Today, you would be hard-pressed to find an average customer who doesn’t conduct their banking through digital channels. Even more so now with the convenience of mobile banking, where it’s quickly becoming the preferred method of banking, due to the ease and convenience found at the tip of your fingers.
With the ease of mobile banking and the integration of payment channels such as Zelle, Same-Day ACH and even debit cards, payments are as close to real time as they’ve ever been. However, this new ease and convenience of operating payment channels has also made it so much easier for fraudsters to not only scam their way into illegal funds, but also receive these funds quicker than ever before.
With customers being the weakest link in terms of fraud risk, preventing and minimizing risk should be the most important priority for all relevant parties involved.
Who’s Responsible for Protecting Customers from Fraud?
According to a recent study by Javelin Strategy & Research, the top payment providers tend to resolve fraud concerns at a higher rate than a financial institution (FI). When scammed, customers tend to turn to these corporations first instead of their FI not because of the ability to “make the customer whole again,” but because the public perception is to resolve issues through the organization where it occurred.
Even if the fraud occurred within a digital wallet outside of an FI’s umbrella, the FI in question is missing an opportunity to place themselves back into the center of the digital banking trust on the payments side.
With mobile banking apps, FIs can finally insert themselves back into the conversation and prove to customers that operating within their app is the safest and most secure way to make payments. Through frictionless banking, FIs allow customers to authenticate payments to the point they feel completely secure, even during risky transactions where there are a lot of funds being moved.
Additionally, when customers are using mobile banking apps, FIs’ fraud teams have greater experience and knowledge with resolving fraud scams.
For example, if a fraud tactic is flagged on a mobile banking app, the fraud team will be able to identify similar patterns regarding the fraud question to prevent future customers being victimized by the same tactic.
Third-party vendors in the same situation don’t have that equal level of experience to lean on for preventing future attacks. On top of that, vendors like Zelle are unable to dispute or reverse transactions. Once they are processed, the results are final.
Digital payments are being adopted at an accelerating rate across all industries, and now that the average customer is used to the ease and convenience digital payments brings, they won’t be switching back to the “traditional” methods any time soon. Fraudsters are already discovering new methods to scam vulnerable customers via digital payment channels, and it’s up to FIs to not only be looked to for resolution, but also ways to prevent and minimize fraud risk at every stage.
To learn more about protecting your customers from mobile payment fraud, click here.