Inevitably, the vast majority of financial institutions will experience payments fraud. Among this year’s AFP Payments Fraud Survey of nearly 700 treasury and finance professionals, a record high of 78 percent of organizations fell victim to payments fraud last year. Banks and credit unions are long overdue in giving account holders what they want and need – to eliminate time-consuming, antiquated fraud prevention processes and replace them with actionable online banking systems that empower account holders to both detect and respond to suspicious activity before the funds ever leave their account.
Offering a convenient, real-time solution that empowers account holders with greater control over their security is a valuable opportunity to tap into a new revenue stream. In addition to opening up new avenues for generating revenue, here are a few other advantages of offering customers actionable online banking systems:
Reducing Liability for Fraud Losses through Enhanced Security
By offering an actionable online banking system that empowers customers to take action against unauthorized activity, rather than simply offering visibility over transactions, financial institutions provide account holders with the necessary tools to protect themselves against suspicious activity. Coupling a modern online banking system that uses single sign on capabilities with fraud prevention tools that utilize technologies, like out-of-band authentication and voice biometrics shifts responsibility to the account holder for detecting and responding to fraudulent payments.
Ultimately, this heightens security as the institution’s decision to process the payment is based on the guidance of the account holder. Without a system that involves the account holder, financial institutions will bear the expensive responsibility of detecting and responding to suspicious activity on the behalf of the customer, which also means the institution could be held liable for losses if fraud does occur.
Minimizing Operational Costs
After a suspicious transaction has occurred, employees must spend time manually communicating the fraudulent activity to customers, either through phone calls or recorded messages. These labor-intensive processes prove costly as they require additional back-office employees to manage. By giving account holders the technology to identify parameters that determine which transactions should be authorized, institutions can then spend time systematically monitoring for suspicious payment activity. This technology, combined with automated out-of-band alerting and verification, enables customers to take action against unauthorized activity and minimizes the time spent by full-time employees managing the manual transaction dispute and return process.
Improving the Account Holder’s Experience to Support Future Growth
Streamlining processes to make fraud prevention more scalable and collaborative with the account holder leads to a better banking experience that not only protects them in the long run, but also supports stronger client retention efforts for the institution as well. Banks and credit unions that offer a process for screening and decisioning transactions that is transparent, convenient and promotes faster processing of the payment will ultimately win out over their competitors.
An actionable online banking system combined with the right treasury management tools allows account holders to quickly and easily dispute fraudulent activity from the comfort of their home or office – vastly improving the user experience. Balancing security with convenience is challenging, but with the right technology, it is possible to deliver a seamless experience to the account holder without compromising on security. Financial institutions that achieve this balance will be more successful in retaining existing account holders and attracting new ones, which supports profitable growth.
Compared to their financial institution’s risk management personnel, the account holder always has a better awareness of their own accounts, so banks and credit unions must take steps to leverage technology that allows account holders to participate in the fraud detection process. By equipping customers and members with an actionable online banking system that enables them to take action against unauthorized activity, financial institutions can shift the control over to the account holder, ensuring heightened security and reduced operational costs, all while delivering an outstanding experience.
Check out the original article in PaymentsSource, “As payment fraud spikes, involving customers can aid prevention."
For more information, download our latest white paper, "Transform Treasury Management with Actionable Fraud Prevention Solutions."