DNB is Norway's largest financial services group and one of the largest in the Nordic region in terms of market capitalisation. The Group offers a full range of financial services, including loans, savings, advisory services, insurance and pension products for retail and corporate customers, delivered via a wide range of traditional and digital channels. DNB is also Norway's largest internet bank, with more than 1.3 million users, and delivers the country's largest mobile banking service, with 715,000 users in Q4 of 2016.
The Need
The Nordic online shopping market is big business. Valued at €17.3bn in 2015[1], it is also a market experiencing dramatic growth with a 13% increase in the same year. 75% of the Nordic population (18-79 year olds) shopped online in 2015, citing the range of products and competitive pricing, together with the speed and convenience of the shopping experience as prime motivators.
For DNB, the delivery of a frictionless online payment experience is central to its ability to maintain customer satisfaction. Key in this regard is the online payment process where consumers in the Nordics expect e-commerce checkouts to be fast, easy, convenient and secure. DNB therefore needed a solution that would improve the speed, simplicity and convenience of its customers' online shopping experience.
The Solution
DNB and Nets initiated a common strategic project to implement a 3-D Secure solution at the end of 2015 with Risk Based Authentication (RBA).
3-D Secure, marketed variously as Verified by Visa and MasterCard SecureCode by the two international payment brands, is an XML-based authentication protocol which applies an added layer of security to credit and debit card transactions performed online. The solution supplements the bank's online payment authorisation process with an online customer authentication procedure performed in real-time. 3-D Secure places the customer right at centre of the transaction approval process, requiring them to enter additional authentication data before the transaction will be approved.
3-D Secure does, however, introduce a layer of 'friction' into the e-commerce checkout process which, inevitably, impedes the speed and convenience of the customer's overall payment experience. To minimise this friction, the integration of RBA was agreed, with the objective of enabling DNB to contain the number of instances in which a 3-D Secure 'challenge' was triggered, thus protecting the customer's user experience as far as is reasonably possible.
Nets' 3-D Secure RBA solution would enable DNB to assign risk based parameters to 3-D Secure transactions according to a 'risk-profile', as determined by the bank. Once deployed, it would ensure that a 3-D Secure challenge would only be triggered when a customer's transaction request falls outside 'safe limits'. This would mean that DNB could automatically authorise all other transactions and interrupt the customer experience only when absolutely necessary.
A trial of 3-D Secure with RBA was launched in November 2015. DNB was able to build its RBA risk-profile based on an extensive range of possible parameters, including (but not limited to):
- the transaction amount
- the number of transactions performed within a certain timeframe
- the country in which the transaction request originated
- the specific merchant
The Benefits
DNB's pilot, which was conducted across three popular e-commerce merchants, demonstrated that Nets' 3-D Secure with RBA solution could deliver substantial benefits, not only to DNB, but to merchants and cardholders too.
Over the course of the trial, the volume of 'not completed' e-commerce checkout transactions decreased remarkably when RBA was deployed; in one instance, almost 14% more transactions were completed than before. With the new solution in place, more customers were successfully buying the products they wanted, increasing their online satisfaction and driving revenues for both the merchant and DNB in the process.
In terms of enhancing the customer's online checkout experience, thanks to the creation of DNB's risk profile, the number of e-commerce transactions that could be authorised automatically rose dramatically across all three participating merchants (without triggering a 3-D Secure challenge). In one case, this figure rose by over 76%; a huge benefit to the customer, merchant and the bank.
Since the trial, DNB and Nets have deployed 3-D Secure with RBA across all the bank's Visa and MasterCard customers.
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[1] E-handeln i Norden 2016, PostNord
