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You didn't read the post's description.
How is it possible that a company asks you to provide the second letter of your password to prove identify? Surely this would either mean the passwords are stored unencrypted. Or they're using some other form of very dubious security.
Sorry, I misunderstood your post. They could do this by doing the process I described above AND storing parts of your password. Without further research, this sounds insecure though.
E.g. your password is: SuperSecure? The hash of your password is: 15837A4C3B Your client sends the hash and the characters 0,2,4 to the server: S p r They can then ask you for single digits of the password.
Another possibility is that they could encrypt the characters with a key to build a more secure value to transmit. As the others have said, this is possibly unsecure too.
In general: it's services are either comfortable to use or secure. You can achieve both on a basic level, but not on a higher level.
Is not "possible" insecure. It's wildly insecure. Encrypting single digits? I mean, anyone could bruteforce them by hand alone.
Funny thing is: I'm probably quicker typing a 20 character password than finding out which symbol is at index 5.