The growth of digital financial technologies has placed dual pressures on security systems. Emerging digital channels have facilitated fraud like never before, but users are growing less tolerant of added friction. Digital interactions that raise the customer experience bar, by streamlining previously tedious and time-consuming interactions, are being accompanied by progressively lower user barriers to ever riskier financial actions. For instance, FIs that wish to compete against third-party providers in P2P payments and mobile wallets cannot afford to impede the user experience with authentication interruptions. To combat this, FIs are eschewing higher-friction solutions (e.g., challenge questions and one-time passwords) for less conspicuous solutions (e.g., device fingerprinting and mobile location data). But while these solutions may provide some insights on the degree of risk during a specific activity, FIs will need to go further to create the seamless yet secure experience that customers expect.
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