By Keiron Dalton, Global Program Senior Director, Aspect Verify
Consumers of all ages are increasingly moving from their browsers to their smartphones to manage their personal finances, not least because mobile banking is convenient and slots into our increasingly digital lifestyles. We’ve seen this with the growth of contactless debit cards, which have been designed for simplicity, convenience and ease of use –something that modern customers have come to expect in their daily lives more than ever before. However, according to the latest Crime Survey from the Office of National Statistics, ‘cyber-related’ fraud made up over half (57%) of all 3.4 million fraudulent incidents during the 12 month period between March, 2016 and March, 2017’. Almost three-quarters (74%) of total fraudulent incidents were categorised as ‘bank and credit account’ fraud.
However, there is a distinct balance that needs to be struck. Clearly, security (and subsequently trust) is a key area where technology is a critical concern for customers of financial institutions, but consumers’ experience expectations can be a huge roadblock when it comes to implementing more advanced and sophisticated security tools. How can organisations achieve the adequate level of security and authentication required to combat fraud and foster consumer trust, but at the same time not interrupt the fast-paced lives of today’s user by ensuring the banking experience is as quick, convenient and as frictionless as possible?
In the event of fraudulent activity, consumer trust hinges on banks being able to inform their customers that an incident is being dealt with, even before they were aware of it. Whether this is through proactive notifications or effective self-service tools – such as chatbots powered by natural language understanding – this proactivity helps to alleviate any consumer concerns as they know that an incident is being dealt with, and they do not have to worry about reporting the issue. At the same time perception is everything – the customer must also feel protected, so a certain level of ‘showing the customer’ what processes are for their security should also remain important.
Move past legacy authentication
The age-old reliance on passwords, usernames or a combination of characters from partial codes that need to be memorised are simply not reliable, can cause friction, and create heavy vulnerabilities, unless backed up with a number of other methods such as multi-factor authentication. While research from Aspect in 2017 revealed that 88% of consumers needed a combination of characters and digits to log into internet banking and 85% for mobile banking, it is critical that banks explore more advanced methods of verification to further secure customer trust and mitigate the risk of financial crime.
For consumers, too much security slows down transactions and affects the customer experience; too little opens the door to fraudsters. This is where the relatively new verification method employed in SIM Swap detection is able to achieve a balance between meeting both objectives. This method can be run imperceptibly to the customer, and offers an extra layer of identity authentication for complex transactions. Divert and location detection tools are also useful for better protecting customers against fraud, by recognising when SMS messages are being diverted from the intended SIM card and alerting customers through alternate channels. Layering verification in this way offers the best protection to date against fraud. However, no method is future proof and fool proof; hackers are getting more and more aware of how to bypass outdated security measures.
Know your customer (KYC)
The smartphone, which has become a digital passport, is quickly developing into a notable form of user identification. These devices are a perfect way to Know Your Customer (KYC) – the process of a business identifying and verifying the identity of its clients. In practice, using a smartphone as ID enables banks to gain rich data insights so they can accurately verify users. Behavioural, operator and transactional insights can be collected and verified legitimately with no disruption to the user experience, yet increase security and further prevent the risk of fraud. Users don’t need to exert any extra effort to prove who they are just because fraud has become more sophisticated. This information helps banks to positively identify the genuine individual, as well as establish the fraudster.
Greater industry collaboration
To achieve trust, banks need to work collectively towards a long-term solution to increase security without introducing more friction. As such, when banks discover a mobile fraud attempt, after they have prevented the attack and repaired the damage, they should also share information about the incident with the wider financial community so similar incidents can be prevented across the board. They must also work harder and put in more measures to ensure they are certain of the transacting party’s identity. With mobile banking, this is on their doorsteps in the form of mobile data, behavioural data and so on. The natural course of progression is for the industry to come together and harvest the information available to them in order to build a battlefront. Making consumers aware that there is a united front against fraud is a sure way to help boost trust.
Ultimately, it’s so important to verify each interaction in a speedy and convenient manner, and spot immediately when genuine customers are looking to make a transaction. Fortunately, today’s advanced analytics solutions combined with publicly available mobile data can help businesses make these efforts more accurate than ever before.