By Robert Rutherford, CEO of QuoStar
Even before the pandemic, there was a sustained and steady move by businesses to the cloud. In the months since, it’s become a scramble. Agility has been critical to successfully navigating uncertain conditions, and those with cloud technology already in place were able to switch to remote working overnight. Those without were left with logistical headaches and little time to act before the lockdown closed offices nationwide.
As we enter a new normal in global working, the race to the cloud will intensify, as businesses expand their remote working capabilities and review existing arrangements. Many who do so are facing financial difficulty, and all in an uncertain economic outlook. Finding a solution that delivers on cost and durability will be a key challenge.
The first mistake would be to panic buy. Businesses need to take time to step back and evaluate requirements. They need cloud solutions quickly, but also answers that are right for the long term.
Doing so begins by addressing two fundamental questions: Does the business need it, and does it fit?
Answering these questions requires a complete overview of the systems currently deployed and a good understanding of who is using them. That visibility is, sadly, often lacking, and it can take an emergency to expose out-of-date or inadequate systems.
Building a picture isn’t a one-man job. It requires proper consultation with all areas of the business to understand their present challenges, team requirements and future plans. By identifying key stakeholders in a company’s IT systems and data, leaders will be able to gather the information to refine their search.
In any case, it is worth investing time and energy in the process. Without a real understanding of requirements, current capabilities and gaps, it’s as easy to overspend as underspend on a solution or to buy the wrong thing. All will be costly to the in the immediate and long-term return on investment.
Choosing a model
The second key question to consider is what type of cloud offering is likely to be most suitable. The cloud market is dominated in terms of market share by the big “public” providers – Amazon, Google, and Microsoft being the best known. There are, though, a large number of thriving boutique businesses, too, offering private or hybrid solutions.
While they ultimately share many of the same features, each of these models has its advantages. Public cloud providers, like Microsoft and Amazon, are the most widely used, and typically have lower costs, no maintenance requirements, high reliability, and unlimited scalability. In this model, a business is effectively a tenant, paying for space owned and managed by the provider.
Private cloud providers, meanwhile, offer more specialised services and the flexibility to meet specific business through a tailored service. That gives users more control over both capabilities and security. A private cloud solution is used exclusively by one firm, either privately located in a datacentre or hosted by a third-party. It may, therefore, be the best option for those looking for advanced management and increased control of their information.
If elements of both sound appealing, it’s also possible to use a hybrid model. This sees data and applications move between the public and private cloud. It enables sensitive information to be stored privately, while high-volume, low-risk information managed in a public cloud, with lower costs. It is, however, more complex to implement and may require engaging with a consultant or IT provider for assistance.
Choosing a vendor
Once you’ve decided on a model, all that’s left is choosing a provider. Even in the public space, there are several big names to choose from. Microsoft’s Azure and Amazon Web Services (AWS) are the most widely used public cloud platforms, but there’s a range of others, including IBM Cloud and Google Cloud Platform.
With many of these offerings pretty similar, the choice usually comes down to a trade-off between cost and ease of integration. AWS is often the most cost-efficient, but for those already heavily invested in Microsoft technology, Azure can offer better and simpler integration. The ease of this may also vary by geography, so it’s worth seeing which benefits providers offer in each location where the business has a presence.
For a private cloud solution, the process is likely to be more complex. Buyers need to carefully investigate the resilience, service level agreements, and additional services, such as maintenance and support, on offer, as well as the cost.
Finally, in all cases – regardless of the model or other considerations – security is critical. The switch to remote working has significantly increased many businesses’ vulnerability to cyberattacks, and we’ve already seen a wave of phishing scams threatening operations where workers are widely dispersed. Almost all organisations have significant amounts of sensitive data and with it a legal obligation to keep it secure. Reputable providers will have robust security arrangements in place, but businesses still have a responsibility to ask about these and thoroughly review them. It is not a job you want to leave until there has been a security breach.
An investment, not a cost
Covid-19 has forced rapid changes on the way all businesses work, but the effects are likely to be long-lasting. It will affect business operations and attitudes profoundly. With the future of large-scale offices up in the air, remote working will become a more prevalent offering in the modern workplace. The cloud will have a central role in the organisational IT of the future.
In turn, that also means internal, centralised systems delivering the bulk of IT service will increasingly be a thing of the past. They typically require costly upgrades, restrict workplace operations and can be prone to security compromises. Cloud, on the other hand, is scalable, flexible, evergreen, and, with the right provider, more secure. To maximise these benefits, though, businesses need to choose the right solution at the right price. To do so, they need to understand both their business requirements and a wide range of providers’ offerings. They need to shop around to find the right solution that will let them meet the challenges of the current crisis and make the most of the opportunities ahead as economies recover.
