Lloyds TSB security trial wipes out online fraud

But banking industry asks what is the best approach?

Lloyds TSB has cut online banking fraud to zero among its customers who are trialling two-factor authentication devices.

Results of a five month trial show that none of the 23,500 customers who used the key-ring sized Vasco devices reported fraud against their online banking accounts during the period.

Some 70 per cent of customers taking part in the trial rated the Access Code Device as 'excellent' or 'very good'.

'The response from customers has been fantastic and the fact that nobody taking part in the trial has had any fraud on their account since using this device is testament to the fact that technology is the way forward,' said Matthew Timms, director of internet banking at Lloyds TSB.

The device provides an additional level of security alongside user IDs and passwords, by generating a unique one-time passcode that is verified by the bank’s computer network and security systems from Cryptomathic.

Lloyds TSB began piloting the technology in October last year amid fears by online banking customers that they were being targeted by internet criminals trying to steal personal and financial information.

Analyst firm Forrester Research estimates that security fears have stopped more than 600,000 UK internet users from banking online.

But much debate still exists in the banking industry over which form of two-factor authentication technology should prevail.

While Lloyds TSB and HSBC have been trialling number generating key-ring sized devices, industry body Apacs has been working on a payment card reader to authenticate online banking and ecommerce transactions.

Last week Alliance & Leicester announced that it would provide two-factor authentication technology to its one million internet banking customers, but has yet announced what approach it will take.

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