Divergence Instead of Convergence in Security and Payments Authentication Industry

Companies working by themselves for a common cause are not good for the ecosystem. It is good that we have seen multiple alliances in the recent past.

If companies work solo, it can be hard to succeed, but if alliances work solo, it might be even harder. The industry is now looking for a standard that would be acceptable for all. An industry standard can be created only if all the alliances work for a common cause. There is even a risk of hampering the ecosystem otherwise.

1. The FIDO Alliance is trying to revolutionize online authentication systems

The FIDO ("Fast IDentity Online") Alliance is an industry consortium which was launched in February 2013. The industry consortium is trying to address the lack of interoperability among strong authentication devices and the problems users are facing by creating and remembering multiple usernames and passwords.

Last month, the FIDO Alliance announced that tens of millions of FIDO-based devices are now in use to protect end-user and enterprise accounts with strong, cryptographic-based authentication at major relying parties such as Google, PayPal, NTT DOCOMO, INC., Bank of America, Dropbox and GitHub. The modern FIDO authentication system is backed by nearly 250 alliance member organizations from around the world including the US, the UK and German government agencies, and more than a dozen trade association partners. The system aims to replace outdated passwords.

The focus of the FIDO Alliance has been more in bringing biometric security and payments authentication solutions.

2. Banks want to own and control identity & authentication systems

Early Warning (EWS), the joint venture of the top US banks acquired Authentify Inc. founded in 1999. Authentify is a leading player in phone-based, multi-factor authentication solution provider. Last year Payfone, a provider of mobile security solutions partnered with Early Warning. The partnership brought Payfone’s Identity Certainty platform to banks looking for better ways to authenticate customers with mobile.

Another important example: Dutch banks. The growing attention and usage of digital services has led Dutch banks to join hands in launching a pilot for a new interbank digital identity service in 2016. The service will allow a customer with an online banking account in the Netherlands to login to commercial and government service providers’ websites without the need for maintaining multiple accounts.

The banks will be collaborating through the Dutch Payments Association and will be working with Innopay on a pilot who will go live next year and let participating customers use their online banking details to access services from the Dutch tax authority and an insurance company. The association particularly emphasized that no banking details such as account balance or payment details are exchanged.

Innopay shared the news on participating in the pilot launch on its official website. The company specified that the service is based on the user experience and technology of the hugely popular Dutch payment product iDEAL. The service will offer two main services that always require the explicit consent of the consumer:

- To allow identification and authentication of a consumer based on credentials issued by a consumer bank

- To provide verified personal attributes of an authenticated consumer from the bank’s administration.

3.Financial Innovation Now (FIN) - Financial Innovation Coalition formed by PayPal, Intuit, Apple, Google and Others

Technology leaders like Amazon, Apple, Google, Intuit and PayPal have formed a coalition called Financial Innovation Now (FIN) to promote policies to help foster greater innovation in financial services. The technology frontrunners want to provide solutions to issues such as security & fraud prevention, real-time payments, online lending and access to basic financial services.

Financial Innovation Now is formulating policies for issues like:

- Trust and safety in financial services

- Leverage technology to reduce barriers to financial services for the underserved

- Enable innovation and real-time payments clearing processes

- Streamline rules for online lending marketplaces

- Promote best practices for consumer and small-business online lending

- Unlock the power of financial applications

The alliance would help in resolving complexity and security issues of the new digital landscape, and the need for standards and common understanding among various players involved.

Today we are looking more towards convergence, interoperability instead of divergence. The big question that will arise when these alliances start succeeding is who will follow whom. Today the security and fraud prevention industry is fragmented. Several firms across the world have built their own solutions and the industry is totally fragmented. We are now looking for an industry standard that would be acceptable across all geographies. If companies start joining hands with specific alliance, it would never lead to creating an industry standard. What do you think? Can we do something about it? Is now the correct time to have convergence instead of divergence?