Today’s financial institutions are deploying top online and mobile banking systems to offer their customers a wide range of capabilities, from opening an account to setting up automatic bill payments, mobile check deposits and more. Despite these comprehensive feature functionalities, the fraud detection and dispute process remains rather outdated for many financial institutions.
PwC’s 2018 Global Economic Crime and Fraud Survey reports that 49 percent of organizations across the globe have experienced fraud, with an increase from 36 percent the previous year. As fraudsters increase and evolve their attacks on the financial services, it’s apparent that fraud isn’t going away any time soon. With that being said, financial institutions must take steps to up the dispute process to protect customers and their hard-earned funds.
Most financial institutions are meeting their customers’ expectations by offering a traditional online cash management system that allows account holders to view transactions; however, this is the extent of its ability. To exceed these expectations, financial institutions must change the role of the customer.
Modern-Day Consumers and Traditional Banking Systems Don’t Mesh
The modern consumer desires an equally modern banking platform, packed with automated features, coupled with an active role in monitoring their finances. It’s clear financial institutions are aware of this, with almost 80 percent of bank operations leaders believing that “their organization’s existence could be threatened if they don’t update technology to be more flexible and capable of supporting rapid innovation,” according to Accenture.
Existing legacy systems do not provide the level of automation needed to keep up with the constant attacks from fraudsters, often leaving customers to be the ones to detect fraud after it’s already happened. Without basic functionalities that allow account holders to take action when fraud occurs, customers are falling victim to these attacks.
Customers need a platform that shares customized actionable alerts and can accept or reject suspicious ACH, check and wire transactions in real-time. Financial institutions should start by enhancing traditional treasury management systems with a solution that empowers account holders with the ability to detect and respond to suspicious activity – before the funds leave their account.
Updated Cash Management Leads to Improved Customer Experience
Ultimately, it is the account holder who can best determine whether a transaction is credible or not, so financial institutions should be offering tools that let customers take the reins on disputing fraud. With an actionable banking system, customers can easily dispute questionable transactions as soon as they happen, right from their phone or office – offering the ultimate convenience and flexibility.
With an actionable online banking system that does not simply offer visibility over transactions, but instead goes beyond by enabling customers to take action against unauthorized activity, financial institutions are equipping account holders as they protect themselves against suspicious activity – resulting in an improved customer experience.
With a transparent customer experience in place, financial institutions can not only protect their account holders, but also support stronger customer retention efforts as well. Happy customers that credit their financial institution with protecting their funds will most always return and stay loyal to their bank.
Balancing security needs with convenience may seem daunting but leveraging the right technology with a modern online banking system that supports single sign-on capabilities and fraud prevention tools that utilize technologies like out-of-band authentication and voice biometrics, will ensure a seamless customer experience without compromising security.
From Sitting Back to Stepping Up: Changing the Role of the Customer
While financial institutions give account holders the tools to combat suspicious activity, they can also reduce internal costs and yield significant new, non-interest fee income.
Legacy systems have been known to involve incredibly time-consuming, labor-intensive and costly processes, requiring additional back-office employees to take time to manually manage fraud. By implementing technology that grants account holders the control in determining which transactions should be authorized enables institutions to focus on revenue generating opportunities and scaling their services to a larger number of customers. Partner this with automated out-of-band alerting and verification, minimizes the time spent by employees shuffling through potential attacks from fraudsters.
By shifting the controls from the institution to the account holder in detecting and responding to fraud, fewer full-time employees are needed to manage the manual transaction dispute and return process. Formally a lengthy process that includes time spent manually communicating a suspicious transaction to customers through phone calls or recorded messages, employees’ time is freed up to handle other tasks and assist customers.
Putting the power in the hands of the customer and automating fraud prevention is crucial to ensure banks can grow most efficiently. With the majority of customers already paying for fraud prevention services that are grossly outdated, offering an updated and convenient, real-time solution that empowers the customer is a valuable opportunity to tap into a new revenue stream.
To scale back the amount of attacks and keep up with the evolving fraud tactics hitting the industry, give account holders what they want and need – an actionable online banking system that offers both visibility over transactions and the tools to detect and dispute unauthorized activity. Banks that do this will better protect their customers against suspicious activity.
By replacing existing legacy systems with an all-encompassing fraud prevention platform, financial institutions can reap the benefits: prevent financial loss due to fraud, minimize liability, meet important compliance objectives, reduce internal cost, retain existing relationships, attract new clients and yield significant new, non-interest fee income.
Deborah Peace, AAP, is Chief Executive Officer of ACH Alert, a provider of patented, innovative fraud detection services to financial institutions ranging from community banks to top tier financial institutions. Relying on more than 20 years of industry experience, ACH Alert assists financial institutions in mitigating the risks associated with electronic payments. ACH Alert is the 2012 recipient of the Kevin O’Brien ACH Quality Award, the highest award for quality in the ACH Network industry.