OneSpan, one of the leaders in Financial Technology with a number of bank clients in the United States and Canada, released its 2021 Security and Fintech Predictions. We have listed the ten below.
- Banks will invest in roles dedicated to enabling data-driven decision making. We will see a rise in the creation of specific and dedicated roles within banks, such as the chief data officer (CDO), who will be responsible for the execution and delivery of the data-driven strategy within the organization. Chief Data Officers will play a critical role in the next normal that follows, as there’s never been such a vital time for CDOs to provide banks with timely and accurate data. These data leaders will help break down data silos in digital transformation teams to secure buy in from the C-suite and the entire organization.
- The future of the banking - more AI, machine learning, biometrics and less passwords. A massive transformation is occurring across digital and mobile channels in how banks engage with their customers and use AI. Banks will combine machine learning with biometrics to provide new experiences, such as facial and fingerprint verification instead of passwords. One example we’re already seeing is banks leveraging machine learning to detect and read physical passports to allow for ID scanning. Customers use their smartphones to scan a government-issued ID and then take a selfie. The banks then leverage biometric facial comparison technologies with liveness detection to verify that ID is authentic and unaltered, confirming the individual’s identity.
- Digital Identity based on Self-sovereign identity leveraging blockchain will emerge. The development of a decentralized or self-sovereign identity will bring a complete evolution to the digital identity space. We’ll see the development of digital ID fully under the control of the user securely stored in mobile devices within digital wallet. The complete ecosystem available for both public and private sector will leverage Distributed ledger technology as source of trust. We will also see the development of a standard protocol for issuing, ordering and verifying digital identities. By combining blockchain technology with standardization that can be made by regulators, self-sovereign identities will become the future of what today is a physical identity document.
- Synthetic identity fraud will increase in 2021. In the coming year, synthetic identity fraud will skyrocket, as bad actors continue to use stolen identities to open fake bank accounts. We will see more of this with the next wave of government stimulus. In fact, with more access to sensitive personal data, fraudsters have the power to perpetrate more digital fraud, create fake identities and drive up new and existing account fraud.
- Banks will start to accept other forms of currency. Because of COVID-19 and the move toward a cashless society, banks will begin to accept other forms of currency like Bitcoin and other cryptocurrencies. COVID-19 brought on a fear of handling cash and a rise in credit card fraud, which prompted banks to begin looking into accepting alternative, safe and secure means of currency.
- There will be frequent hacks in voice-capturing devices. As more organizations and financial institutions use voice for authentication in 2021, we’ll likely see an increase in hacks in voice-capturing devices that have microphones to record users’ authentication information. This information will be particularly susceptible to attacks if used by financial institutions, as it may contain sensitive information such as account numbers, social security numbers, or other personal identifiable information.
- Digital identities and remote account openings will gain traction worldwide: Regulators in Hong Kong, Pakistan, Greece, Macedonia, Mexico and Turkey approved remote bank account openings in 2020 – a clear indicator that even processes rooted in traditional face-to-face meetings in the branch are now going digital and touchless around the globe.
- Open Banking will grow rapidly throughout the world: As third-party providers (TPPs) are allowed to use banking information to help consumers save money, borrow more easily and pay efficiently, banks will increasingly work with TPPs. In the U.S., the Consumer Financial Protection Board (CFPB) issued an Advanced Notice of Proposed Rulemaking on consumer authorized access to financial data, which could be the catalyst for Open Banking in America.
- Facial recognition will drive the greatest changes to banking regulations: As banks increasingly use facial recognition technology for Identity Verification requirements, they are housing large amounts of consumer biometric data. Standards organizations such as the National Institute of Standards and Technology (NIST) and Fast IDentity Online (FIDO) Alliance and are developing frameworks that could be adopted at the national level and would stipulate how banks protect and store their customers’ biometric data.
- Regulation is on the way for cryptocurrencies: As digital banking platforms have experienced massive growth, many governments and industry bodies worldwide have begun to look to Central Bank Digital Currencies (CBDCs) and cryptocurrencies in terms of what they might add to the financial sector. This has resulted in new and refreshed conversations around the possible uses of CBDCs and cryptocurrencies.
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