What is Knowledge Based Authentication?

by Stefani Wendel 6 min read December 5, 2023

Man on laptop checking identity.

Sometimes logging into an account feels a bit like playing 20 questions. Security is vital for a positive customer experience, and engaging the right identity verification strategies is essential to proactive fraud prevention. For financial institutions and businesses, secure authentication is more important than ever. It is imperative for customer safety – which drives retention and loyalty – and your bottom line – as fraud has determinantal effects on and off the balance sheet. Information sharing has proliferated, as has the number of times consumers are prompted to provide access to sensitive information. While today’s consumer has grown accustomed to providing such information, there’s also a heightened demand for security.

According to Experian’s 2023 U.S. Identity and Fraud Report, nearly two-thirds (64%) of consumers say they’re very or somewhat concerned with online safety, listing identity theft, stolen card information and online privacy as top concerns.

Customers want to know who they are providing access to and whether that entity will have their safety in mind. From a business perspective, one way to ensure that only the right people can get in is by using (KBA). KBA takes traditional authentication methods, like passwords and Personal Identification Numbers (PINs), one step further by creating an additional layer of security through collecting private facts from each user. In this post, we’ll look at how KBA works, what its benefits are as a form of identity verification, and how it can improve customer trust.

Introducing Knowledge Based Authentication (KBA): What it is and how it works

Knowledge Based Authentication can be part of a multifactor authentication solution and is one way to stay on top of privacy and security for your customers – existing and new. KBA is a feature designed to protect online accounts by verifying the account holder’s identity. It involves answering a series of personal questions, such as mother’s maiden name or first pet’s name, that only the account holder should know. This system has become increasingly popular due to its effectiveness in preventing fraud and identity theft. With KBA, businesses and individuals can have peace of mind that their information is protected by a reliable authentication system that is difficult for unauthorized users to breach.

Benefits of implementing KBA and a multifactor authentication strategy

By implementing KBA into your business, customers experience an additional layer of security by verifying the identity of users through personalized questions. This reduces the risk of fraud and enhances customer trust and confidence. Secondly, it improves the customer experience by making the authentication process faster and user-friendly. Lastly, KBA reduces costs by automating the authentication process and reducing the need for manual intervention.

However, KBA is just one facet of an ideal strategy. Multifactor authentication provides confidence while reducing friction. Risk-based authentication tools allow organizations to assess risk to apply the appropriate level of security.

Factors to consider adding to your authentication processes include:

  • Generating unique one-time passwords (OTPs): By creating a new OTP for each transaction, you can increase the level of security.
  • Confirm device ownership: A multifactored approach applies device intelligence checks to increase confidence that the message is reaching the correct user.
  • Maintain low friction with secondary options: If the OTP fails or can’t be attempted by the user, working with a provider who allows an automatic default to another authentication service, such as a knowledge-based authentication solution, decreases end-user friction.

Identifying potential security risks associated with KBA

KBA relies on personal information that may easily be discovered via social media and other public records, which makes it vulnerable to fraud and identity theft. This highlights the need for a multilayered fraud and identity solution. The landscape of digital security is constantly changing, leveraging an arsenal of fraud and identity prevention strategies, like document verification, one-time passcode, and various identity authentication and verification measures, is critical for keeping your customers and business safe.

Commonly used technologies for enhancing KBA security

With the rising need for secure authentication, KBA systems have become increasingly popular. However, cyberthreats evolve at an alarming rate, making it imperative to stay current with the latest fraud schemes and how to enhance and supplement your security. Biometrics, like facial recognition and fingerprint scans, as a tactic is gaining traction, as evidenced by “85% of consumers report physical biometrics as the most trusted and secure authentication method they have recently encountered,” according to Experian’s 2023 U.S. Identity and Fraud Report.

Additionally, machine learning algorithms detect patterns and anomalies in user behavior and flag any potential security breaches. Multi-factor authentication is another tool that adds an extra layer of security by requiring users to provide multiple forms of identification before logging in. Keeping up with these and other technological advancements can help ensure your KBA system stays one step ahead of potential cyberattacks.

Interestingly, there’s a disconnect between the technologies consumers feel safe with and/or are prepared to use versus the technologies and strategies that organizations implement. According to the U.S. Identity and Fraud Report, biometrics are only currently used by 33% of businesses to detect and protect against fraud. An opportunity for business differentiation and driving customer loyalty through a better customer experience may be tapping into some of these lesser used – but sought after – technologies.

Compliance with industry standards regarding KBA

Ensuring that your system complies with industry standards regarding KBA is crucial for protecting sensitive information from unauthorized access. By implementing the following tips, you can stay ahead of the game and safeguard your organization’s data. Analyze your system’s current authentication methods and evaluate if they meet industry standards. Additionally, follow standard guidelines for data storage and encryption, limit access to only authorized personnel, and y current with regulations. Lastly, conduct frequent security audits and perform vulnerability tests to identify and address any potential threats.

Knowledge-based authentication offers a robust security solution for businesses of all sizes, and incorporating KBA as part of a multifactor authentication strategy is a winning course of action. It provides an added layer of protection for personal data, encourages user accountability, and safeguards against unauthorized access. By leveraging appropriate KBA technologies and maintaining compliance with industry standards, it is possible to create a secure system for customers that gives you peace of mind for your business and bottom line.

Experian can help you with knowledge-based authentication offerings, a multifactor authentication strategy and everything in between to enhance your existing authentication process without causing user fatigue. Increase your pass rates, confirm device ownership and add security to risky or high-value transactions, all while executing identity verification and fraud detection to protect your business from risk. The most important step is getting started.

