Arming Customers with Actionable Online Banking Systems Supported by Real-Time Fraud Prevention Tools

Posted by Deborah Peace on Aug 8, 2018 9:30:00 AM

Arming your customers

Today’s online banking systems boast extensive 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 antiquated for many financial institutions. While online banking systems offer visibility over transactions for account holders, these systems do not allow account holders to take action and protect themselves against suspicious activity.

For instance, when a customer logs into their online banking portal, they can view all of their transactions, including checks, ACH, wire, internal transfers and debit card transactions. However, if the customer notices an unfamiliar charge, like an ACH debit, they can only see the amount and the company that initiated the transaction with no additional details about what the charge was for. From there, the customer must call their financial institution to research the transaction. After the institution researches the transaction, the customer may choose to dispute it. In order to dispute the transaction, the customer must visit the branch and complete a dispute form. After filling out the form, it may be ten days before the customer’s money is back in their account.

This manual, reactive process does very little to protect the customer from fraud and creates additional work for a financial institution’s staff. To make it worse, Gartner reports that 28 percent of account holders switch banks after being victims of fraud.

Today’s financial institutions must enhance their fraud prevention strategy by empowering customers to detect and respond to suspicious activity before the funds ever leave their account. This requires an actionable online banking system that doesn’t just offer visibility over transactions and instead, enables customers to take action against unauthorized activity. This can be accomplished by coupling today’s online banking systems using, single sign on capabilities, with fraud prevention tools that utilize technologies like out-of-band authentication and voice biometrics.

Without a truly actionable online banking system that facilitates greater security for account holders, financial institutions could be held responsible for fraud losses, especially when fraud is directed toward a corporate account. Corporate accounts are often targeted, as they have higher balances and a limited amount of time to report fraudulent transactions compared to consumers. Since business customers are valuable relationships for banks and credit unions, financial institutions may cover fraud losses at their own expense. There is also the risk of reputational damage, as Gartner also reports that six percent of account holders have switched banks due to security concerns.

From a customer experience standpoint, an actionable online banking system with adequate fraud prevention features offers account holders greater control and increased transparency over the funds in their account. Imagine if a customer was reviewing transactions and noticed an unfamiliar charge – an actionable banking system would allow the customer to dispute it right there from their phone. No one knows their account better than the actual account holder and ultimately, the account holder can best determine if a transaction is legitimate or fraudulent.

For financial institutions looking to grow or expand into new markets, leveraging existing technologies that enlist the customer’s participation in the fight against fraud will be key. By shifting the controls for detecting and responding to fraud to the customer, fewer full-time employees are needed to manage the manual transaction dispute and return process. Turning the controls over to the customer and automating fraud prevention is crucial to ensure your financial institution can grow most efficiently while offering an outstanding customer experience.  

Topics: Fraud Prevention