HF-SCA: Hands-free strong customer authentication based on a memory-guided attention mechanisms

• Published in: Journal of risk and financial management 2022-08, Vol.15 (8), p.1-24
• Main Authors: Distante, Cosimo, Fineo, Laura, Mainetti, Luca, Manco, Luigi, Taccardi, Benito, Vergallo, Roberto
• Format: Article
• Language: English
• Subjects: Algorithms; Case studies; Deep learning; Fraud; machine learning; Neural networks; PSD2; Purchasing; Risk assessment; risk-based assessment; Smart cities; strong customer authentication; transaction risk analysis; user experience; vocal interaction
• ISSN: 1911-8074; 1911-8066; 1911-8074
• DOI: 10.3390/jrfm15080342

Strong customer authentication (SCA) is a requirement of the European Union Revised Directive on Payment Services (PSD2) which ensures that electronic payments are performed with multifactor authentication. While increasing the security of electronic payments, the SCA impacted seriously on the shopping carts abandonment: an Italian bank computed that 22% of online purchases in the first semester of 2021 did not complete because of problems with the SCA. Luckily, the PSD2 allows the use of transaction risk analysis tool to exempt the SCA process. In this paper, we propose an unsupervised novel combination of existing machine learning techniques able to determine if a purchase is typical or not for a specific customer, so that in the case of a typical purchase the SCA could be exempted. We modified a well-known architecture (U-net) by replacing convolutional blocks with squeeze-and-excitation blocks. After that, a memory network was added in a latent space and an attention mechanism was introduced in the decoding side of the network. The proposed solution was able to detect nontypical purchases by creating temporal correlations between transactions. The network achieved 97.7% of AUC score over a well-known dataset retrieved online. By using this approach, we found that 98% of purchases could be executed by securely exempting the SCA, while shortening the customer's journey and providing an elevated user experience. As an additional validation, we developed an Alexa skill for Amazon smart glasses which allows a user to shop and pay online by merely using vocal interaction, leaving the hands free to perform other activities, for example driving a car.