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How can banks strike a balance between user experience and security requirements?

Read Time 4 mins | Written by: Finartz Team

In this article, we will explore how banks can bolster user experience and security simultaneously in online e-commerce payments. Banks operate within strict regulatory frameworks, while newer fintech companies enjoy more flexibility, often gaining a competitive edge through superior user experiences. However, both banks and fintech firms can enhance user experience within regulatory confines, while also implementing robust security measures against fraud, albeit not uniformly across all aspects of e-commerce payments.

Today, banks, payment institutions, and e-money institutions collaborate behind the scenes to facilitate online shopping payments. With the growing share of online transactions, this sector becomes increasingly attractive to fraudsters. While e-commerce merchants and financial institutions strive to streamline payment processes for ease and speed, they must also combat evolving fraud methods. Card payments, holding the largest share among online payment methods, have been the focal point of security efforts for the past three decades, particularly concerning cardholder verification during transactions.

In online payments, user experience and security are often viewed as conflicting priorities. Authentication methods employed during purchases can introduce friction, causing delays and additional steps for users, disrupting the payment flow. Consequently, these interruptions lead to negative shopping experiences and do little to alleviate the tension between user experience and security. Traditional security practices heavily rely on user input, but given advancements in technology and evolving user expectations, compromises in user experience are no longer inevitable or necessary for ensuring security. With the right tools and technologies, it's possible to achieve both seamless user experiences and robust security measures simultaneously. In fact, when executed effectively, security measures can enhance the overall user experience. Take, for instance, Face ID authentication on the iPhone—what could be more unique to an individual than their own face? It's a secure solution that eliminates the need for manual input and provides effortless access to applications.

Is it possible to strike a balance between authentication steps, creating a seamless experience for users while maintaining a secure environment for your organization? Despite the perception that rapid technological advancement complicates our work, it actually presents new opportunities. When it comes to fraud prevention and enhancing user experience, selecting the right products is crucial for success. These choices enable us to provide customers with a superior shopping experience while safeguarding our business. Let's delve into some technologies that can help us combat fraud and enhance the user experience.

Frictionless Verification with Risk Analysis

Frictionless verification, along with risk analysis, entails the comprehensive analysis of payment transaction data. This data encompasses various sources, from the user to the device used for the transaction and infrastructure providers. The goal is to verify the user without introducing additional verification steps. It's widely recognized that the primary cause of shopping cart abandonment is the additional verification step and the associated issues it brings. By combining security and user experience, risk-based authentication offers a time-saving alternative. It achieves this by analyzing your past actions, such as location and device information, in the background while you proceed with your payment. Factors like whether the user is logging in from a known and trusted device, an expected location, or a potentially suspicious remote location are evaluated silently. Based on the analysis of all these factors, a risk assessment is performed in milliseconds, unnoticed by the user, ensuring uninterrupted completion of the payment process. Currently, all secure e-commerce transactions in Turkey require active user authentication. However, online transactions abroad are increasingly verified by analyzing large amounts of data without the need for user interaction.

Imagine you've just made a purchase from your favorite e-commerce merchant, and now you're about to make the same purchase again in a very short period of time. With today's technologies, data transmitted during the transaction can be analyzed to ensure that the second transaction is secure and initiated by you. As a result, unnecessary additional verification steps can be bypassed, allowing for a seamless payment process.

Verification with Passkeys

Managing separate passwords for each application or website, ensuring they're up to date and avoiding conflicts with the last 5 passwords has become a complex task for all of us. This password management challenge has fueled the desire for a password-free future. A secure Internet experience without passwords is fast becoming the norm. Passkeys, which are already emerging in the new passwordless era, are poised to become the preferred method of user authentication during website registration and subsequent logins.

Developed by FIDO and integrated into our smart devices, passkeys eliminate the need for users to write and remember passwords. The technology is rapidly gaining traction, improving both security and convenience. With this method, users can verify themselves with a single click on subsequent logins using the previously generated passkey. Now, logging into your favourite application after the latest update is as simple as selecting your passkey - a cryptographic solution that provides security without the need to remember complex passwords. Although not yet widely implemented, these advances offer hope that future e-commerce payments can offer both security and a user-friendly experience.

Can Passkeys, which offers high security with just one click, be used for transactions that require both security and speed, especially for e-commerce payments? Would you choose a one-click verification method that ensures high security for e-commerce payments over the current practice of searching for verification codes in your phone's messages, hastily copying them or trying to remember them? Or perhaps the elusive mobile notifications from your bank? As user options continue to expand rapidly, financial institutions that provide the infrastructure for e-commerce and payments face a significant challenge: breaking away from traditional habits.

Regulated players in the financial industry and fintech organisations, which have relatively greater flexibility in providing e-commerce and payment infrastructure, can leverage innovative technologies such as Finartz's secure online payment solutions. These technologies have the potential to deliver a superior experience and enhance the security of e-commerce payments.

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