Five Things to Ask When Choosing a Fraud Detection Solution

Posted by Deborah Peace on Aug 1, 2018 9:30:00 AM

5 things to look for when choosing a fraud solution

For businesses across the U.S., it is not a matter of if their organization will fall victim to payments fraud, it is a matter of when. A majority of organizations experience payments fraud each year and in 2017, 78 percent were hit, which is a record high according to this year’s AFP Payments Fraud Survey. The banks and credit unions that serve these businesses recognize this growing issue and the industry’s need for a better approach to fraud prevention, but selecting the right fraud detection and prevention solution can be challenging.

To help narrow down your institution’s selection, consider these questions:

1. How are items processed with the solution?

Consider implementing a solution that supports an automated detection and response strategy. This allows financial institutions to efficiently monitor the movement of funds and automatically alert the customer when suspicious activity is detected. The institution then processes the transaction according to the customer’s instructions. Since this process is automated and the institution moves forward based on guidance from the customer, employees are no longer tasked with an arduous review process and time-consuming call back procedures. Eliminating these manual processes also mitigates the risk of human error and any potential losses as a result.

2. How much time will this help my employees save?

Labor-intensive processes like manually communicating a suspicious transaction to customers through phone calls and recorded messages are incredibly time-consuming and costly, requiring additional back-office employees to manage fraud. However, implementing technology that allows account holders to set parameters determining which transactions should be authorized enables institutions to systematically monitor for suspicious payment activity that does not meet those parameters. This capability combined with automated out-of-band alerting and verification minimizes the time spent by employees reviewing transactions for fraud and following up with customers to verify the validity of transactions.

3. Who is responsible for pay or no-pay decisions?

Financial institutions should realize the value in making fraud prevention a collaborative effort with the customer, as it is the account holder who can undoubtedly determine whether a transaction is authorized or not. Involving the account holder in detecting and responding to payments fraud shifts liability to the customer, as the institution’s decision to process the payment is based on the customer’s guidance.

Financial institutions that do not involve their customers in fraud prevention measures will continue to bear the expensive responsibility of detecting and responding to suspicious activity on behalf of their customers. If fraud does happen, the institution could be held liable for the losses incurred.

4. Will this solution cost money or generate revenue?

With scalable technology that simplifies and automates the fraud detection, response and dispute process, fewer full-time employees are needed to manage the service, reducing operational and staffing costs. Offering a self-service fraud solution also provides a way to generate extra revenue. Customers already use and sometimes pay for outdated fraud prevention services so offering a convenient, real-time solution that empowers the customer is a valuable opportunity to tap into a new revenue stream.

5. Will this solution improve the customer experience?

Businesses will seek out financial institutions that understand the importance of ensuring secure transactions and offer a process for screening them that is transparent, convenient and promotes faster processing of the payment. By leveraging technology like voice biometric authentication and out-of-band SMS text alerts, financial institutions can engage and empower customers with greater control and visibility over their accounts. Balancing security needs with convenience can be difficult, but with today’s technology, it is possible to deliver a seamless customer experience without compromising on security. 

 

Topics: Fraud Detection

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