BT sets up one-time password service

BT Managed Authentication is aimed at banks and other companies that want to use two-factor authentication for customer access to online services

BT has launched a service providing one-time passwords to banks and other organisations that want to use two-factor authentication for customer access to online products.

The BT Managed Authentication service can be rebranded by businesses as part of their identity protection for users. It sits alongside username and password authentication, the company said in its announcement on Thursday - thus creating two levels of security.

One-time passwords can be generated either by a dongle or by software on a customer's computer, according to BT. Typically, one-time passwords are pseudo-random numbers, generated by an algorithm, that expire after a single use.

"Businesses and end users are facing increasing attacks against online services, and the need for better security is vital," Jeffrey Schmidt, BT Global Services's executive global head of business continuity, security and governance, said in a statement.

Other companies, including Virgin Media Business, already offer managed authentication services to British businesses.

A BT spokesman said it has trialled BT Managed Authentication with several tens of thousands of business internet banking and e-corporate banking customers of Clydesdale Bank and Yorkshire Bank, both of which are owned by National Australia Group.

UK banks lag countries in Europe and Asia in terms of rolling out online two-factor authentication, according to Andy Buss, a security analyst at Freeform Dynamics.

"The UK is a lot further behind compared with some countries in Asia, where fobs are mandated," Buss told ZDNet UK. "It's absolutely necessary to increase the degree [of two-factor authentication] in the financial and banking system."

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