Who Are You?

Identity verification goes mainstream in bank security features

  • By Katie McCarthy
  • Jul 01, 2007

IDENTITY theft has changed the public's perspective on financial security. Phising scams take consumers to Web sites almost identical to their trusted bank, a stolen driver license can lead to forged checks, a stolen Social Security number can open numerous credit card accounts and card cloning has left the public vulnerable.

Financial institutions are doing their best to address consumer concerns. They are making sure that they know as much as possible about who they are doing business with. In a world where people carry cash less often, transfer money online and can sign up for a credit card in less than five minutes, identities are directly linked to a person's pocketbook. And in response to that, access to personal and corporate accounts need to be monitored more strictly. In the age of the Internet, the question that banks should ask is who are you?

Multi-Factor Authentication
"Right now, financial institutions are under increased pressure from consumers and the government to increase security around customer identification relating to the Internet and other transactions where individuals are not present," said John Lazzaro, vice president of financial services, VoiceVerified.

Federal pressure is coming in the form of increased regulations. The Federal Financial Institutions Examination Council (FFIEC) has issued the "Authentication in an Internet Banking Environment." Designed for banks offering Internet-based financial services, the guidance describes enhanced authentication methods that regulators expect banks to use when authenticating the identity of customers using online products and services. Examiners will review the progress of financial institutions. The deadline for compliance is the end of 2006.

There also is a movement to define exactly what enhanced authentication methods means. Many businesses understand that to mean multi-factor authentication. The National Institute of Standards and Technology has yet to release a specific definition for what multi-factor authentication is, leaving banks exploring their options while they wait.

Identification can come in many forms.

"It can be a combination of something you have, something you are and something you know. In the real world, it's something you have which is your card and something you are, which is your signature," Lazzaro said.

Creating an identity online is different. During an Internet transaction, you lose the physical card and your physical presence. And since a password and a PIN could be stolen, there must be another form of authentication. Financial institutions need to make sure that you are who you say you are.

Speak Up
Simply speaking is a great way to identify yourself. Voice is as unusual as a fingerprint and unlike a password it can't be stolen. With this technology, you can identify yourself from any telephone all across the world.

Small banks are realizing the potential of listening to their customers in a whole new way.

Somerset Trust Co. uses technology from VoiceVerified to secure high-risk transactions. Used as authentication for wire transfers, the bank predicts usage across all banking services requiring multi-factor authentication, including its call center, telephone, online and bill pay services.

"We are intrigued by the possibility of voice being the only method of authentication needed beyond username/password in the future -- a single-user credential that can be used for every aspect of the customer relationship," said Richard Stern, senior vice president and treasurer of Somerset.

The enrollment process protects against theft. Voice authentication is deployed through a 90 second process where an individual is requested to recite a series of random, five-digit numbers. From that series of numbers, an electronic voice print is created. And the voice print can't be recorded or replicated to try to hack into the system. Each time the customer calls in, they are asked to repeat a different number that is compared to their voice print, and the individual is identified, Lazzaro said.

"As the criminal element out there can steal all your information and passwords that are static, things like voice verification are dynamic. You can't steal someone's voice and the pass code changes every time. It's a very viable solution to identity theft," Lazzaro said.

International Credentials
For larger companies, the concern with multi-factor authentication is being able to do business all over the world.

"Identity authentication is a key focus because when you do cross-borders transactional processing, you want to be able to authenticate the parties to the transaction. And that it is really who they say they are," said Andrea Klein, chief marketing officer, IdenTrust.

Developed as a tool to address the technical aspects of identity management, IdenTrust solutions also provide a legal and global interoperable environment for using identities. As a bank-built identity company, IdenTrust enables businesses to actively manage their e-commerce risks through trusted relationships. IdenTrust supplies legal mechanisms that allow trading partners to trust the other's identity.

Letting a company manage a bank's identity management requirements allows U.S. banks to stay within compliance. In Europe, it's streamlining how they do business. Two areas where identity management is crucial are the Single European Payments area, which focuses on integrating payments across borders, and the market and financial industry directive for a single European Settlement Mechanism.

As the Internet gains popularity, IdenTrust credentials might be able to save companies travel time. Today, businessmen and women fly in to confirm their identity. In the future, with the proper paperwork, they may be able to easily open an account across borders in a safe, secure manner.

Moving On
By the end of the year, multi-factor authentication will be the standard. New solutions will hopefully cut down on the amount of identity theft. For now, it's important that the topic continues to be discussed and that consumers know how to protect themselves. Financial institutions are using cutting-edge technology to protect their customers. And it seems that technology is doing a great deal letting the world know who each of us are.

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