Customer Experience and Fraud Protection

By David Britton

Personal banking has become a lot more convenient over the years. When it comes to our finances and purchases, we can do just about anything online, whether it’s cashing a check, paying a bill, sending money to friends when the dinner bill arrives, or getting approval on a mortgage. A recent study by Experian looked at nearly 6,000 consumers across the globe, and found that personal banking is the second most frequent activity taking place online, just behind shopping. However, as personal banking activity becomes more digital and accessible, it becomes even more complicated for banks and financial institutions to keep consumers safe from fraud.

Fraud has been an ever-present and growing risk for businesses and consumers, and it’s not slowing down. In the personal finance space, identity data has become the new goldmine. Fraudsters will use this information to impersonate customers, open new bank accounts, and submit unauthorized transactions from anywhere in the world.

In many instances, personal data brings more value to the impersonator than a compromised credit card, which the legitimate holder or institution can quickly freeze or cancel.

Beyond the password

Multi-factor authentication methods—which go beyond just a password—have been the first step in preventing compromised data. However, many financial institutions are looking at combining more advanced authentication methods, including things like biometrics, which include a physical or behavioral feature like a fingerprint, face scan or mouse movement, as a layered defense. When customers are enrolled securely, this approach can help identify them more accurately, making it more difficult for fraudsters to attack via digital channels.

In addition, advanced identity and fraud prevention technologies that make use of the right data can help financial institutions solve another problem beyond simply finding the right balance between security and convenience. Combining the power of data and technology can help businesses make the right fraud decisions and protect people’s identities, while simultaneously creating great consumer experiences.

Delivering an online experience with up-to-date security protocols instills confidence in customers, making them feel safe and protected. But these protocols should also allow for easy and convenient access. According to Experian’s data, consumers currently tolerate friction to varying degrees in the interests of their own protection. However, the future state of personal banking can promise a positive customer experience that proves as secure, if not more secure, than their experience today. Here are the key features that customers think would enhance the online banking experience, while also making them feel secure:

  1. Instant confirmation for transaction

More than half of consumers surveyed said the number one feature they want, in order to feel secure while banking or making purchases digitally, is to be notified as soon as those transactions happen. Approximately 72 percent of consumers said they want instant confirmations along with confirmation numbers for things like fund transfers and bill payments.

  1. Easy-to-report lost or stolen cards, or suspected fraudulent behavior

Consumers want reassurance that security is a top priority and that they have the ability to make their financial institution aware of potential fraudulent activity. Sixty-nine percent said they want the ability to easily report lost or stolen cards, or suspected fraudulent behavior.

  1. Ability to reach a representative by phone and download transaction history

While the days of balancing a checkbook and every single transaction are behind us, consumers still want the ability to review their transactions and to know that only legitimate charges are being billed to, or withdrawn from their account. Customers’ ability to call their financial institution and the ability to request a download of their transaction history was the third most desired feature. Sixty-six percent reported that they appreciate visible security because it helps them feel more secure.  The future of customer service contact is quickly moving toward voice-based AI assistants. How banks choose to evolve those capabilities may offer areas of unique differentiation.

These are just three ways financial institutions can enable strong security while providing consumer convenience, but in general, they should consider a three-pronged solution:

  • Integrating the right fraud prevention tools to stay ahead of the changing fraud landscape
  • Implementing a multi-layered risk-based identity authentication approach when verifying consumers’ identities
  • Using “soft signal” data that exists in digital interactions to simultaneously solve the fraud detection challenge while delighting customers.

Although fraud prevention still presents a great challenge to businesses and to their consumers, all of these tactics deployed in a unified approach can be an organization’s biggest asset. And while some financial institutions simply choose to prioritize focusing on happy customers, our data shows that a safe customer is a happy customer, and that’s what makes the investment worthwhile.

David Britton is VP of Industry Solutions, Global Fraud & Identity, at Experian.