how improving the customer experience can help fight bank fraud
Lenders are striving to provide a cutting-edge experience in a highly competitive marketplace while protecting customers from increasingly sophisticated fraud threats. Latest figures show that every hour victims of bank transfer scams in the UK lose more money than average British worker earns in a year. Here are four key lessons on how an improved customer experience can support the fight against fraud.
Lesson 1: The importance of clear and targeted communication for prevention
In a digital world, fraud no longer just targets the vulnerable. Knowing who to educate is crucial to keeping customers informed about an ever-changing suite of fraudster tactics, while maintaining confidence in using digital.
- Targeting communications to vulnerable people will always be a priority. However, there are other segments that are increasingly affected by fraud. Two examples are business leaders and millennials. The former segment, form 20% of all identity theft cases. Meanwhile, a growing number of millennials are being targeted by fraudsters due to the ease of access to their shared information online. Constant scrutiny of targeted people can help identify segments that might otherwise be hidden.
- To drive adoption of digital banking, messaging is often focused on building financial confidence online. Promoting digital adoption must be carefully balanced with encouraging customers to engage in precautionary behaviors. While digital security is a reassuring message to customers, if the message is too overbearing or inconsistent, it can undermine their overall financial confidence.
- Internal terminology should also be reviewed. Often in financial institutions, if there is fraud, it will be with “customers”. This labeling can minimize the mental and financial impact on these people. The use of terminology such as “victim” can lead to a cultural change in the way these people are perceived and treated.
Lesson 2: Make case reporting as simple as possible
Speed is essential to ensure the well-being of clients and improve the chances of financial recovery. But today, reporting fraud can be overwhelming for customers.
- One of the longstanding arguments against making it easier for customers to report fraud is that a bank will be inundated with misrepresentation and will be taken advantage of by both customers and fraudsters. However, for banks that have invested in automated refunds, such as TSB, there has been no evidence of a large increase in misrepresentation.
- Making reporting quick and easy is operationally crucial, increasing the chances of recovering losses. It is also essential for the well-being of clients not to experience additional stress in an already debilitating experience. Monzo’s in-app reports are a great example of simplifying the customer journey.
- Fraudsters are continually seeking to find new vulnerabilities in the banking sector, as well as using the changing economic and social context to test new methods opportunistically. Another benefit of easy reporting is the identification of emerging threats, which helps alert customers to what to watch out for more quickly.
Lesson 3: The public can manage and benefit from data visualization
The pandemic has taught us that audiences can benefit from data visualization – when presented at the right level. However, today there is very little data on the fraud threats customers may face that can help increase vigilance..
- Making the scale of the fraud clearer to customers with in-app trackers and data access would help make the problem more transparent and visible. Fraud is on the rise, with £479m in losses in 2020. Making this information readily available to customers could make them realize it takes an ‘always on’ mentality to protect their finances.
- However, within this growth figure, there is volatility. There was a 5% increase in authorized fraud in 2020, but a 94% increase in identity theft scams. Here, transparent
- There is a risk that all the data provided may encourage fraudsters to succeed. The idea of what could deter fraudsters while building customer confidence will be key to implementing the right measures.
Lesson 4: Finding the balance between controls and trust
Building the right security for customers must go hand in hand with increasing their confidence and happiness in using digital propositions, which are inherently safer than cash.
- Fraud and Digital CX teams can often be at loggerheads. On the one hand, CX teams are pushing to make digital banking frictionless. In the meantime, anti-fraud teams benefit from more controls, especially on payments and login/access. It is therefore crucial that these teams work together on a common and consistent control approach for customers that aligns with messaging, data and the overall digital strategy.
- To bridge this gap, collaboration between fraud and CX teams, especially those located in digital, is crucial. Some examples of collaboration have already emerged, including proactive “verification” SMS messages to customers, as well as neobanks using ML to identify emerging threats (e.g. Monzo and Ticketmaster)
Historically, fraud teams have often worked in silos away from the customer experience. This made sense in the past when fraudulent activity was often low volume but very complex. The quality of the investigation was a key determinant of the outcome. With the rise of digital, the scale of fraud has exploded. Fraud teams must constantly find new ways to broaden the battlefield against fraudsters and improve prevention methods. By equipping customers with the right data, controls and messaging, CX innovations can help ensure that customers reduce the risk of falling victim to the ever-evolving threats in the fraud landscape.
Greg Beckett is Director at consulting in digital transformation and business Gate One