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Types of Authentication Methods: A Quick Overview

The International financial sector is seeing a churning with global fund transfers, payment platforms, AI-financial advisories, blockchain cryptocurrency sites, and an ever-growing repertoire of FinTech applications. They all face a common challenge – protecting consumer privacy and enhancing the safety and security of online transactions using authentication methods.

The Importance Of Controlling Access, and How Authentication Achieves That

User authentication is the process that confirms the identity of the user accessing a network, then authorizes the access, and safeguards the transaction from unauthorized players who may steal data and commit fraud. 

The purpose of user authentication is to protect the interests of all stakeholders, the user, financial firms, service providers, and retailers, to safeguard against risks and frauds. 

Here, we handhold you through a whirlwind tour of the types of user authentication methods that provide transactional security in cyberspace.

Usernames And Passwords Are Outdated But Ingrained In Our DNA

Passwords offer the most direct customer experience, are very easy to implement, inexpensive, and without compatibility issues. Yet, passwords are the most vulnerable to hacking, and they are usually forgotten and easily stolen. 

As passwords move between users, financial institutions, and payment service providers, encryption is low, and the transactions are prone to man-in-the-middle (MitM) attacks.

The browser and mobile access to most bank accounts, pay wallets, payment service providers, and retailers continue to employ the username and password as backups, diluting the security of high-end authentication methods like biometrics. 

Personal Identification Numbers (PINs): Better Than Passwords, Best If Tied To A Device 

PINs power the vast swathe of debit and credit card transactions and mobile payments, and the convenience they offer is beyond question. Some retailers insist on entering a PIN after the user’s biometric fingerprint verification on the POS terminal. 

Generally, users and merchants popularize PINs as a measure of convenience, not safety. The only universal element in the PIN is that it contains a band of four to six numerical characters. The overall security is weak because financial institutions rarely, if ever, urge users to review and revise their PINs.  

The most egregious error is repeating the same numerical or digitally sequencing the numbers, making it easier for criminal elements to guess the combination. The same PIN in force for multiple accounts opens the doors to a severe data breach.

Issues with the PIN are more in customer behavior and neglect of basic safety norms and security measures, but this doesn’t negate the PIN’s usefulness.   

Knowledge-Based Authentication (KBA) Is Useful As A Secondary Verification Tool

The KBA is an out-of-wallet query that customers need to answer for the authentication process to conclude. The answers lie in the personal archives of the user, and the information is private and unknown to third parties. 

Users face typical queries like, “What is your mother’s maiden name?” “Which is your favorite restaurant?” or “The last amount you withdrew from your account.”

The KBA authentication process is weakening under the onslaught of scammers who reconstruct personal identities from stolen social media data flooding the grey market. Scammers use stolen data to answer KBA queries and misuse personal financial data. 

Two-Factor Authentication (2FA) Safeguards Against Automated Attacks And Phishing

If there’s a password already in play, applications developers can introduce another factor to strengthen the authentication process. The second factor uses a channel different from the first factor to eliminate the MitM attack.

A live example of 2FA is the ATM card we use to withdraw cash, which requires both the card and the PIN specific to the withdrawal facility. Even with a stolen ATM card, a third party cannot transact without knowing the PIN, and the PIN by itself is functional only when a card is in our possession. 

Authentication experts from Passbase KYC verification solutions stress that 2FA protection is gaining popularity with service providers, especially cryptocurrency exchanges and banks that look to strengthen security for moving digital currency and real money. 

2FA effectively blocks autonomous internet programs (bots) from manipulating user systems and prevents phishing attacks that tempt users to part with their profile and account details.

Mobile-Centric OTP And Push Notification Combination Is More Secure Than SMS

The combination of OTP and Push notification provides an additional layer of security which is safer than using a solitary password. The vulnerability lies in the SMS.

The passage of the OTP message through the telecom companies and networks doesn’t use encryption in all segments. A MitM attack can intercept or divert the message with the help of sensitive information gained through phishing.

The way forward is to embrace more secure app-based solutions, such as in-app push notifications, because these apps enforce more challenging authentication protocols that are difficult to break.  

Physical And Behavioral Biometrics Bring Sophistication to Authentication Mechanisms

A paradigm shift occurs in the authentication Methods when the user moves from what he knows (passwords) and what he has (mobile devices) to what he is. Biometrics measures and analyzes the physical and behavioral characteristics that make us human. 

Voice modulation and physical features are virtually impossible to duplicate or compromise because they remain unique throughout life.  

A face scan or thumbprint is enough to unlock your mobile device, and nobody else can. Even if facial features age or skin loses elasticity or voice and tone alters with time, biometrics like the fingerprint or Iris scan can accurately identify people.

The higher cost of integrating biometric systems and the fear of infringing privacy or compromising biometric data prevent biometrics from being more widely used. 

The Distribution of Wealth Comes At A Price

The wheels of the global economy deliver a bouquet of benefits to customers, but this generosity comes at a price. 

The growing risk attached to a transaction impacts both the service provider and beneficiary. FinTechs are coming up with more robust customer verification protocols and transaction authenticating systems. 

Companies are creating dedicated security specialists and financial fraud analysts to evaluate risk and innovate authentication Methods. 

As dynamically growing companies, we must ask ourselves whether we are proactive in moving beyond standard password protection to layered security protocols that safeguard our assets and the user knocking at the door. 

If we don’t do this, our business may go to competitors. 

Check out: How To Secure Ring Account With Two-Factor Authentication

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