Customer fraud protection products for banks and credit unions

At PAYMENTS 2019 this week, ACH Alert joined bankers Kim Dodson, CTP, Vice President of Treasury Management at Independence Bank, and Don Youngberg, AAP, Assistant Vice President of Business Services of Mountain America Credit Union, during the panel, “Going Beyond Visibility and Taking Action on Transactions.”

In this session, they discussed how financial institutions can enhance their fraud prevention strategy by empowering customers to detect and respond to suspicious activity before the funds leave their account – a critical area that should be top of mind for financial institutions.

Taking Action to Prevent Fraud

Currently, online banking systems offer visibility for transactions, but they do not allow account holders to take action and protect themselves against suspicious activity. In today’s digital-first world, there is a critical need for banks and credit unions to empower their customers and members to respond to potentially fraudulent activity before it happens.

The likelihood of fraud is rising in correlation with the consistent advancement of technology. In fact, according to Javelin’s 2018 Identity Fraud Report, there was a 6.64 percent increase in identity fraud in 2017. But for today’s tech-savvy consumers, these advancements open new opportunities and features that benefit them. It also, however, brings worry for businesses.

As technology evolves and new concepts come into play, such as AI, businesses can actually utilize these new tools to their advantage. Even as fraudsters push forward, financial institutions can protect themselves by enhancing the capabilities of their digital banking offerings with actionable fraud prevention tools, including voice biometrics. 

Much like a fingerprint, an individual’s voice is extremely detailed, unique and difficult to alter or imitate. As we move towards a cashless and digitally driven world, we are faced with new risks that require new innovations in security – such as the use of voice biometrics.  Banks and credit unions have tapped into biometric authentication as part of a layered security measure to help combat rising risk concerns, with many more expected to move in that direction. According to recent analysis from Goode Intelligence, it is predicted that 1.9 billion bank customers will regularly use biometric interfaces by 2020.

As new advancements enter the market, myths also rise to criticize the new technology that holds the potential of becoming the norm. Many myths have circled around voice biometrics and how it could be more of a security risk rather than a security solution.

There are three particular myths that are fair questions to the idea of voice biometrics but are discredited when you dig a little deeper. The facts of voice biometrics clearly denounce the myths.

The 2018 AFP Payments Fraud Survey revealed that wire fraud contributed to 48 percent of total fraudulent transactions hitting organizations. This means wire transfers make up almost half of the fraudulent transactions experienced. With financial institutions processing thousands of commercial transactions each day, checks and wire transfers are the top targets for fraudsters.

The volume of transfers via the ACH Network is at an all-time high, proving that consumers are increasingly using ACH payments for more regular, predictable transactions. NACHA credits the massive growth to both an increase in bill payments and account-to-account transfers, which grew 24 percent, as well as a rise in business-to-business payments, which rose 13 percent.

This increase among B2B payments underscores the demand for ACH among business customers; therefore, financial institutions should consider offering a service that allows businesses to easily exchange payments with other businesses, as they often initiate regular payments between one another.