Barclays banks on two-factor authentication

Barclays is hoping to pin down fraud with its PINsentry device

Barclays is to use two-factor authentication for the first time in an effort to prevent fraudsters plundering bank accounts.

The bank's PINsentry devices will be sent free to half a million customers later this year for use with their online accounts.

Other customers will be able to get the devices if they are using online banking to make transfers to third-party accounts.

Barnaby Davis, director for electronic banking at Barclays, said: "Barclays is constantly working to help protect customers and their money and that is why we have invested in this system.

"PINsentry is the next generation of fraud prevention technology and Barclays is proud to be the first organisation in the UK to roll it out to its customers.

"The popularity of Barclays' online banking service comes down to convenience and security, and the introduction of PINsentry will enhance both these features."

Barclays has done more than most to combat the phishing industry. The bank gave free antivirus software to its customers last year, and introduced an SMS alert service covering activity on online banks accounts.

While broadly welcomed, many in the industry have been concerned at the slow introduction of two-factor authentication.

"It has taken banks a while to get round to tokens because it is a cost to them," said Tony Redmond, chief technology officer at HP Services and HP Security.

"Some bankers have said that this is because it is more expensive to introduce tokens than the cost of the fraud because they can offset the losses against tax.

"But they are now being forced to introduce them because of the damage to reputation."