The Reserve Bank of India is planning to introduce two-factor authentication for all ATM-cum-debit card transactions in the next few months. This is to ensure that bank customers do not fall prey to frauds.
Sprucing up safety
The two-factor authentication uses a combination of two of the three factors — something the user knows (example, password, PIN); something the user has (example, ATM card, smart card) and something the user is (biometric characteristic, such as a fingerprint).
“Online credit card frauds have come down significantly following implementation of two-factor authentication. This authentication procedure will be extended to ATM-cum-debit cards,” said Mr G. Gopalakrishna, Executive Director, Reserve Bank of India, at the Indian Banks' Association's Banking Technology Summit.
In view of the proliferation of cyber attacks and their potential consequences, banks should implement two-factor authentication for critical activities such as fund transfers and changing customer-related details through Internet banking facility, according to the report of the RBI's working group on electronic banking.
Another step
Financial transactions, such as operations of bank accounts and credit cards, are being carried on by banks in a big way by using cards, pin numbers and passwords, and so on.
“Banks are using many security features to prevent frauds to the extent possible. The proposed two-factor authentication method (2F method) is also a step in the same direction.
“It may not be ideal to mandate a particular technology (digital signatures with asymmetric crypto system and hash function) for authenticating all electronic transactions by banks,” said the report.
There is a need to have a separate Consumer Protection Act to exclusively govern activities in the financial services space, including banking, capital markets, insurance and pension, according to Mr M.R. Umarji, Chief Legal Adviser, Indian Banks' Association.
The US and the UK have a consumer protection law for financial services and its time India also drew up a law in this regard, he said.