Risk-based authentication helps identify and disallow someone from accessing secure systems, processes, and enterprise information. It works by matching the credentials of an individual available within the database of users who exist in the whitelist or by checking the data authentication servers before deciding.
In a world where business dynamics are constantly evolving, transactions must be seamless and instant to increase customer satisfaction. However, it’s also critical to identify and validate customer authenticity to prevent data leaks and data manipulation from fraudsters. Therefore, the importance of risk-based authentication becomes vital to address these challenges to create data insights and help give customers a risk-free and seamless transaction experience.
You may have noticed that whenever you want to complete a bank transaction, you need to follow a series of steps before your transaction can go through. In addition, this is also part of risk-based authentication, which decides whether to let that transaction through or not, based on individual profile and risk assessment.
How Does it Work?
Active Analysis for Real-Time Decision Making
Risk-based authentication systems often work on proprietary methods to detect frauds. The algorithm it’s built upon considers multiple customer touchpoints to analyze and score every transaction occurring within the system. This allows for a seamless experience for customers while ensuring data integrity and the safety of each customer’s financial data, which is done using the following methods:
- Analyzing customer transaction activity
- Device fingerprinting
- Location data analysis
- Behavioural biometrics
- Analyzing links
EMV 3D Secure for Added Protection
Most likely, you are aware of this term if you have ever used your credit or debit card for online transactions. The EMV 3D secure prevents any unauthorized use of your cards for online transactions by using push notifications to notify you if a transaction has been initiated, sending OTPs to your device to authenticate a transaction, or requiring you to verify the transaction using biometrics physically. This helps in creating a frictionless and better experience for your customers and better sales.
Real-Time Analytics and Configurable Business Rules
A risk-based authentication system helps you configure your business rules to capture any risks associated with online transactions by analyzing changing fraud patterns. It also helps in real-time monitoring of market conditions and transactions during flash sales. Also, this assists in lightning-fast transactions for customers, thanks to advanced analytics and customer insights.
A risk-based authentication system is crucial in a competitive world, where businesses need to evolve to provide the best possible experience for customers. It results in fewer cart abandonment due to an efficient checkout process.
These days, customers are getting increasingly savvy and aware of online frauds. Therefore, they are increasingly sceptical of transacting online unless they are sure of the business practices of the brands. With the advancement in technology, both banks and merchants have the opportunity to engage customers using multiple touchpoints.
With a higher number of consumers engaging in online transactions, the risk of online fraud is at an all-time high. Therefore, it’s becoming increasingly important for online companies to increase security to reduce fraud incidences to prevent distrust and increase the level of confidence customers have in the business.
A risk-based authentication system helps authenticate every transaction before it goes through and reduces the risk of a monetary loss due to online fraud. Therefore, risk-based authentication is crucial for your business to increase sales and trust in your brand among your customers and create a safe and secure transaction environment for them.
It can help convert data points from every transaction into intelligence to provide an insight into the consumer’s transaction behaviour pattern by offering you information about the device, locations, and the type and frequency of transactions initiated by a customer in the past. Moreover, this helps identify any deviations in the pattern and prevents any incidences of fraud.
