Speaking Of…Vanguard’s Recent Voice Verification System

by on Mar 09, 2015

VoiceverificationIn today’s business world, all CEOs fear seeing their company’s name in the headlines as a victim in the latest cyber-attack. Financial firms nationwide are constantly searching for new ways to prevent intruders from infiltrating their systems. In the past year, several firms within Corporate Insight’s e-Monitor group introduced new security features. UBS and Vanguard, for example, both introduced security PIN services, and Schwab rolled out a new Change Website Timeout feature that triggers an automatic logout. Most recently, Vanguard made headlines when it unrolled a new biometric Voice Verification system. Although voice verification technology has become increasingly popular across many industries, Vanguard is the first firm within the e-Monitor coverage group to add this type of authentication tool to its security arsenal.

Vanguard’s service prompts clients to call the firm and answer several security questions, which the firm records in an encrypted database. The recordings are used in future calls to authenticate callers’ identities by their voices. In addition to its security value, the service also improves customer service by expediting the process for reaching private accounts. Clients who enroll in this program are able to bypass standard security questions to directly speak with an associate, and can conduct specific transactions without a notarized signature or signature guarantor.

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Although Vanguard’s Voice Verification service provides an added layer of security, does it offer enough benefits for other brokerage firms to follow in its footsteps? On the one hand, for more traditional full-service brokerage firms that have a smaller online presence and typically engage with clients over the phone, voice recognition technology may be a worthwhile investment. The growing popularity of online and mobile trading, however, may make firms overlook this form of security. If firms interact with the majority of their clients online via email or online chat, they may rightfully choose to focus on strengthening their online security measures. This seems to be the case for self-directed firms that allow clients to make transactions and conduct research primarily online.

Even if firms are skeptical of the service’s security value, its ability to improve customer service should not go unnoticed and may be worth the investment on its own. In the end, if peers in the brokerage industry decide to forgo voice authentication, they should at least attempt to replicate Vanguard’s greater client security. In the age of cybersecurity, every firm’s mentality should be better safe, than sorry.