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PSD2 Strong Customer Authentication – 3 Factors for Success

Blog: Enterprise Decision Management Blog

Three locks and data

From September this year, PSD2 requires Payment Service Providers (PSPs) to secure more transactions using Strong Customer Authentication. PSD2 mandates a framework for when customers must be authenticated using two different factors from:

Source: FICO Blog

Asking customers to provide these elements is likely to be disruptive to them, delaying or even preventing them from making payments or carrying out other activities. Customers will lay the blame for this disruption at the feet of their PSPs; those that provide a poor customer experience will lose customers to those that do it better.

What Can PSPs Do?

There are two main areas that PSPs need to look at in order to reduce the impact of Strong Customer Authentication on their customers:

PSPs are now actively implementing strategies to help them meet their Strong Customer Authentication obligations, so what are the key factors they should consider?

1.  Compliance with Regulation

This is an obvious area of focus, however there are some factors that are easily overlooked. PSPs need to:

2.  Improved Customer Experience

If PSD2 compliance comes at the cost of customer experience, then the PSP is likely to lose customers to those that have taken a more customer-centric approach to Strong Customer Authentication. As the infographic below shows, there are 3 things that banks are getting wrong when they build their Strong Customer Authentication solutions without paying enough attention to their customers’ journeys.

They dictate to customers how they must authenticate. A FICO survey of 500 UK adults found that if their bank told them they must provide a mobile phone number for authentication purposes, only 53% would do it willingly.

They don’t offer enough choice of authentication methods. Even looking at something as simple as the delivery of a one-time passcode there was much diversity in how people would like to see it delivered. The most popular method is a text message to a mobile phone, however 61% of UK adults prefer another method.

They don’t sufficiently account for factors that could prevent successful Strong Customer Authentication. An inflexible approach means the presumption is made that the prescribed method of authentication can always be completed. This is far from the truth — for example, a mobile phone signal can fail at any time, or a customer could be concerned about multiple people having access to their home phone. This attitude means that many PSPs are not deploying Strong Customer Authentication orchestration that can ingest information about changing factors and dynamically react to conditions such as a network outage or a higher risk factor being in play, such as a SIM swap.

3.  Cost-Effective Efficiency

Short-term policies that look to achieve minimal possible compliance are likely to increase costs. Without a strategic solution that takes an enterprise-wide view, inefficiencies and failures will be baked into the system that will end up costing more. To manage this PSPs should:

Managing all the above parameters through a single platform helps you to stop duplication of effort, reduce service costs and lower integration costs.

Our PSD2 Strong Customer Authentication solutions work holistically to help you achieve PSD2 compliance, cost-effective efficiencies and satisfied customers. For more information, read our solution overview sheet.


The post PSD2 Strong Customer Authentication – 3 Factors for Success appeared first on FICO.

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