the client side, customers need to know that the entity can deliver what they are marketing with security and a positive experience.
Applying authentication that follows standards like FIDO2, and eKYC allows the organization to achieve these objectives. With solutions like LoginID’s FIDO2-certified passwordless authentication, firms can step up their safeguards against cyber threats using biometric authentication during account logins and for transaction confirmation. Users can also enjoy higher customer satisfaction with frictionless execution on all service platforms.
Get started by getting in touch with our experts today at sales@loginid.io. Or you may also register an account to get immediate access to LoginID’s authentication solution.
**References: ** https://www.forbes.com/sites/charlestowersclark/2020/07/22/trust-is-a-keystone-of-digital-transformation/?sh=9942c1876e2https://21ilab.com/blog/what-factors-influence-consumers-trust/https://fidoalliance.org/fido2/
