Best practices for switching from Hardware to Software Tokens

Posted on March 8, 2018

The smartphone has become indispensable. According to Deloitte’s latest Global Mobile Consumer Trends1 report, a survey of 17 developed countries found that one in five consumers checks their phone >50 times a day.

The explosive adoption of mobile apps and devices is changing how banks authenticate customers in the digital world. One trend we expect to continue into 2018 and beyond, is the drive to upgrade customer authentication technology from hardware to software tokens.

Software Tokens: Adoption Best Practices

If you have used OTP hardware tokens for years, introducing software tokens would ensure strong security coupled with a faster, easier user experience. (Prior to software authentication, customers had to remember multiple passwords; forgotten passwords blocked customers from transacting and required a reset by the helpdesk.)

Survey your customers
Survey customers’ readiness to accept software tokens. Research may show that most customers actually want both. Customers want the convenience of using their mobile device, knowing that if something goes wrong (e.g., lost phone, dead battery, etc.) they have a hardware backup. Mobile-first customers will inevitably be interested in software tokens, but not everyone may want to use their smartphone as an authentication method.

Barriers to adoption include:

  1. Lack of familiarity with, and therefore trust in, software tokens.
  2. Concerns about having too many apps already (not wanting to run out of space on the phone).
  3. Concerns about loss or theft of the phone.

A hybrid hardware and software authentication system can be the key. Customers are resistant to change, but once they try mobile authentication,
they are very satisfied and stay with it. That’s why communication is so important. You have to convince customers to try it.

Not surprisingly, the way you explain a new authentication method to customers directly influences adoption. First promote the software token, presenting the hardware option only if the customer does not have a smartphone. By promoting the mobile authentication option first, some organisations saw 62% of the first wave of migrated customers activate the soft token.

Customer Satisfaction
One of the most noticeable benefits organisations saw was the level of customer satisfaction among those who tried the software token. Overall, the majority of customers did not have any trouble understanding software authentication, and were very happy it was introduced. They found the information on the website, read it, and were able to activate and start using it without any helpdesk support.

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