Related Posts

Ask the Expert: The Future of Lending Starts With Identity With Shawn Rife and Brian Cardona

Identity intelligence and alternative data can help lenders validate consumers and support more informed decisions across the customer lifecycle.

September 16, 2026 by Julie Lee
Financial Institutions Are Rethinking Customer Acqusition

Customer acquisition strategies are constantly evolving toward more precise targeting. From a marketing lens, you can track every step, optimize communication channels and still miss the person most likely to convert. Attribution can tell us which channels work and automation can make marketing spend more efficient. But both assume we know who is actually on the other end. Financial institutions are learning that finding audiences and targeting them is no longer the biggest challenge. As acquisition optimization marketing becomes more sophisticated, teams can measure and act on more signals than before. What they can't always know is whether the person on the receiving end is real. Customer acquisition has evolved into an identity problem. The challenge is not that every questionable signal represents malicious activity. It's that acquisition systems must make increasingly intelligent decisions with an imperfect understanding of who they're actually engaging. When identities are fragmented, duplicated, temporary or synthetic, optimization becomes a question of trust as much as targeting. When your signals don't reliably identify customers The customer journey often includes searching, filling out a form, creating an account, requesting a quote and subscribing. All of these signals work well when identity is relatively stable.  However, financial institutions are finding that these signals are becoming less reliable. A single person can operate across multiple personas, devices, browsers, aliases, accounts and intermediaries while several apparent “people” may actually represent one underlying actor. Financial instituions are finding: Fragmented customer signals Difficulty distinguishing an old account from a new one Different digital pathways associated with the same individual Signals that are generated by automation Real customers getting flagged because signals are too thin to evaluate confidently Legacy signals continue to be challenged Marketing has historically treated intent as a valuable signal because intent was relatively difficult to produce. A search required human intent. A form required someone to fill it out. An inquiry implied a meaningful amount of human effort. Financial institutions are already combating AI-enabled fraud, and now marketing teams are starting to face it on a massive scale. AI can mimic human behavior by researching products, comparing prices, filling out forms, creating accounts and signing up for services. A valid email address is no longer enough. Marketers need to know: How long has it existed? How recently has it been active? Does its activity appear consistent or suddenly anomalous? Has it gone dormant and returned? Is it associated with patterns that suggest stability or unusual behavior? How to build on your strongest signal Email remains one of the most persistent identifiers in digital commerce, following people across devices, platforms, transactions, subscriptions, accounts and years of activity. For over two decades, this has shaped how AtData thinks about identity. Now, as part of Experian, it’s shaping how an entire platform and team approach identity. A marketer doesn’t need every prospect to have existed online for twenty years. But understanding whether a newly acquired prospect has meaningful identity context can dramatically improve the quality of the decision being made around it. Better identity intelligence can help organizations reduce unnecessary friction by improving their ability to recognize legitimate customers. With a strong identity foundation, marketing teams can better address: Which audiences are more likely to convert? Which leads are high quality? Which channels are driving incremental growth? What do the best prospects look like? The value isn't simply having an email address. It's understanding the history and behavioral context associated with it. That context can provide a stronger digital identity signal, helping marketers understand how long they have been active, whether its behavior is consistent with that of a real person and whether current activity aligns with past patterns. It continues to be one of the most persistent identifiers in digital commerce. An infrastructure built for what's coming The acquisition of AtData by Experian reflects a fundamental shift in how identity infrastructure needs to work. Experian's scale and decisioning capabilities, combined with AtData's real-time email intelligence, create a strong platform. Read more about the why behind the acquisition and see how email works as an identity anchor for fraud prevention. Contact us to learn about our customer acquisition solutions

September 15, 2026 by Zohreen Ismail
As Electric Vehicle Adoption Eases, Dealers Can Find New Opportunities To Reach Consumers

After years of rapid growth, new electric vehicle (EV) registrations have moderated, and the EV market has entered a new chapter. But slower growth shouldn’t be mistaken for disappearing demand, with data suggesting the reality is much more nuanced. According to Experian Automotive’s Automotive Consumer Trends Report: Q2 2026, battery EVs accounted for 8.21% of new retail registrations in the last 12 months, down from 9.23% a year earlier. However, consumers aren’t simply walking away from electrification. In fact, more than one million new EVs were registered during the past 12 months and the used EV market recorded more than 540,000 registrations over the same period. The opportunity may be less about waiting for the EV market to grow and more about understanding where EV demand is present, who is driving them, and how to reach those consumers more effectively. Who is likely to purchase an EV and what vehicle types are they interested in? Understanding who’s in the market for an EV can allow dealers to position themselves around consumers’ needs as they choose a vehicle that fits their everyday lifestyle. In the second quarter of 2026, Millennials and Gen X accounted for 67.83% of new EV registrations, nearly 10 percentage points above their combined share of all new, retail registrations. Millennials were also the largest generational audience across both new and used EV market share, coming in at 35.76% and 38.42%, respectively. It’s important to consider that the EV shopper isn’t necessarily looking for an unfamiliar or new type of vehicle. In many cases, they’re seemingly looking for an electric version of the practical vehicle they already know. For instance, SUVs accounted for 77.47% of new EV registrations in Q2 2026, which was similar to SUVs’ 63.49% share of all new retail registrations. For these shoppers, creating messaging around value, practicality, and available choices may resonate differently than premium technology messaging aimed at some new-EV prospects. The more precisely dealers can identify those audiences, the less they need to depend on broad EV market momentum to generate demand. To learn more about EV insights, view the full Automotive Consumer Trends Report: Q2 2026 presentation.

September 15, 2026 by Kirsten Von Busch

Subscribe to our Newsletter

Enter your name and email for the latest updates.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Subscribe to our Newsletter

Don't miss out on the latest industry trends and insights!
Subscribe