The pandemic provided many financial institutions with a digital reality check as they scrambled to accommodate the surge in digital channel usage. As the future of money is changing, this has also presented financial institutions with an opportunity to rethink current technology investments as they adjust their business models and take a step closer to a digital-first strategy.  With an expected increase in digital channel investment, preventing digital fraud while improving customer experience will be the key to attracting new customers and retaining existing ones.

What can financial institutions and other digital businesses do to enable the future of money while addressing the security challenges and capitalizing on the potential surrounding digital transformation? Here are three key measures.

1. Customer experience is the #1 priority. Digital fraud prevention is second.

Striking the right balance between customer experience and risk is a tricky one, but digital experience and fraud management teams don’t have to be at odds. In fact, reducing fraud rates is the bare minimum of what fraud tools can and should be able to accomplish.

Within a financial institution, different teams have different goals and often work in silos, competing for budget. Customer acquisition is focused on customer delight and reduced friction, whereas fraud teams are focused on reducing fraud and introducing additional security controls. All teams need to work together — security, marketing, digital experience, and fraud management — to create an approach that will cover contradicting considerations and achieve the ultimate goal of a secure and frictionless online experience.

When we think about ways to secure the customer experience and solve the fraud problem, we must understand all priorities and help organizations break internal silos to facilitate collaboration within and across organizations. With the right tools in place, financial institutions can build customer trust without adding friction and provide an adaptive customer experience aligned to business priorities.

You can read more in Gartner’s latest 2020 Market Guide for Online Fraud Detection, which evaluates the technologies, like behavioral biometrics, that are helping financial institutions find solid footing and prepare for the future of digital banking.

2. Move away from point fraud solutions

To create the appropriate level of protection in digital channels, controls need to be applied across the customer lifecycle. This includes: 

  • Account application
  • Customer onboarding
  • Account login and management
  • Payments
  • All other online activities

To do so, the industry needs to move in a different direction. Specifically, moving beyond point solutions that solve a specific problem to looking at technologies that can distinguish between genuine and fraudulent activity regardless of the attack vector.

The result? Financial institutions will be able to stop treating customers like criminals, making them jump through hoops and fill out endless forms, but as valued, genuine users who can seamlessly create a new account or make an online transaction. Read more about three ways behavioral biometrics can improve the digital banking experience.

3. It’s all about collaboration – between and within financial institutions, but can we make it happen?

Much has been said about the need to improve collaboration in the financial industry, be it participating in peer discussions to cultivate ideas and improve our overall security posture as an industry, sharing data through identity consortium networks to improve fraud detection, or coming together as a unified community to fight fraud. 

Currently, there is not enough unified reporting of various types of fraud. For example, an advanced social engineering scam known in the UK as Authorized Push Payments is considered a leading fraud attack today.  Consumers have little recourse in these scams, and it was costing British banks so much last year that they called for a 24-hour delay in digital payments. The scam has started to grow in other parts of Europe, and it will only be a matter of time before they reach the U.S. shore.

The reality is we just don’t know the full scope of fraud because financial institutions do not all use the same framework to identify and report fraud cases. Classifying fraud properly will let us know what the primary threats are and what problems and solutions we as an industry need to focus on. The FedPayments organization is attempting to solve this problem with the Fraud Definitions Work Group.

We all know how important customer experience is to grow revenue in digital channels. The future of money depends on having resources in place that take the move to mobile apps, online banking, P2P payments, and whatever new innovations are on the way to even higher levels, rather than deploying tools that hold banks back.

How are you working to improve customer experience at your institution? What tools are you considering and will they help you move into the future?

For more details on how BioCatch and behavioral biometrics are adding to the conversation and helping financial institutions prepare for the future of digital banking, you can read more in Gartner’s latest 2020 Market Guide for Online Fraud Detection. 

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