Entersekt provides clarity on Secure Remote Commerce authentication techniques for financial institutions
New whitepaper from Mercator available: Revisiting Authentication in the Age of SRC and EMV 3-D Secure
Is it time for a new authentication strategy in light of international mandates for Secure Remote Commerce (SRC) and EMV 3-D Secure? This is the question posed to financial institutions (FIs) in a new Mercator Advisory Group whitepaper entitled Revisiting Authentication in the Age of SRC and EMV 3-D Secure.
The paper, licensed by Entersekt for public distribution, delves into the role SRC and EMV 3-D Secure will play in the European Union’s Strong Customer Authentication (SCA) requirements under the revised Payment Services Directive (PSD2). It finds that now would be the ideal time for FIs to rethink customer authentication strategies, particularly with the deadline for full SCA compliance approaching on the 1st of January 2021.
“Consumers face an increasingly complex authentication landscape, which can vary greatly depending on the communication channels they use,” said Frans Labuschagne, UK&I country manager at Entersekt. “Multiple authentication techniques create unwanted friction and uncertainty. This paper gives actionable advice to FIs that need to keep security top of mind while also providing a good user experience.”
All card issuers competing for top of wallet will find useful insights in this whitepaper, which states that, “Since it is well recognised that convenience is critical to consumer adoption, it is time for financial institutions to rein in the multiplicity of authentication methods they use to identify account holders and even employees.”
Some of the key findings include:
- The lack of an integrated solution results in an inconsistent user interface.
- Inconsistency not only detracts from a customer’s experience but is likely to disrupt any cross-channel implementation plans an organisation might have.
- A customer who is presented with the same authentication technique for every interaction becomes more familiar with that technique.
- The authentication technique should be implemented on a smartphone, which 89% of UK residents between 16 and 75 already have.
- Consumers increasingly trust smartphone-based biometrics and are growing accustomed to using smart speakers for a range of use cases.
To download the whitepaper in full, please visit: https://www.entersekt.com/resources/white-papers/revisiting-authentication-src-3ds
This is a Sponsored Feature
Using AI to identify public sector fraud
When it comes to audits in the public sector, both accountability and transparency are essential. Not only is the public sector under increasing scrutiny to provide assurance that finances are being managed appropriately, but it is also vital to be able to give early warnings of financial pressures or failures. Right now, given the huge value of funds flowing from the public purse into the hands of individuals and companies due to COVID measures, renewed focus on audit is essential to ensure that these funds are used for the purposes intended by parliament.
As Rachel Kirkham, former Head of Data Analytics Research at the UK National Audit Office and now Director of AI Solutions at MindBridge, discusses, introducing AI to identify and rectify potential problems before they become an issue is a key way for public sector organisations and bodies to ensure public funds are being administered efficiently, effectively and economically.
The National Crime Agency has warned repeatedly that criminals are seeking to capitalise on the Covid crisis and the latest warnings suggest that coronavirus-related fraud could end up costing the taxpayer £4bn. From the rise in company registrations associated with Bounce Back loan fraud, to job retention scheme (furlough) misuse, what plans are in place for government departments to identify the scale of fraud and error and then recoup lost funds?
There is no doubt that the speed with which these schemes were deployed, when the public sector was also dealing with a fundamental shift in service delivery, created both opportunities for fraud and risk of systematic error. But six months on, while the pandemic is still creating economic challenges, the peak of the financial crisis has passed. Ongoing financial support for businesses and individuals remains important and it is now essential to learn lessons in order to both target fraudulent activity and, critically, minimise the potential loss of public funds in the future.
Timing is everything. Government has an opportunity to review the last 6 months’ performance and strengthen internal controls to ensure that further use of public funds is appropriate. Technology should play a critical role in detecting and preventing future fraud and error.
If the public sector is to move beyond the current estimates of fraudulent activity and gain real insight into both the true level of fraud and the primary areas to address, an intelligent, data-led approach will be critical. The use of Artificial Intelligence (AI) in public sector IT systems can be used to detect errors, fraud or mismanagement of funds, and enable the process changes required to prevent further issues.
