2 Factor Authentication – Is It Beneficial For the Fintech Industry?

Almost everything we do nowadays, we do it on the internet. Be it for our activities in personal life and official purposes. Digitization definitely brought ease into our lives. It is more convenient to communicate now than ever before. Because of technology, merchants have a lot of opportunities to perform their work operations. 

As much as technology is benefiting businesses these days, it has also become convenient for criminals to undergo bad acts using advanced technological tools. The exponential increase in crimes required businesses to have authentic verification measures for identity proofing vendors. 

How can 2 factor Authentication Reduce Fraud?

Fraudsters no longer use traditional methods of spoofing a system, rather they prefer virtual ways as a better option for themselves. By using machine learning and artificial intelligence, cybercriminals can poke their nose into anyone’s social media accounts that do not have strong privacy protocols. Companies often face data breaches and ransomware attacks every now and then. Without complying with 2 factor authentication measures, the financial losses have increased over time. Financial institutions and banks have induced digital verification of carrying out transactions but cybercriminals have found a way to accomplish their heinous acts there too. 

Financial institutions are facing high scrutiny by regulatory bodies as well as customers to make sure that their data remains secure and protected. Along with the legal pressures, customers are also vocal and demanding to ensure that businesses become more responsible and transparent with their credentials. All the industries including FinTech demand a higher level of security like 2 factor authentication to protect their sensitive information. 

Fortify Customer’s Sensitive Data

One way to protect the customer data that these institutions can use is to secure the user apps that they use to log in to their accounts. Conventional ways in the apps require customers to put in single identities like username, password, email address, phone number, etc to gain access to the app. However, this method needing a single security key is not sufficient. 2 factor authentication is an additional security step in the process. It acts like a double security door, if a fraudster unlocks the first door, he is blocked by the second one. 

Common 2-FA Approaches 

Generally, there are 3 factors included in 2 factor authentication: 

• The first thing required in two-factor authentication is your password (something you know)
• It may also require you to have your mobile phone or any other hard device (something you have)
• The other thing it may require is your facial features or fingerprint (something you are)

2 factor authentication needs customers to have two of these options. Along with a password, 2-FA can request you have a cell phone for a time-based one-time password (TOTP) or that you present any biometric like a selfie or thumbprint.

Importance of 2 Factor Authentication in the FinTech Industry 

Phishing attacks are the worst of all cybercrimes. Therefore, financial institutions are required to protect their business from them. Phishing emails can direct your customers to share personal credentials. To have a 100% authentication measure to stop these frauds is still a struggle. However, companies have 2 factor authentication to ensure emails are protected, be it your business emails or personal emails. 

2-FA comprises two steps in which the first step is common and everyone is obliged to perform it. It is the password. Setting a complicated password is what users are required to do. The second step in 2 factor authentication involves a verification code that is shared on the users’ recovery email address or phone number. 

The department of cybersecurity of all the businesses makes sure to enable 2FA for all the business emails. If any step in 2 factor authentication is compromised, the system will not allow the user to access the account. For instance, a code is sent to a registered number and without entering the code, nobody can access the emails. 

Benefits of 2 factor Authentication 

The Digital verification method proves to be an extra layer of security. Having 2-FA in your system will make it hard for fraudsters to take control of your accounts. In wake of the increasing fraud cases, it is crucial to ensure that your account is secure and protected. This is the reason why some companies are trying to move their system from dual-factor authentication to 3-factor authentication. 

Furthermore, as an average person has multiple accounts, so the chances of using the same password for different accounts are likable. This is dangerous since it will make the process easy for perpetrators to access more of your accounts and thus steal a lot of your data. So relying on more than mere passwords like it does in 2 factor authentication is significant. 

Summing it up 

2 factor authentication, being an easy and simple verification method, is used by a lot of social media users and email service providers. An additional layer of security, 2-FA authenticates that the users’ credentials are saved by verifying individuals in two steps.