how to prevent cyber-threats while offering better customer experiences

More and more people are going online to manage their everyday tasks. Already 73% of the global population uses online banking at least once a month. By 2023, over 85 million EU citizens (around 11% of the total population) will be using digital-only banks or insurers to handle their daily financial needs. For this reason, digital experiences must be designed to be easy and effortless. At the same time, exposure to fraud and cyber-attacks is an increasing threat for both companies and customers.

How do cyber-attacks impact companies?

The pressure is on CISOs and Compliance Officers to guarantee the data security of customers at all times. Organizations that fail to offer adequate protection can face consequences, including:

Loss of customer trust: The Thales Cyber Threat Report 2022 points out that cyber-threats (including ransomware attacks, data breaches and ID fraud) is an increasing risk facing companies right now. Data breaches can result in lasting damage to a company’s reputation and loss of trust among consumers. The same report also mentions the importance for companies to adapt their security strategies to Zero Trust Strategy (the full report is available here).
Heavier financial penalties: The sharp increase in cybersecurity threats has prompted the EU to impose strict regulations. In 2022, the European Commission expanded the Network and Information Security Directive 2 (NIS2) to impose stricter data protection rules for businesses in key sectors, including a fine of up to €10 million or 2% of global turnover for non-compliance.

Companies can mitigate risks through Customer Identity and Access Management (CIAM)

On the bright side, companies who take the right approach to cybersecurity enjoy greater trust among their customers. Smart Customer Identity and Access Management (CIAM) solutions enable companies to offer an overall better customer experience, along with targeted customer service.

Three key elements empowered by CIAM can reduce your company’s risk of cyber-threats while boosting the customer experience:

Fraud detection (ID proofing)
Secure passwordless authentication
Know Your Customer (KYC) profiling and auditing

Let's revisit these in a bit more detail:

Fraud Detection

Cases of online fraud have increased by 70% since 2020 and are expected to cost companies $45 billion worldwide by 2025.

Fraud detection helps protect your customers from these threats by identifying and preventing unauthorised account activity. At the same time, companies must offer a user-friendly fraud detection solution, so that law-abiding customers can carry out their transactions efficiently and without unnecessary delay.

To balance security with convenience, companies can combat fraud with CIAM solutions that include robust APIs which can integrate with Fraud Reduction Intelligence Platforms (FRIP) and SIEM/Security Monitoring platforms. This technology uses advanced analytics and automatically detects potentially fraudulent behaviour during both registration and transactions.

Secure Passwordless Authentication

Passwords are a weak link in any company’s cybersecurity chain. In fact, 80% of hacking-related breaches are related to passwords. Since the average person has over 38 different passwords, everyone is potentially highly vulnerable to a cyber-attack. Not surprisingly, 90% of internet users say they are worried about getting their passwords hacked.

By replacing passwords with alternatives like passport, QR code scanning or biometric identifiers such as the customer’s fingerprint, face or voice, you virtually eliminate the risk of their account login details being abused (MFA).

At the same time, passwordless login vastly improves the customer experience. Instead of having to remember passwords (and worry about the risks associated with them), customers can easily and full secure (2FA) log into a secure environment with the touch of a fingerprint sensor or by simply showing their face or personal document scanning.

Know Your Customer (KYC) profiling and auditing

To combat fraud, governments around the world have enacted strict Know Your Customer (KYC) standards for financial institutions. Failure to comply with these standards results in heavy penalties and reputational damage for the institutions involved, as numerous high-profile cases have demonstrated. In 2021, global KYC penalties amounted to $5.35 billion.

In most cases, banks require new customers to submit to KYC screening during the onboarding phase. They confirm the customer’s identity, analyse their activities and verify whether their funds are legitimate. Yet this process is complex and often imposes unnecessary difficulties for banks and their customers.

Using a CIAM solution helps financial institutions (banks, pension service providers and insurers) streamline their onboarding processes while remaining KYC compliant. As a result, they achieve a seamless, digital-first experience that is both secure, compliant and customer-friendly.

Combine security with customer satisfaction

Instead of creating unnecessary barriers for your customers, a modern CIAM solution ensures convenient access without the risk. As the examples discussed above prove, customer security can now go hand in hand with customer satisfaction.

Are you ready to state reducing risk while providing better customer experiences? Contact us now to learn more.

about the author

An expert on multichannel distribution and electronic services, Michel de Jong, helps financial institutions to achieve their digital ambitions. With nearly 30 years of experience in finance and (cyber) security, Michel translates IT, Security and Compliance challenges into business value.

michel.dejong@onewelcome.com

Michel de Jong

Sales Executive BFSI, OneWelcome