Authentication is the process of verifying a user's identity before they can access digital banking services or conduct transactions. With the rise in online transactions, secure authentication methods have become crucial to prevent unauthorized access and protect user data.
So, what types of authentication are recommended for secure digital transactions? Let’s dive into the article!
Types of Digital Authentication
There are various digital authentication methods used to protect user accounts and transactions. Here are the main types:
1. Something You Know
Authentication based on "Something You Know" refers to information only known by the user to access a system. Examples include passwords, PINs, or security questions. However, this method has weaknesses because users tend to use weak passwords or reuse them across multiple accounts, making them vulnerable to brute force or phishing attacks.
According to a VIDA report, over 97% of businesses in Indonesia have experienced password-based attacks.
2. Something You Have
This type of authentication uses a physical device or token owned by the user for identity verification. Examples include ID cards, hardware tokens, or OTP codes generated by authentication apps like Google Authenticator.
While safer than relying on passwords alone, it still carries risks if the device is stolen or hacked.
3. Something You Are
This category uses biometrics to confirm a user’s identity based on unique characteristics that are difficult to replicate. Examples include fingerprint scans, facial recognition (Face ID), iris scans, and voice recognition.
Biometric authentication has grown in popularity as fraudsters have become increasingly sophisticated at bypassing passwords, PINs, and OTPs.
Fraud Risks in Digital Banking
Digital banking faces a variety of evolving cyber threats. Major risks in digital banking transactions include:
1. Phishing and Social Engineering
Scammers trick users into revealing login information or OTPs by impersonating official banks.
This is often carried out via fake emails, SMS messages, or phone calls.
2. Account Takeover
Cybercriminals steal login credentials and hijack user accounts to conduct illegal transactions.
This can happen due to weak passwords or data leaks on the dark web.
3. SIM Swap Fraud
Fraudsters hijack a victim’s SIM card to receive banking OTPs and access their accounts.
Using SMS OTP-based authentication is no longer secure because of this technique.
4. Deepfake and AI-Generated Fraud
AI technology is used to mimic someone’s face or voice to bypass less sophisticated biometric authentication systems. This risk is increasing with the advancement of deepfake and biometric spoofing technologies.
Secure Types of Authentication for Digital Banking
To tackle security threats in digital banking, stronger authentication methods are needed. Here are some recommended types:
1. Biometric Authentication
This type of authentication uses facial, fingerprint, or iris scans for identity verification. Biometric authentication cannot be stolen like passwords or OTPs and provides a more user-friendly experience.
Example: VIDA FaceToken, which combines liveness detection and facial authentication to prevent spoofing and deepfake attacks.
2. Device-Based Authentication
Uses the user's registered device as a factor for authentication without relying on SMS OTPs.
Example: VIDA PhoneToken, which leverages Public Key Infrastructure (PKI) to secure transactions without SIM swap fraud risk.
3. Multi-Factor Authentication (MFA)
Combines two or more authentication methods to enhance security.
Example: Combining biometric authentication with device-based authentication to prevent account theft.
4. FIDO2 and Passkeys
Passwordless authentication technologies using public key cryptography. They reduce the risk of phishing and credential theft because they don't rely on easily stolen passwords.
In today’s digital era, filled with cybersecurity threats, using safe types of authentication is essential to protect digital banking accounts. Password-based methods and SMS OTP authentication are no longer sufficient and are highly vulnerable to attacks.
Digital banking services must adopt biometric authentication, device-based authentication, and MFA strategies. By implementing solutions like VIDA FaceToken and PhoneToken, users can enjoy stronger protection without worrying about data theft or unauthorized access.
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