Presented by Envestnet | Yodlee
Financial fraud increases as data sharing becomes more complex. Stream this VB On-Demand event to learn how payment processors can step in and take a stand against data breaches and attackers, with highly secure ways to retrieve, verify, and share data.
Digital financial applications and services, which provide consumers with convenient ways to pay for products and services, send and receive money and manage investments, have become the norm. But as digital interactions spread across the financial ecosystem, regulatory compliance becomes more important as the risk of fraud increases exponentially.
Account verification is the critical first step. Before any transaction, a financial services provider must verify that the funding source is valid, that there is sufficient balance in the account, and that the money belongs to that customer. Account verification in many cases exposes ownership and banking information to the financial services provider. Given the required infrastructure and compliance required to manage and maintain banking information, account tokens serve as a highly secure way to retrieve, verify, and share verified account information.
“We are committed to protecting customer data at all times,” said Lloyd Fernandes, VP, product management at Envestnet | Yodle. “Therefore, the industry and businesses should consider adopting the most secure standards for account authentication.”
Why Account Tokens Are Critical Now
When a customer logs into a site or an app, they hand over incredibly sensitive data to the fintech or organization running the workflow, whether they open an account or make a payment. The financial services provider gains access to ownership information, balance information, and bank account information such as routing and account numbers.
“Verification is enhanced information about the holder profile,” Fernandes says. “In addition, AI and ML-powered transaction analytics can provide inferred information about a bank account that opens up better methods of account verification and thereby opens up newer revenue opportunities. All of this means that account tokens are critical, as now that serves as the starting point for a number of different possibilities, account verifications could be the right solution.”
The consumer gives up that information in exchange for convenience and convenience, such as fast login and fast transactions, but in return also expects data to be stored, used and transmitted safely and securely.
“Account tokens also play a major role there,” Fernandes says. “When sensitive data is always tokenized, from the time it is acquired to the time it is used, that token becomes the secure intermediary from account verification to transaction. Only the data needed to verify the funding source is sent, the data is encrypted, and the user’s credentials are securely managed throughout the process.”
The token-based authentication protocol eliminates friction because once it verifies a user’s identity and issues a unique access token, customers can easily access that service without having to re-enter their credentials every time. But tokens also provide a second layer of security, giving administrators greater visibility into the user’s actions across the site, while still protecting the user’s sensitive data.
Tokenization ensures that a customer’s bank account and routing numbers are never sent along with a payment. It reduces the chances of a customer’s account information being stored with third parties such as retailers, fintech apps and more. And when a system is compromised, the token can be deactivated, rendering it useless.
Account tokens and the shift to open banking
Today, consumers are accustomed to using account tokens for their credit and debit cards, for example, the tokenization framework that Apple Pay and Google Pay use, making payment a seamless tap on the phone.
The banking industry has never really embraced the idea of tokenization for real-time payments, but fintechs are embracing the solution, making authentication tokens more common than ever before. And now we also see FedNow and THC’s real-time payment services promoting these secure tokens to keep customers’ bank account numbers hidden from third parties. This is driving the industry towards a standardized tokenization protocol and is a huge boon to a successful open banking solution.
In the open banking framework, the token represents a consumer’s reference at a financial institution. A consumer can have any number of tokens, with multiple financial institutions. With tokenization, open banking – which gives third parties access to financial data through the use of Application Programming Interfaces (APIs) – becomes much more secure.
“Very soon, consumers will have secure, fully tokenized wallets that prevent fraud,” Fernandes said. “Open banking protocols will be more secure and easier to implement than ever, making customers even more likely to embrace these solutions.”
To learn more about how authentication tokens are improving the way financial services firms serve their customers, how they fight fraud, and what tokenization means or the future of the industry, join this VB On-Demand event.
Start streaming now.
agenda
- Learn how account tokens work to reduce the risk of data theft
- Protect sensitive financial data from hackers and malicious parties
- Simplify complex account verification processes
- Eliminate the need to store sensitive financial account information
- Get ready for open banking and open finance opportunities
presenters
- Jeff WilliamsSVP Product Development, The Clearing House (TCH)
- Ginny ChappellEVP, Product & Marketing, Moov Financial
- Lloyd Fernandes, VP, Product Management, Envestnet | Yodlee
- Chris J. PreimesbergerModerator, Venture Beat
