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NewApproachesforCustomerAuthenticationAcrossChannels
JanetSmithSeniorVicePresident,IdentitySolutionsMastercardWorldwide
©2016 Mastercard. Proprietary and Confidential
©2016Mastercard.ProprietaryandConfidential2
Authenticationiscriticaltothepaymentindustry
Approval Rate1
Physical 96%
Digital 83%
1x
3x
Paymentsinthedigitalworldshouldbeassafeandsimpleastheyareinthephysicalworld
Fraud Rate2
The challenge… Authentication can help…
1. ApprovalRateSource:MastercardDataWarehouse.2. FraudRateSource:JavelinStrategy&Research,July20133. MastercardSecureCodecardholderverificationmethod(CVM)fraudstudy,2013.
LessthanIssuersthatimplementdynamicauthenticationexperiencethelowestCNPfraud8BPS
11%Transactionapprovalratesriseby11%whenfullyauthenticated
Approval Rate1
Fraud Rate3
September15,2016
©2016Mastercard.ProprietaryandConfidential3
Passwordsstilldominant…butintoday’sdigitallyconnectedworld,they’reareout-of-datewithconsumers’needs
• Consumersuse5digitaldevicesonaverage1
• Timespentonmobiledevicesnowsurpassesdesktopsandlaptops2
• Consumershaveupto30onlineaccountsrequiringpasswords3
>90%ofuser-generatedpasswordsare
vulnerabletohacking6
1 out of 5consumersuse
thesamepasswordforeverywebsite4
84%ofconsumersadmitforgettingtheirpassword4
47%ofconsumersareusingpasswordsover5yearsold5
60%ofconsumersfind
passwords“cumbersome”7
1. In17countries.Digitas,ConnectedCommerceSurvey2015.2. eMarketer. TimeSpentperDaywithMajorMediabyUSAdults,2011–2017,2015.3. IdentityTheftResourceCenter.ConsumersFallShortonUsingStrongPasswords.2015.4. KetchumGlobalResearch&Analytics,surveyofconsumersin17countriescommissionedbyMastercard,2015.5. CBSSmallBusinessPulse.What’sInAPassword.Infographic.2016.6. YahooFinance.YourPasswordIsn’tSafe.2013.7. AccentureDigitalConsumerSurveyof24,000consumersin24countries.2015.
September15,2016
©2016Mastercard.ProprietaryandConfidential
Consumerswantanalternativetopasswords—asdobanks,merchants,regulators&everyoneelse…
4
Passwordsareinconvenientandfrustrating
Consumersresentthehoopstheymustjumpthroughtoprovewhotheyare,andone-timepasswordsviaSMSonlyincreasecheckouttimeandfrustration.Securityisimportant,butsoisconvenience.
Passwordsarenomatchfortoday’sfraudsters
AndtheproblemwillonlygetworseasEMVdrivesfraudsters
totheonlinechannel,increasingtheriskofcard-not-
present(CNP)fraud.
PasswordswillnotmeetnewregulationsRegulatorybodiesaroundtheglobearebeginningtomandatestrongtwo-factor
authentication.
ForgottenpasswordscauseabandonedshoppingcartsAboutathirdofonlinepurchasesareabandonedbycardholdersatcheckoutbecausetheycan’tremembertheirpassword.1
September15,2016
©2016Mastercard.ProprietaryandConfidential5
Consumerswantserviceproviderstorecognizetheminasingle&consistentwayacrosschannels&devices…
Shapedbydigitaltechnology…today’sconsumerhashighexpectationsfor
convenience&securityintheirfinancialtransactions
©2016Mastercard.ProprietaryandConfidential6
Mobilebiometricauthenticationenablesasingledigitalconsumeridentityacrosschannels
TYPICALAUTHENTICATION
SOLUTIONS
KBA*W/CALL CENTER
CALL CENTER
DIGITAL PAYMENTS
MOBILE BANKING
SUSPECT TRANSACTIONVALIDATION
DIGITAL WALLETS
IN-BRANCH
September15,2016 *KBA:KnowledgeBasedAnswer;OTP:One-timepassword
©2016Mastercard.ProprietaryandConfidential
TransformingtheConsumerAuthenticationExperience
SelfieAuthenticationhttps://www.youtube.com/watch?v=DfLarAas-U0FingerprintAuthenticationhttps://www.youtube.com/watch?v=m4qi3t1HP3g
©2016Mastercard.ProprietaryandConfidential8
Bothconsumersandfinancialinstitutionsbenefitfrommobilebiometricauthentication
CONSUMERBENEFITS
• Providesamoreconsistent,satisfyingexperienceateachauthenticationtouchpoint
• Eliminatesthefrustration ofmanagingandrememberingpasswords
• Providesstrongprotectionforconsumer’sfinancialdata
• Empowerscardholderstocontroltheirdigitalidentity
FINANCIAL INSTITUTIONBENEFITS
• Delightsdigitallysavvyconsumerswithanintuitiveandconsistentshoppingandbankingexperience
• Addressesemergingregulatoryrequirementsinmanymarketsforstrongtwo-factorauthentication
• Decreasesfraud andoperationalcosts
• Enhancescustomerengagementandloyalty
• Increasesrevenuesbyenablingincreasedtransactioncompletionandapprovalrates
September15,2016
©2016Mastercard.ProprietaryandConfidential9
KeyConsiderationsWhenImplementingaMobileBiometricSolution
TECHNICALLEGAL®ULATORY
• Notalldevicefingerprintsensorsarecreatedequal…• Research&testthebiometricfalsematch&falseacceptratesbeforeenablingadeviceforyoursolution
• Ensurethebiometrictemplatestorageondeviceissecure• NewdevicesandOSupgrades createopportunities&challenges,be
preparedtoconstantlytestandpushoutupdates• Regulation&dataprivacyrelatedtobiometricusagevariesbycountry
(sometimesitvariesevenwithinacountry)andisever-changing…investingoodlegalcounsel!
September15,2016
©2016Mastercard.ProprietaryandConfidential10
KeyConsiderationsWhenImplementingaMobileBiometricSolution
STRONGSECURITY&CONTROL
• Takealayeredapproachtosecurity… utilizetoolslikedevicecryptography,deviceidentification +biometricstoenhancesecurity
• If you’rebringingbiometricdatabacktoacentralserverformatching- end-to-endcommunicationchannel encryption iscritical
• Makesureyouunderstandandcan setthepass/failthresholdsforbiometricmatching
• Don’tstorebiometricdata inacentralserver– edge-basedbiometricmatching ontheconsumer’smobiledeviceisbest!
September15,2016
©2016Mastercard.ProprietaryandConfidential11
KeyConsiderationsWhenImplementingaMobileBiometricSolution
CONSUMERCONVENIENCE&CHOICE
• Consumerswantachoiceofbiometricmodalities, suchasfingerprint,facialbiometric,eye (veinoriris),voice…
• Somebiometricmodalitiesaresuitedtocertainauthenticationusecasesbutnotforothers…voiceisagreatexampleofthis!
• Consumerusability testingiscriticalwhen introducing anewbiometricmodalityormobilebiometricusecase.
• Ensureconsumerscanenablemultipledeviceswithoneenrollment
September15,2016