The introduction of New Payments Platform (NPP) is tipped to be one of the biggest changes affecting the Australian financial industry in 2018. The NPP will allow instant payments for customers between their banks and other service providers. Where customers previously needed an account number and BSB to complete a transaction, mobile numbers or email addresses will be enough to receive payments in the new system.
While the NPP will be heralded by customers for its speed and convenience, for Australian financial service providers, it carries major security implications that must be addressed. Previously, banks had in some cases a 24-hour window to detect and halt fraudulent transactions. Under the new instant payments system, the time between transactions is completely reduced. This presents fraudsters with an advantageous opportunity and also creates a huge vulnerability point for financial institutions.
Timing is of the essence, and the arrival of instant payments means it has never been more critical for financial institutions to act and adopt security measures that can eliminate the potential for fraud and unauthorised transactions.
The rise of biometrics
With the rollout of NPP, it is no coincidence that the prevalence of traditional security means, such as passwords or your mother’s maiden name, are slowly in decline. While traditional passwords have acted as a layer of security, they are knowledge-based, meaning they are often compromised to hackers. Once someone has that information – or ‘knowledge’ – hackers have the ability to falsely provide authentication and wreak havoc on their victim’s bank account.
To mitigate fraud, Australian banks are looking to replace passwords as the traditional security measure with biometrics as a more secure technology. The implementation of biometric technology, which can range from voice recognition, facial recognition and fingerprinting, is becoming more prevalent in the Australian market. Last year, ANZ added a voice ID function to its Grow by ANZ app which, powered by voice biometrics technology, allows customers to make high value payments without a PIN or password.
Your voice as a tool
Voice biometrics is widely considered to be a tried and trusted security measure and could curb the influx of fraud with the introduction of NPP. Deployment of voice biometrics across financial institutions also makes the process of authentication easier. A customer can log in without having to type in a password or PIN and simply say a short passphrase such as “My voice is my password” or can identify customers as they interact naturally with a virtual assistant or human agent.
Beyond addressing security measures, adopting voice biometrics technology reflects the emergence of artificial intelligence technologies that assist in providing a seamless customer experience. Features like natural language understanding and voice recognition technologies are answering consumers’ expectations for a secure and easy way to communicate with service providers using the voice channel.
Voice can be harnessed as a powerful tool because of its ability to authenticate the user or account owner as well as detecting fraud. The algorithms applied in voice biometrics can also pick up unnatural voice characteristics and have the ability to detect computer-generated voices at a much higher precision than the human ear. When unnatural tendencies are picked up, voice biometrics technology has back-up mechanisms to challenge the speaker to verify their authenticity. Nuance’s voice biometrics solutions have secured over five billion transactions to date, and not once has an impersonation attack been reported.
By deploying voice biometrics as another layer of security for NPP, Australian financial institutions have the potential to reduce the instances of fraud and eliminate the possibility of large-scale attacks. When instant payments between financial institutions were rolled out in the UK there was a dramatic increase in the number of fraudulent transactions.
Deploying voice biometrics allowed UK banks to significantly reduce their fraud losses within contact centres and enabled the identification, arrest and prosecution of many of the most prolific fraudsters in the UK. A top UK bank prevented over 200 cases of fraud in just under 6 weeks after introducing Nuance biometrics, which led to savings of 4.5 million pounds (approximately AU$7.9 million).
HSBC bank also saw success in the UK, having caught 4 million pounds (approximately AU$7 million) of fraud attempts after just one year of deploying a voice biometrics. Australian banks have the opportunity to learn from the UK example and ensure they have strengthened their security ahead of the NPP roll-out.
Preventing fraud will become a key objective for financial institutions as the NPP is introduced. Voice biometrics can hugely increase the security of instant transactions. As we see the increase of voice transactions across wider industries, banks are looking to voice biometrics and voice recognition technology to create new and convenient channels of communication for customers. With the roll-out of instant payments in Australia, voice biometrics should be encompassed as part of a broader strategy that augments existing security and fraud processes in banks.
Robert Schwarz is Australia and New Zealand managing director of enterprise at Nuance Communications