The COVID-19 pandemic has forced businesses and consumers to increasingly utilise the internet for most goods and services, resulting in a massive shift to a nearly whole digital world.
As a result, cash payments have sharply declined, and digital payment solutions have become the primary option.
The shift to a cashless economy is not, however, unprecedented. With a preference for real-time payment options, combined with greater adoption of digital identity solutions, Singapore is leading Asia towards the reality of a truly cashless economy.
The rewards of digital payment and banking solutions are evident. Increased mobility of money across borders, 24/7 access, and the ability to track payments in real-time are just some of the benefits of digital finance.
But as financial services institutions (FSIs) expand their offerings to meet the changing expectations of users, FSIs and their leaders have an increased responsibility to protect consumers.
Faced with the need to handle and manage a large influx of digital payment information, the challenge for FSIs is protecting users from fraudulent activity while not compromising customer experience.
The uptick of digital payment platforms has provided criminals with greater access to personal and financial data than ever before. In 2020, Singapore saw a 37 per cent increase in people falling victim to a cyber incident as the global pandemic pushed people towards digital platforms for everything from banking to shopping to online healthcare.
With these numbers expected to grow, FSIs are faced with never before seen transactions and personal data levels. In response, they need to rise to the challenge by implementing scalable and risk-based models of cybersecurity.
Classic cybersecurity models are no longer enough to protect users from cybercriminals. ForgeRock’s 2021 Consumer Identity Breach Report found that finance was in the top three industry sectors most affected by data breaches, with breaches involving personal identity information increasing by 49 per cent.
As the reality of a cashless economy creeps closer, users who cannot or do not know how to protect themselves rely on FSIs to adopt the proper levels of security.
This responsibility grows more significant as consumers’ consumption of goods and services shift online, and cybersecurity breaches, scams, and hackers represent a greater level of threat than ever before.
An increase in cloud security breaches is also problematic. With an increasing number of FSIs shifting to cloud platforms, the impact of wide-scale data breaches through technology providers has become a pressing issue.
The 2021 Kaseya ransomware attacks have proved that hacks and breaches have become more sophisticated than ever.
New central banking rules implemented by the Money Authority of Singapore (MAS) work to ensure FSIs are responsible for checking the security of their technology vendors. FSIs need to be proactive in their implementation of security systems to protect increasingly digital society.
Improving user experience with passwordless authentication
To alleviate the pressures faced by FSIs, businesses also need to adopt scalable and risk-based cybersecurity models.
To detect and manage vulnerabilities, the implementation of intuitive systems which utilise AI provides a much more robust solution than traditional rules-based models of criminal detection. Ultimately, minimising the time and energy spent on fraud detection enables FSIs to put more resources into improving customer experience.
Given the weak passwords, multi-factor authentication (MFA) is a more reliable mechanism for safeguarding access to consumer devices, but more can be done to build upon this. The best solutions rely on passwordless authentication.
Passwordless authentication works by expanding the circle of trust to devices via a security key— without any certificate management. This is not only more secure by minimising points of vulnerability from malicious actors, but it also creates a user-friendly customer experience with fewer friction points.
The end-user experience of migrating to a passwordless environment can be seen in push-based authentication. Leveraging things like face-ID or touch ID for the second authentication factor means users don’t have to remember hundreds of unique passwords and usernames.
This authentication method also makes the user themself a central part of the login process, making it hard for malicious actors to replicate, significantly reducing the risk of a breach occurring.
With the rise of a completely digital economy, FSIs can no longer rely upon fixed threat detection methods. As digital access in hyper-speed continues to grow, investing in intuitive infrastructure is paramount to the success of a cashless economy.
Up against unknown threats, solutions need to be adaptable, scalable, and intuitive to protect the increasing number of users online. With an increased responsibility placed upon the shoulders of FSIs and their leaders, the best solution is the solution that effectively solves tomorrow’s problems today.
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