HMRC is leading the way, using its extensive experience in identifying and tackling tax fraud to address the misuse of furlough – an approach that has led to many companies making use of the amnesty to repay erroneous claims. Other public sector bodies, especially smaller local authorities, are less likely to have the skills or resources in place to undertake the required analysis. If public money is to be both recouped and safeguarded in the future, it is likely that a central government initiative will be required.
Data resources are key; the government holds a vast amount of data that could be used, although this will require cross-government collaboration and co-operation. It is possible that the delivery speed of COVID-19 responses will have led to data collection gaps – an issue that will need rapid exploration and resolution. It should be a priority to take stock of existing data holdings to identify any gaps and, at the same time, use Machine Learning to identify anomalies that could reveal either fraud or systematic error.
In addition to identifying fraud, this insight can also feed back into claims processes providing public sector bodies with a chance to move away from retrospective review towards the use of predictive analytics to improve control. With an understanding of the key indicators of fraud, the application process can automatically raise an alert when a claim looks unusual, minimising the risk of such claims being processed.
While many public sector bodies may still feel overwhelmed, it is essential to take these steps quickly. Even at a time of crisis, good processes are important – failing to learn from the mistakes of the past few months will simply compound the problem and lead to greater misuse of public funds. The public sector, businesses, and individuals need to learn how to operate in this environment, and that requires the right people to spend time looking at the data, identifying problems and putting in place new controls. With an AI-led approach, these individuals will learn lessons about what worked and what didn’t work in this unprecedented release of public funds. And they will gain invaluable insight into the identification of fraud – something that will provide on-going benefit for all public sector bodies.
Why dependency on SMS OTPs should not be the universal solution
By Chris Stephens, Head of Banking Solutions at Callsign
In our day-to-day lives, SMS one-time passwords, also known as OTPs, have unintentionally become the default authentication factor when carrying out high risk and confidential transactions online. Banks, telcos, and businesses are opting for this method as SMS OTPs are relatively quick and simple to put in place. In our digital age, this solution works for the majority of users, who more often than not possess a mobile phone and are familiar with the user experience. As a result, companies are using them to securely authenticate both their customers and employees.
When looking into SMS OTPs, businesses should consider the bigger picture and how time- and cost-efficient solutions are as a whole by taking into account other key elements that might have been neglected in the past, such as hidden fees and security vulnerabilities. Apart from this approach, there are also other options better suited to different business needs – the European Authority (EBA) has already recognised other forms, such as employing the secure binding of a device to achieve possession and the use of behavioural biometrics as an inherence factor. For example, earlier this year Google officially began moving away from SMS OTP-based authentication. Whilst in the UK both the Financial Conduct Authority (FCA) and UK Finance have recommended banks ought to reduce their dependence on its use in the longer-term. Whereas, in the past, financial institutions were choosing to use this solution because it enabled them to save time on becoming compliant with the PSD2 Strong Customer Authentication (SCA) regulation.
It is common knowledge that SMS OTPs are not without their flaws, and with the extended deadline for SCA for e-commerce less than a year away (September 2021) – is now the best time for the industry to look elsewhere for more intelligent approaches to authentication?
SMS as the go-to solution
Fraudsters are sophisticated criminals, who attack the weakest points in the system – they have observed that banks and businesses heavily rely on SMS OTPs for 2FA (two-factor authentication) transactions, which is why they continue to abuse and weaken existing systems and exploit these solutions for their own benefit. Fraudsters commonly practise SIM-swap – where they steal personal information about the victim and then contact the target’s mobile operator pretending that their phone has been lost or stolen. With lockdown rules constantly changing, not all customers are able to easily visit stores right now, therefore operators are dependent on mobile-authentication channels that are more susceptible to this type of manipulation to service their customers.
SIM-swap fraud can easily be done. As soon as the fraudster has duped the mobile operator, a number transfer is authorised and then activated on a new SIM card – it works by granting cybercriminals access to the victim’s number and consequently all one-time passwords and authentication codes that are sent to that number. In March 2020, Europol warned that SIM-swap scams are a growing problem across Europe, following an investigation that resulted in the arrest of 12 suspects associated with the theft of more than €3 million ($3.3 million).
However, consumers and businesses need to be aware that SIM-swap fraud is not the only method cybercriminals are deploying to intercept OTPs from their victims during the pandemic and beyond.
Spotting a scam
SIM-swap attacks are not the only method scammers are using, there is also a growing number of cases that take advantage of malware and remote access applications to steal SMS OTPs. They do this by socially engineering individuals to download remote access apps or hidden surveillance apps to grant access to the victim’s device, without coming into contact with it. The cybercriminals can, therefore, directly read their messages or secretly record all their texts and phone calls to another device. The unknowing victim’s personal messages, including OTPs, are tapped into by the fraudster using the same approach as SIM-swap attacks. However, this time they also have direct access to the target’s device.
