NEARLY EIGHTY PERCENT OF FINANCIAL CUSTOMER ACCOUNTS AND BANKS AFFECTED BY RECENT DATA BREACHES

ACI Worldwide survey from BAI Payments Connect highlights pressures on financial institutions to protect customer accounts

• 44 percent of customer accounts have been compromised
• 42 percent are more aggressively looking at EMV plans
• 50 percent are currently investing in fraud detection technology
• 42 percent of customers have responded favourably to banks’ efforts to respond to breach events

Recent publicised data breaches are having an impact on the operations of financial institutions, according to a recent survey by ACI Worldwide (NASDAQ: ACIW). The survey of U.S.-based financial industry professionals was conducted in March 2014 at BAI Payments Connect and reports that 44 percent of customer accounts have been compromised.

 The impact of data breaches

While the headlines continue to discuss data breaches that involve compromised payment, banking and personal data, financial institutions must stay vigilant in combating fraud loss and maintaining customer goodwill. More than fifteen percent of respondents indicated recent breaches put more pressure on fraud operations resources to do more to protect themselves. And another twelve percent indicated that they experienced a negative impact on their brand.

 “Managing fraud in the wake of a data breach involves having the right tools to detect fraud early on and having customer communication programs that proactively address account holders’ concerns,” said Mike Braatz, Senior Vice President and Product Line Manager, Payments Risk Management, ACI Worldwide. “Without proper proactive and reactive fraud protocols, banks and issuers risk losing customers and trust in their brands, even when the breach is through no fault of their own.”

Shoring up preventative resources

More than seventy-five percent of respondents said they are looking at additional resources to combat fraud in their organisations. Of those, fifty percent said they are looking to invest in fraud detection system technology, more that fifteen percent are investing in more training for their fraud management teams, and ten percent say that they are beefing up staff with new personnel.

EMV’s role in protecting customer accounts

The last holdout of EMV technology and standards, many in the US are re-evaluating their strategies after these recent events. Countries including Canada and England attribute decreased card fraud to the more secure chip and PIN methods employed as part of their EMV strategies, which were rolled out years ago. More than forty percent of respondents indicated they are more aggressively looking at their EVM plans. Another thirty percent are still exploring options required to meet the 2015 liability shift, and just under ten percent indicated they are already EMV compliant.

A silver lining

Although data breach-related fraud has a negative impact on the bottom line and on the industry in general, more than forty percent of respondents indicated that their customers appreciate the proactive outreach and response to market events.

According to Braatz, “Customers want an open dialogue with their financial institutions when it comes to protecting their payments. When executed properly, a payments risk management strategy that keeps customers informed – early and often – in the event of a fraud or data breach will keep financial institutions on the right side of customer satisfaction and ensure trust in their brand.”