Early Warning Acquisition Strengthens Authentication Platform

Bank-owned fraud prevention provider Early Warning will acquire mobile authentication vendor Authentify, the companies announced on Tuesday (April 7).

Terms of the deal weren’t announced, and the companies didn’t say when they expected it to close.

The acquisition agreement beefs up Early Warning’s options for blocking fraud, especially for mobile banking. Early Warning, which is owned by Wells Fargo, Bank of America, JPMorgan Chase, BB&T and Capital One, operates a data exchange that lets 1,100 financial institutions and other organizations share customer-related data that could point to fraud (or fraud in the making).

Privately held Authentify supplies multifactor authentication for financial transactions on multiple devices, but it’s largely focused on mobile. That’s become a pain point for banks, which are trying to lure customers with convenient mobile banking (and, not incidentally, keep them out of branches, as branch visits become increasingly expensive compared with mobile transactions). But passwords and PINs are easy for thieves to steal through shoulder-surfing when a customer does mobile banking in a public place, so multifactor authentication has become increasingly important.

“As organizations strive to provide consumers with an online experience that is both seamless and secure, managing authentication factors and methods is crucial,” Early Warning CEO Paul Finch said in a prepared statement. “With the acquisition of Authentify, Early Warning is well on its way to realizing its vision of providing both the powerful multi-faceted authentication needed today plus the advanced authentication needs of the future.”

The result of the Early Warning/Authentify combination will be a platform that improves mobile security and reduces consumer friction through biometric and behavioral authentication, strengthens event-based authentication (instead of depending on user names and passwords), and offers a persistent identifier that’s authenticated in real-time via mobile operators, the companies said.

That should help to better secure the customer end of the transaction. On the back end, it’s still up to banks to use set up their systems to use Early Warning’s databases, both to block unauthorized transactions by cyber thieves and to spot “friendly fraud” by bank customers doing things like using mobile check deposit multiple times at different banks with the same check.