Finance Monthly October 2019 Edition

using biometrics is a much quicker and more efficient way of paying for goods or services than traditional payment methods using only passwords 1 . SCA deadline extension In an increasingly digital age and with the high rates of cybercrime and identity fraud, financial institutions and payment providers need to apply these regulatory rules in order to provide the highest level of security for their customers. According to Action Fraud, £34.6m was stolen from innocent victims between April and September in 2018, a 24% increase on the previous six months 2 . Despite reports that more than £190,000 a day is lost in the UK by victims of cyber- crime, the Financial Conduct Authority, a financial regulatory body in the UK, has granted an 18-month long extension for the enforcement of SCA 3 . The Financial Supervision Authority (FSA), the authority for overseeing banking and payment services in Poland has also followed suit and confirmed on the 19th August that they will delay the enforcement of SCA. The new SCA rules have faced opposition from an industry which is seen to not be ready for the new digital era; new research from Stripe reported that just half of 500 businesses surveyed expect to be already compliant 4 . The delay from the financial services community in providing a more secure payment service for their customers is disappointing and worrying considering the increasing numbers of cyber-attacks each year. The financial institutions and payment service providers who have had nearly two years to prepare since the initial announcement, have unfortunately not put the safety of their customers at the heart of their operations – and there is no excuse. Moving forward Newandadvancedtechnologiesinthemarket have the potential to reduce the challenges posed by the new SCA enforcement. Basing the online authentication process on combining the customer’s own smartphone with an open biometric approach, will allow financial institutions to offer a low friction payment experience while meeting the new regulatory requirements – as it is far more secure than passwords or codes alone. Indeed, financial institutions and payment service providers need to integrate new technologies into their customer services and move to a passwordless society. Passwords are easily compromised; it comes as no surprise that 81% of reported data breaches last year were due to poor passwords such as 1234 5 . There are easily incorporated multi-factor authentication solutions that rely on consumers’ digital devices, and more secure forms of biometric authentication, which will eventually render passwords obsolete. 1 https://info.veridiumid.com/biometric-recognition-systems 2 https://www.bbc.co.uk/news/uk-47016671 3 https://www.fca.org.uk/news/press-releases/fca-agrees-plan-phased-implementation-strong-customer-authentication 4 https://stripe.com/gb/newsroom/news/sca-impact-study 5 https://www.tracesecurity.com/blog/articles/81-of-company-data-breaches-due-to-poor-passwords 53 www.finance-monthly.com FINANCIAL INNOVATION & FINTECH - PSD2