By recognizing the strengths of hard and soft tokens for different customer segments, you can deploy future-proof authentication solutions that stay ahead of fraudsters and ensure the safety of your customers.
In the modern digital landscape, password-based authentication has become highly vulnerable to threats like phishing, mobile malware, and remote access attacks. The prevalence of these threats makes it imperative for banks and fintech companies to adopt robust, future-proof authentication methods, such as those offered by tokens.
Hard tokens (also known as hardware tokens) and soft tokens (also known as software tokens) are two distinct approaches used to bolster security through multi-factor authentication for different customer segments. In this post, we’ll provide some key pointers to help you reap the benefits of both hard and soft tokens.
What Are Hard Tokens and Soft Tokens?
Hard tokens are physical authentication devices that can be connected to digital devices via USB, Bluetooth, or NFC. These tokens provide a secure authentication method without the need for a mobile device or dedicated software program on the user’s device.
While traditional hard tokens have historically been quite cumbersome tools for users, the FIDO2 standard has revolutionized hardware tokens, unlocking fresh opportunities for their application and use. If you’d like to learn more about how hard tokens work, we’ve put together a detailed blog post on this topic.
Soft tokens, on the other hand, are digital versions of hard tokens that typically come in the form of mobile apps. Soft tokens are designed to supplement two-factor authentication (2FA) across various online platforms, including web and mobile applications.
Soft tokens can be either code-based or codeless — while code-based soft tokens generate a temporary one-time password (OTP) that users enter into the application to authenticate their identity, codeless tokens utilize strong cryptography and data channel connectivity for operation fetching and approving operations, eliminating the need for users to manually enter codes.
Comparing Key Benefits
Both hard and soft tokens offer an array of unique benefits: Hard tokens provide unmatched security, as they’re physical devices that are difficult to tamper with or duplicate. Moreover, they offer a robust layer of protection, especially for high-risk transactions, since they don't rely on mobile devices or internet connectivity.
On the other hand, soft tokens excel in convenience and a seamless user experience. A big draw of soft tokens is the fact that they allow users to easily authenticate themselves without carrying an additional device. They can be quickly deployed and updated, providing flexibility and ease of use while still offering strong security measures.
Optimal Strategies for Utilizing Hard and Soft Tokens
For banks and fintech companies aiming to enhance security and provide flexibility to customers, it’s essential to use a tailored approach to token solutions.
For banks serving SMB and corporate customers, we recommend adopting a balanced strategy, with an even 50/50 split between hard and soft tokens. By having both solutions readily available, this approach ensures that businesses can choose the most appropriate method based on specific security requirements and operational needs.
Here are some real-world examples of how organizations can make use of hard tokens:
- Authenticating high-value banking transactions: Hard tokens are a dependable option for securely authenticating high-value and high-risk banking transactions.
- Securing sensitive accounts: For example, those related to business operations or containing client data — this is especially relevant for corporate banking customers and their employees.
- Internal system access: Hard tokens can serve as a vital tool for a bank’s employees for securely authenticating themselves when accessing internal services and systems.
For retail customers, soft tokens should be the primary authentication method due to their convenience and ease of use, with hard tokens available as an alternative for those who prefer or require an extra layer of security.
Soft tokens may be the best choice for your organization if you’re looking for the following benefits:
- Rapid scalability: Soft tokens provide cost-efficient security systems.
- Quick deployment: Your workforce can quickly begin using soft tokens, and they’re easy to update on an ongoing basis.
Wultra’s Token Solutions Have Your Back
At Wultra, we recognize the importance of both approaches. That’s why we offer comprehensive hard and soft token solutions, including our personal identity device, Talisman, and Mobile-First Authentication, to cater to the unique needs of modern financial institutions.
Whether you’re prioritizing the robust security of hard tokens or the seamless convenience of soft tokens, our solutions ensure that your authentication methods are both secure and user-friendly.
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