Reality Check: Banks Need Omni-Channel Anti-Fraud Strategies to Protect the Bottom Line
Our world has become increasingly connected and digital. As a result, public concern about identity theft and fraud continues to escalate. In recent years, account takeovers and fraud cost financial institutions upward of $17 billion. We’ve all heard about Personally Identifiable Information (PII) being leaked into the Dark Web, empowering criminals to take this information and open a new bank account or line of credit under someone’s stolen name. Taking over an existing account can be done rapidly when the right PII falls into the wrong hands.
It is now more critical than ever for financial institutions (FIs) to step up customer protection efforts — or risk taking a hit to their bottom lines. Let’s review some of the steps banks can take to safeguard their customers from fraud.
Your Customers are a Key Defense for Detecting Fraudulent Activity
Customer detection remains key to limiting fraud damage, so banks need to make sure their clients are on the lookout for fraudulent activity. Javelin Strategy & Research reports that over 60% of identity fraud is discovered by consumers, not by their financial institutions. So, what’s the best way to address this? Start by having customers receive electronic (preferably mobile) alerts tailored to their unique preferences and financial management habits. FIs should also encourage their customers to engage in a periodic review of credit card and banking statements. This could potentially help catch unauthorized transactions that weren’t caught the first time.
This advice might sound simple, but it’s too often overlooked. So financial institutions should consider using a variety of communication tools — email messages, digital newsletters, social media, and print brochures — to reinforce their anti-fraud messaging and raise awareness about the fraud protection services they offer. Similar to personally-tailored medical advice, FIs can finally implement tailored fraud protection advice for each customer. This will help with higher adoption of account controls such as alerts or statement monitoring.
Empowerment Through Education
Here are three key recommendations to help customers avoid identity theft in the first place:
- Safeguard PINs | Never write a PIN for a credit/debit card on a piece of paper and store it in a wallet or purse.
- Get Password Savvy | Use a unique and complex password for each website and change it immediately after becoming notified of a data breach. Sontiq’s Password Infographic is an example of a communication FIs often send to their customers.
- Stay Vigilant | Beware of suspicious e-mails. Phishers will use spam or pop-ups to look like legitimate banks or businesses to get personal information. This information can then be used to access accounts. Learn the basics of today’s scams, including phishing attacks.
The Delivery: What Banks Need to Do
Of course, customers don’t want to go it alone. Banks need to be on the front lines of fraud detection and prevention. Some steps are relatively easy to take. Many banks, for instance, will automatically log customers out of online banking after 15 minutes of inactivity. Mobile applications (smartphones, iPads, etc.) should have a shorter window of inactivity — say five minutes.
Customers also appreciate banks that provide security alerts (in automatic text messaging and email alerts) whenever the bank has been given instructions to change the customer’s account. These alerts may include changes to address, email, or phone number; sometimes, most importantly, a PIN change. A request for an additional or replacement ATM/check card or credit card are also critical alerts to send customers.
Customers prefer quick and direct communication from their banks when fraudulent activity is detected. According to a recent PYMNTS.com article, “Using easy-to-access, ubiquitous communication tools like mobile solutions is thus important for banks because it allows them to seamlessly involve customers in security efforts. The more conveniently and smoothly consumers can be engaged to help keep themselves safe, the more likely they are to want to participate in such activities.”
Fight Fraud with ID Theft Protection
In the fight against fraud, financial institutions that offer identity protection find this service to be increasingly popular. The best fraud protection services search daily to detect changes in credit reports, flag new accounts (like a credit card or car loan) opened in the consumer’s name, and then follow up with an immediate alert to the customer. Many services even take the extra steps of monitoring online chat rooms where data thieves sell personal information.
When customers do spot suspicious activity, they need to know who to call. Research data makes it clear that financial institutions are among the most sought-after sources of help for consumers. FIs should step in with tools that fill their worried customers’ needs and strengthen both the customers’ financial health and loyalty. Banks should make it easy to report fraud concerns and offer “live” one-on-one service providers who are available to field calls and quickly take follow-up action.
Helping to protect against account-related fraud can save millions for financial institutions. So it’s vital to mount effective — and broad-ranging — customer protection efforts.
Sontiq’s Tailored Solutions Can Help Increase Loyalty & Reduce Costs
As banking becomes even more omnichannel, FIs need to protect their customers from every angle – regardless of the products they access for their financial services. As services continue to expand, more personalized solutions with fraud detection and even restoration services must be added into the various. And, of course, robust customer communication will help to make those anti-fraud strategies flourish.
Learn more about Sontiq’s suite of services for FIs and how we can help further strengthen customer safety and engagement with our AI-driven and actionable recommendations through BreachIQ™.