The pandemic accelerated the shift to digital banking, and there’s no going back. Today’s banks may never meet a customer in person. To minimize risk and keep customers secure, banks need to focus on building relationships based on strong digital trust.
Under the principle of digital trust, a financial institution is highly confident in 1) a digital banking customer is the person they claim to be, and, 2) the person is authorized to perform the transaction they request. It’s like a digital handshake between a bank and a customer where both parties transact together with confidence.
But digital trust is a two-way street. With fraud increasing and fraudsters become more inventive, bank customers want assurance that their bank can keep them secure. If something about their account behavior seems suspicious, customers expect their banks to catch it and take measures to keep them and their money safe.
Three reasons banks must increase their focus on developing digital trust
- Fraudsters are targeting the end consumer. Banks have invested in fraud detection solutions that have made it harder for criminals to commit fraud. As a result, fraudsters are focusing their attention on the next most vulnerable cog in the transaction: the end consumer. Fraudsters might prey upon potential victims during a moment of weakness like a medical situation or by taking advantage of world events like the pandemic to push a scam.
- Banks can’t intervene in customer transactions too often. Digital trust is essential for banks to allow customers to transact without a significant level of intervention. If the bank can’t trust the customer is who they claim to be or that they are authorized to perform a transaction, the bank will have to take measures to authenticate the customer at multiple steps of their journey. Too much intervention leaves customers feeling irritated and annoyed at their bank.
- Bank customers expect to be trusted. Customers believe that their banks should know who they are based on their provided data. In their opinion, their bank should know that if their home address is in London, but they are suddenly making a high-value transaction in Brazil, something may be suspicious. If, however, they’re carrying on with their daily routines and have to authenticate themselves repeatedly, they’ll think their bank doesn’t trust them.
Three core components of digital trust
Banks can build strong digital trust between banks and consumers with a combination of three key components.
- Can the device be trusted? Banks should develop an understanding of the mobile devices, laptops, and other electronic devices that a customer uses to log into their account. New devices should be flagged at first but banks should watch how the user utilizes them to ensure they are being controlled by the actual customer.
- Can the person and network be trusted? To trust the person behind the device, banks can build a digital profile based on how their customers normally behave. Each transaction, mobile device, and new address adds to the profile and helps banks understand who their customers are and how they normally transact. Is the customer logging in from a geographical location that makes sense or that raises suspicion? Are they using a network they normally use? And are their interactions with their device, including the motions they normally use to touch their screen, their language setting, and even the angle at which they hold it, familiar? These are all questions banks must address to determine if they can trust the user behind the device.
- Is there malware at play? Banks should be on the lookout for suspicious programming like malware that may infiltrate a device without the owner’s knowledge. By relying on the user’s digital profile, banks can assess whether it’s the user or a bad actor compromising their account using malicious software.
To be successful in the new digital-first reality of today’s banking, banks need to establish strong digital trust. For a digital trust strategy to be effective, all three components must be in place. If any component is not addressed sufficiently, a bank’s digital trust capabilities will fall short. By fulfilling all three, banks can be sure they are dealing with trustworthy customers, and build customers’ trust – even if they never meet them face to face.