Telephone Banking Authentication Practical Approaches to Securing a

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Telephone Banking Authentication: Practical Approaches to
Securing a Popular yet Vulnerable Channel

Description:    Overview
                Financial institutions (FIs) must implement effective authentication solutions that address spe-cific,
                often mutually exclusive threats from different channels, while remaining in compliance with FFIEC
                guidelines which pertain to both telephone and online channels. With phone usage increasing over
                historical levels, this report provides comprehensive coverage and analysis of consumer preferences
                toward telephone banking, and evaluates the authentication methods currently being used by FIs
                for the phone channel. Building upon robust consumer data gener-ated from a survey of 3,215
                respondents, Javelin also interviewed several top FIs and authenti-cation solutions providers to
                obtain qualitative input on current phone security efforts and market trends. Finally, Javelin
                investigates several well-known phone authentication products.

                Primary Questions

                -How can FIs secure the phone channel, while maximizing efficiency and reducing costs?
                -Which phone authentication solutions provide the best security?
                -What phone authentication solutions are FIs using?
                -How many consumers conduct phone banking transactions (compared to other channels)?
                -How secure do consumers feel using the phone channel?

Contents:       Overview 3
                Primary Questions 3
                Findings and Analysis 3
                Over One-Third Of Consumers Bank By Phone: Channel Security Is Critical 4
                Confidence High In Telephone Banking Safety Despite Fraud Potential 6
                Expect Growth In Telephone Fraud With Advent Of VOIP 7
                Weak, In-Wallet Authentication Prevails On The Phone Channel 9
                Fortify Phone Authentication With Risk Scoring, Voice Biometrics And KBA 12
                Vendor Solutions By Need: Comprehensive Or Component14
                What’s The Bottom Line 16
                Related Research 17
                Appendix A: 15% Of Fraud From In-Store, Mail Or Telephone Purchases 18
                Appendix B: Online Bill Payers Have Higher Rates Of Phone Contact Then Non-Bill Payers19
                Appendix C: Telephone Channel Usage Increasing Over Historical Levels 20
                Appendix D: Two-Thirds Of Consumers Use Telephone Channel 21
                Appendix E: Passwords And Voice Recognition Are The Top Phone-Based Solutions

                Table of Figures

                Figure   1: Used a Phone Operated System to Perform a Banking Function 4
                Figure   2: Spoke By Phone with a Bank or Credit Union Representative 5
                Figure   3: How Consumers Rate the Safety of Using a Phone Automated System 6
                Figure   4: How Consumers Rate the Safety of Speaking with a CSR 7
                Figure   5: Telephone Authentication Factors Used By Top 23 US FIs 9
                Figure   6: Phone Authentication Model 12
                Figure   7: Sources of Identity Fraud 18
                Figure   8: Financial Activities in Past 12 Months by Bill Payer at Bank Web Site 19
                Figure   9: Consumer Financial Activities by Type and Time Period 20
                Figure   10: Percentages of Online Consumers Who Have Ever Used these Channels 21
                Figure   11: Consumers’ Preferred Methods of Authentication for Online

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                                       Popular yet Vulnerable Channel
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