Data security is more important in the banking sector than ever before — the industry was hit with a 1,318% year-on-year increase in ransomware attacks in the first half of 2021 alone. Not only do cyberattacks in the banking industry come at a huge price ($18.3 million annually per company), but they also damage consumer trust (8 out of 10 U.S. citizens worry businesses can’t secure their financial information). Fortunately, privacy-strengthening technologies are evolving to protect sensitive financial data and restore peace of mind.
Biometric data verification
Since no faces, voices, or fingerprints are ever the same, biometric data is playing an increasingly important role in improving financial security. Over half of Americans say biometric technology, including fingerprint scanning, facial identification, signature dynamics, and hand geometry, would help strengthen their confidence in the safety of their personal or credit/debit card information when shopping. Facial recognition, for example, uses your device’s camera to capture your image and create a mathematical pattern tied to your identity (taking nose position, forehead size, and distance between the eyes into account). And, in digital banking, bank accounts can now be opened via a smartphone with the camera taking a photo of the user’s face and their identity card to compare and verify the images.
Open baking security solutions
Open banking is a type of banking that gives third-party financial service providers access to consumer financial data (with the consumer’s consent) through APIs (application programming interfaces). Thanks to open banking APIs, for example, customers can securely share their data with multiple financial institutions, making switching banks a much easier task. APIs can also review consumers’ transaction data to make tailored financial service and product recommendations. Financial security, however, is a key concern in open banking. Fortunately, tech solutions like “virtual clean rooms” eliminate the risks associated with handling raw data in open banking. By using advanced cryptography and mathematics, all legitimate operations on financial data are facilitated while illegitimate operations are prevented.
Payment tokenization replaces a consumer’s card details, including their PAN (Primary Account Number), with a one-time unique token identifier during payment. These tokens hold no value themselves, but rather substitute sensitive, more valuable information, ensuring credit card information can be authorized promptly for payments, while in turn eliminating the risk of data breaches. Tokenization is becoming increasingly popular for mobile payments with use of mobile wallets like Apple Pay and Google Pay for both online and contactless transactions expected to double from 2020-2025 in the U.S.
Privacy-enhancing technology in the banking industry is rapidly evolving. Biometric data verification, open banking solutions, and payment tokenization are the latest innovations in keeping sensitive financial data safe.