As financial institutions bolster online identity authentication efforts in response to increasing threats and FFIEC guidance, firms are putting considerable thought into online security. In light of this industry movement, Mercator Advisory Group has released a new report, "Total Transaction Security: Best Practices in Limiting Fraud Exposure Online and Offline," in which it recommends four strategic imperatives to consider in developing online security initiatives:
1. Implement a portfolio-based approach when deploying multifactor authentication solutions.
By evaluating customer segments on risk and implementing authentication methods accordingly, firms can reduce operational costs, lower overall risk through increased adoption and improve overall security. Within an institution's customer base, there are users more likely to make use of certain channels and transactions. For example, high-net-worth customers likely behave differently from retail investors, and security measures should be applied based on these differences.
2. Invest in powerful transaction management software, and make the most of it.
The most effective means of identifying potential fraud -- and doing so early on -- is through robust transaction management solutions and analytics. Advanced models that include improved pattern recognition and learning greatly enhance a business' ability to control losses from fraud.
3. Embrace a holistic security mentality.
Mercator offers that defining an effective antifraud strategy involves a broader view of the problem, as opposed to spot treatment on individual fraud events. With this in mind, financial institutions have begun dedicating additional resources to security, illustrated by the advent of the chief security officer role and similar enterprisewide security oversight efforts.
4. Focus innovations away from derivative products.
Too often, innovations in technology focus on simply adding features and functionality to existing platforms and products. The real change in fraud prevention will require a true breakthrough technology as opposed to solutions that are merely derivatives of older products. <<<