Q&A: ETrade CIO calls token-based authentication a success

Computerworld - In March, ETrade Financial Corp. became the first major financial services company in the country to launch a two-factor authentication service to protect customers from online fraud and identity theft. Nearly eight months later, the service, which is based on RSA Security Inc.'s SecurID token technology, is proving to be very successful, said ETrade CIO Greg Framke in this interview with Computerworld. Even so, there's plenty of room for other forms of multifactor authentication services, and the company is actively evaluating a number of them to see if one could replace hardware token-based authentication, he said.

ETrade CIO Greg Framke

What's been the customer response to your two-factor authentication service? Customer adoption has been nice and steady. We are consistently doubling adoption every two to three months. There's been nothing unexpected, certainly not on the con side. In fact, one of the nice ancillary benefits is that customers who have adopted SecureID feel more secure. They feel that ETrade has their best interests in mind and are therefore willing to move more assets to us. I would say it's been a home run for us.
What was the main driver of this whole initiative? I would say that since our whole business is online and ETrade.com is our storefront, we have always been very sensitive to our customer requirements. In the older days, companies focused a lot of their time and energy around protecting themselves from people who wanted to hack into the company or launch denial-of-service attacks. While these things certainly haven't gone away, ETrade got the sense early on that there was a trend that [hackers] were starting to go after the weakest link in the chain, which was the customer. We were pretty early on thinking about the things that we could do to help protect our customers, like determining potentially suspicious or fraudulent activity and requiring authentication codes for outbound wires and [automated clearinghouses]. So we've been employing a number of techniques to help protect our customers. Multifactor authentication is kind of like the padlock on the door.
Is it available to all your customers? It's available to anybody who wants it. We did a pilot with a restricted number of customers, and the feedback was very positive. It is now available to all our customers. If you are an active trader or have more than $50,000 in assets with us, you can have it for free. Otherwise you pay a one-time fee of $25.
One of the concerns that people have about token-based authentication is that it is expensive to implement and can be inconvenient for consumers if they are required to carry around multiple tokens to authenticate themselves.