As digital payments grow increasingly mobile-centric, financial institutions and payment companies are grappling with the dual challenge of ensuring seamless customer experiences while defending against sophisticated fraud. Telecom providers are stepping in with a potential solution: silent, network-based phone verification.
Smartphones at the Center of Financial Lives
The urgency for stronger defenses was highlighted during a recent webinar when Alex Walling, head of business development at Nokia, recounted tracking his smartphone usage for 24 hours. Beyond sending emails or hailing an Uber, he logged into his bank and conducted financial transactions.
“It was actually shocking to me just how much my life goes through my mobile phone,” Walling observed, underscoring how critical smartphones have become for both convenience and risk exposure.
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With payments just a tap away, phishing scams and fraudulent texts have surged. Malicious links can secretly install malware to siphon sensitive banking details, while fraudsters can spoof caller IDs and impersonate bank staff to extract credit card numbers.
Why SMS and Email Codes Fall Short
An AT&T executive specializing in network API productization, said traditional safeguards—such as passkeys, email verifications, and SMS one-time passcodes (OTPs)—are no longer adequate. Fraudsters can intercept, spoof, or socially engineer their way around these methods.
By contrast, network APIs allow banks and financial institutions to verify a customer’s identity in the background, eliminating the need for manual code entry or app switching. “We have helped these financial institutions reduce that friction point for their users,” noted.
This approach not only enhances security but also improves user experience by removing cumbersome verification steps.
The Road to Adoption: Education and Trust
Despite its promise, silent phone verification faces adoption hurdles. Many financial institutions see SMS passcodes as an easier and cheaper default. For wider rollout, telecom providers must demonstrate that the benefits outweigh the transition costs.
Walling emphasized that education is the key—both for institutions and end-users. Telecoms are showing companies how background verification strengthens defenses, while consumers must understand why it is “night and day more secure” than OTPs.
A recent report reinforced the urgency, calling for closer collaboration between telecom and financial sectors to counter the “ever-evolving and expanding nature of fraud.” The report urged joint initiatives worldwide to provide reliable, fraud-resistant authentication frameworks.
As fraudsters refine their tactics, the race to secure digital payments has become a test of industry cooperation. Whether silent verification becomes the new standard may depend on how quickly banks and telecoms align on their shared responsibility to safeguard customers.