Several different parties are involved in the delivery of OTPs and at each stage of the process there is an opportunity for fraudsters to capture messages. There is also the potential mass compromise as a result of hidden vulnerabilities in the SS7 network and the attack surface to consider. With all these in mind, banks need to have a good overview of all data sub-processors to allow them to adopt the most suitable security controls, such as multi-factor authentication (MFA), audit logs, and dashboards.
Watch out for hidden costs
It comes as no surprise that intercepted OTPs result in fraud losses, which quickly increase as hidden fees go unnoticed over time. Beyond the upfront costs of SMS OTPs, such as cost per text, there are also several hidden costs that are difficult to budget for and avoid. They are typically the result of the domino effect of the aforementioned issues – forcing businesses into a reactive mode that is tricky to handle.
As an example, where drop-offs take place in an authentication journey, including when SMS texts are not received, financial institutions need to be ready to manage an influx in calls to their customer service helplines and the associated fees. Or else the customer may decide to use another card to make the payment, which is worse for the bank. This is due to the fact that customers are likely to abandon the use of a card when they are fed up with a customer journey that involves too much unnecessary friction. These abandonments lead to a decrease in interchange fees for banks and could even potentially reduce the customer base for merchants.
Evaluating the user experience
Whilst most consumers possess a mobile phone, SMS is not a reliable solution for everybody. For instance, SMS OTPs are not accessible to those living in remote or low-service locations, who may struggle to receive SMS alerts. This overall experience is also cumbersome as it takes roughly 30 seconds of transaction time for the text to be delivered, compared with the almost instantaneous transactions experienced by alternative authentication approaches, such as biometrics.
In this digital age, businesses are constantly adapting to accommodate different generations including Gen Z who are digital natives – so mobile use is only going to increase and, along with it, the volume of transactions taking place on these devices will also grow. This goes hand in hand with the ever-changing needs and expectations of customers as they look for hyper-personalised online experiences as the new norm. Yes, SMS OTPs are mobile-first, but they do still require the user to switch to another app to view the SMS so they can complete the transaction, which can be annoying for the customer as it interrupts the e-commerce user journey. After a friction-filled experience, it would be unsurprising if the user then decides to abandon the transaction. With this and other existing security implications in mind, the EBA recommends banks adopt other options.
Benefits of behavioural biometrics
Every person has their own unique behaviour and habits when swiping across the screen, which can be tracked through the analysis of the data signals captured from hardware sensors when the user engages with their device. These signals are crucial to designing user features such as finger movement, hand orientation, and wrist strength. Together, artificial intelligence and machine learning provide us with the capability to analyse this information to develop a personalised prototype of that user’s swipe behaviour, which only takes milliseconds to confirm whether the customer is who they say they are. This immediately allows the bank to seamlessly carry out appropriate security actions and stop fraudsters in their path before they can even begin using a target’s device.
Behavioural biometrics is ideal for positively identifying an individual and also effectively identifies bad actors. Including when cybercriminals use technologies, such as bots or remote access Trojan (RAT) software, to control transactional flows without the user being aware. This approach to biometrics works on both high- and low-end devices and helps to protect potential victims against both blind (where the fraudster has never observed how the user swipes their phone) and over-the-shoulder attacks (where the fraudster has been able to observe the victim’s swipe movements). Both forms of attack can be detected unique algorithms, with an accuracy rate of 98%; by layering in device intelligence and locational habits it is the most accurate and robust identification method currently available on the market. By preventing criminal access, even when the attacker has observed the user’s behaviour, it offers an added level of security to businesses and banks that other traditional methods, such as a PIN or password, cannot.
In order for organisations to maintain a competitive edge and successfully navigate through the pandemic, they will need to deliver hyper-personalised journeys to meet consumers’ expectations. They are increasingly looking to bank with or sign-up to services that offer a secure and bespoke service that meets their daily needs during and beyond the pandemic.
Therefore, a holistic approach to security empowers businesses to take back control of their fraud and authentication management. Unfortunately, single point solutions, like SMS OTPs, do not allow businesses to scale or provide enough flexibility to meet these requirements. By adopting a strategic, and intelligence-based, approach financial institutions and organisations will be able to upgrade security measures and enhance the user experience – whilst keeping IT spend low.
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