2 tips for balancing fraud and CX in financial institutions

Financial services companies need to protect customer information not only because they are entrusted with a customer’s Personally Identifiable Information (PII), but also because a breach of that trust can mean more than the loss of data. PII of a client. This can mean loss of assets in a financial account, loss of confidence not only of that customer, but also of other current and potential customers, as well as heavy regulatory fines. But “perfect” security would mean that no transactions would be made, so there would be no financial services activity. Even extremely tight security can hamper transactions and CX. There has to be a balance.

In the recent Information Media Security Group / Appgate 2021 Faces of Fraud investigation, 69% of respondents said customer experience is the top priority for their financial institutions today. Thirty-one percent said preventing fraud was the top priority.

Below are some best practices for financial institutions to help balance fraud and the need for a great customer experience.

Know your customers

Financial institutions must join Know Your Customer (KYC) rules: “Each member must exercise due diligence, in the opening and maintenance of each account, to know (and maintain) the essential facts concerning each client and concerning the authority of each person acting on behalf of of this client. “

This includes doing things like verifying the identity of a customer when opening an account, monitoring transactions (especially those over $ 10,000), etc.

By going deeper into knowing a customer’s typical transactions, preferred channels, etc., a financial institution can provide better CX while reducing fraud (i.e. reporting out-of-band transactions), said Christopher Schnieper, LexisNexis risk management solutions director of fraud and identity.

“There is no doubt that today’s customers are becoming more and more digital. However, customers are interested not only in a hands-on experience, but also an experience that is safe and does not expose them to scammers and fraudsters. malicious activity, ”Schnieper said. “In today’s hyper. -Competitive and digitally driven landscape, the ability to deliver a better customer experience is becoming the competitive differentiator in all industries. Consumers do not view the brands they do business with as a distinct set of access channels. They require a holistic experience. “

The only way organizations can deliver a consistent customer experience is by having the most recent and comprehensive information on consumer preferences, interactions and behaviors, Schnieper added. For example, a consumer accesses an account with the same device multiple times over a short period of time for a low-risk transaction such as a request for an account balance. The organization does not understand that this consumer is a legitimate customer, resulting in repeated security checks each time to validate the customer. Frustrated, the customer abandons the retailer and will avoid that retailer in the future since the transaction risk does not match the level of friction imposed. The only way an organization can balance convenience and security is to have a unified view of customer data for a complete view of an identity.

Personalize the customer experience

Personalizing the customer experience should be a dynamic process that organizations undertake for every customer interaction, Schnieper said. Financial institutions can do this by combining internal data such as customer preferences, commonly used channels, device profile with external data such as identity verification, risk signals from mobile devices and others. . The combination of internal and external data can inform the type of interaction the customer should have with the organization.

“If the transaction is low risk and doesn’t require a lot or no interaction, the customer can complete the transaction quickly and easily,” said Schnieper. “Additional friction is justified if the transaction is new and / or may present a risk to the company or the customer. Institutions that integrate feedback data to manage the CX so that it offers a sufficient level of security while being practical (responding to an authentication request in the same mobile application) receive a clear competitive advantage. The consumer realizes that they have established their trust in the organization, which makes them more likely to come back.

Keep security in the background

Transparency is key, said Bryan Jardine Appgate director of fraud prevention products. “Customers don’t want to be victims of fraud; nor do they want their online banking capabilities to be hampered by anti-fraud checks. Instead, they want “effortless” authentication methods. They don’t care if it’s happening in the background, they don’t want to interact with it. The solution is behavioral biometrics. People used to unlocking their phones with a swipe of a finger or by facial recognition want the same experience when banking online.

“As banks and fintechs innovate to adapt to growing consumer demands for strong CX in financial services, passwords have come out and new authentication methods are in place,” said André Ferraz, founder and CEO of Icognia. “Multi-factor methods including single-use access codes (OTP), biometric authentication and security keys have been introduced as alternatives. But by adding more security, legitimate users of mobile fintech apps now face increased and unnecessary friction. With the added friction comes a lower CX which contributes to dropping customers and lower retention rates. “

Added zero factor authentication (0FA)

While customers care about security and mitigating the risk of fraud, they care even more about avoiding friction, Ferraz said. “Banks and fintechs should look to provide mobile users with zero factor authentication (0FA) that works silently in the background to authenticate users, using network, location and device signals. This new form of mobile authentication relies on sensors and technologies on the smartphone to recognize trusted users and is the best way to balance the risk of fraud and enhanced security, without compromising the customer experience.