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Oisin Lunny
Oisin Lunny 25 April 2016

The Importance Of Two-Factor Authentication For Financial Services

As cyber security threats increase over time, industries are being forced to safeguard against attacks. And when it comes to security, the financial services industry has always been on the cutting edge.

This is particularly true when it comes to two-factor authentication and the role it plays in securing the accounts of its customers.

The Importance of Better Account Security

 Whether it’s an email account or bank account, hacking into someone’s online accounts has sadly become easier than ever. Hackers have become even more sophisticated and it’s now fairly easy to identify vulnerabilities in servers and figure out passwords.

And while hacking a personal email may or may not have catastrophic results, hacking into a bank account certainly can. For organizations in the financial services sector, the primary focus moving forward needs to be on preventing cyber threats by better protecting client account information.

Tech writer Matt Asay argues that security is no longer the responsibility of individual departments within an organization. It goes straight to the top.

“First, your company’s board is not going to blame the CIO or CISO (chief information security officer) for the breach,” Asay writes, outlining the need for two-factor authentication in all industries. “They’re going to blame the CEO. Breaches are no longer a technology issue. They’re a core business issue.”

There’s research to support Asay’s opinion. A recent survey of more than 200 corporate directors reveals that more than 40 percent of respondents feel like CEOs should face the brunt of breach-related backlash.

Overall, security is a big deal in 2016 and financial services organizations need to place a major priority on securing client information and protecting accounts. One approach is to leverage two-factor authentication.

Understanding Two-Factor Authentication

“With password breaches seeming to happen today with alarming regularity – thanks in part to the way we reuse too many of our passwords – the need to improve authentication practices has reached critical levels,” writes David Strom, a thought leader in information technology. “Deploying a multifactor tool blunts the effect of this excessive password reuse by requiring people possess something more than their reused passwords to authenticate themselves.

For those unfamiliar with the ins and outs of two-factor authentication, here’s a brief explanation. Two-factor authentication is basically the use of something more than just a username and password to identify a user.

The problem with usernames and passwords is that they are simply something a user knows. Someone else can steal this information relatively easy. Two-factor authentication requires access to two separate factors: (1) something the user knows (username and password), and (2) something the user owns (mobile phone or device).

When two-factor login is required, a user must input their username and password, then wait for a security question or randomly generated passcode to be sent to their mobile device. This additional security measure requires the person logging into the account to also have a specific physical device in their possession. This prevents remote security breaches – which constitute the majority of account breaches.

4 Reasons to Invest in Two-Factor Authentication

From a financial services perspective, the importance of two-factor authentication can’t be stressed enough. If you aren’t using it in your organization, then you need to quickly reevaluate your current state of security.

Here are some specific reasons why now is the time to make an investment:

  1. Customer Satisfaction and Peace of Mind

Customers are becoming increasingly savvy and have grown to expect two-factor authentication from many of their service partners. If you want to give your clients peace of mind, then it’s imperative that you offer this comforting safeguard. Even if it never protects them against an actual attack, the enhanced level of security they feel will ultimately reward you with long term loyalty.

  1. Increased Cyber Threats

The frequency and intensity of security breach attempts will only increase in the future, and you need to be prepared. According to a study from PwC, the number of reported security incidents rose by 48 percent in 2015 to 42.8 million. That’s the equivalent of 117,339 attacks per day.

This trend doesn’t appear to be stopping any time soon, either. The compound annual growth rate of detected security incidents has grown a whopping 66 percent year over year since 2009.

In other words, you may be getting along fine without two-factor authentication right now, but you certainly won’t be able to survive in the future.

  1. Liability Issues

If a security breach ever happens within your organization, then you’re bound to face serious liability issues. If you don’t have adequate safeguards in place, it’s going to be difficult to claim innocence. On the other hand, if you have a detailed security plan in place – and one that includes two-factor authentication – you’ll be able to confidently claim that you’ve done everything you can to protect sensitive client information.

  1. Extremely Simple and Cost Effective

The final reason for leveraging two-factor authentication sooner rather than later is that it’s extremely simple and cost effective to get started. By choosing the right service partner, you’ll be able to continue your existing operations without a hitch.

Contact OpenMarket Today

If you don’t currently have a two-factor solution, or aren’t satisfied with your current provider, then don’t hesitate to contact us today.  We would be happy to walk you through the details of our solution, how it works, and how it will directly impact your organization moving forward.

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