Five banking and digital payments security trends to watch for in 2023

A new year often brings new changes to the global financial services market — some good and some bad. As with any change, however, there's also opportunity.

We’ve recently explored five digital banking and online payment security trends to watch out for 2023, so that banks and credit unions can arm themselves for success. The key lies in optimizing both human and technological resources.

“People were so bullish about the digital spend in the COVID years that the retraction hitting large parts of the tech industry will take some by surprise – banks and credit unions included. Many of the important, but often delayed-due-to-COVID, priorities will be put back on the 2023 to-do lists and we may also see many of the ‘technical debt’ and longer-term projects that were pushed out during the crisis, get their rightful place on this year’s agenda.

However, as we continue through our crypto winter and tech crunch, security leaders should snap up available skills. Because the one thing we know is that when things get harder, criminals also become more desperate. We must prepare for more breaches as the year progresses,” warns Gerhard Oosthuizen, CTO at Entersekt.

A common thread in 2023 banking security trends is for financial institutions (FIs) to be prepared for future cybersecurity threats like those leveraging AI technology or ever-evolving social engineering fraud.

And though technology can potentially support the work of these fraudsters, the advancements can (and will) protect consumers’ banking data — if FIs keep pace with new advancements in authentication.

Generative AI like ChatGPT is one the biggest tech trends at the moment. While these advancements in AI and machine learning provide opportunities for more personalized customer engagement (like banking chat bots), they should be deployed with caution. The same technology is available for fraudsters to leverage, after all.

These cybercriminals now have the opportunity to use AI to develop programs that bypass poorly secured websites or to simulate a voice and manipulate voice recognition security measures, for instance. This poses a serious risk to consumers’ personal data — for digital banking or any task, such as e-commerce payments, performed online.

Social engineering fraud, particularly payer manipulation, is another evolving cybercriminal specialty that FIs need to be more aware of this year. Authorized push payments could be a bigger concern going forward as fraudsters use banking customers as the ‘insider’ that helps them access funds.

Innovation is the key to safer digital payments and banking across the globe. For one, advancements in digital ID technology are moving ahead, the latest trends suggest. One approach is based on emerging standards, such as the World Wide Web Consortium’s (W3C) Verifiable Credentials, while Apple, for instance, has chosen to pursue Near Field Communication (NFC) standards. The question for many banking security leaders will be whether these two diverging standards will find a way to work together.

The uptake of multi-factor authentication (MFA) is also set to increase this year, with the US government placing more emphasis on stronger enterprise identity and access controls, and committing to Zero Trust architecture on a federal level.

Also gaining momentum is the renewed commitment to Fast IDentity online (FIDO) and the shift towards passwordless authentication. We believe this, and many of the other tech trends, will help pave the way for user experiences that remove unnecessary friction and help banks retain and grow their customer base.

The banking and online payment trends for 2023 may suggest new security threats, but by combining best-in-class human and technological resources, FIs and banking customers can be better prepared for whatever tomorrow brings.