Credit Unions Tap AI to Keep Digital Services Fraud Free

With so many consumers converting from in-person transactions to online channels throughout 2020, new opportunities arose for fraudsters to take advantage of the evolving conditions. As a result, the Federal Trade Commission (FTC) collected more than 1.3 million fraud reports between Q1 and Q3 of 2020, with more than $1.5 billion in total losses.

Credit unions (CUs), both in America and in other parts of the world, were not exempt from these ongoing fraud trends. Most CUs and their vendors used precarious email networks, practiced poor software patch management and fell victim to leaked employee credentials. Cyberattacks on credit unions cost institutions anywhere from $190,000 for small CUs and more than $1.2 million for large CUs. Furthermore, the financial impact of an attack on a single vendor could be financially devastating: costs may surpass $1 million for large CUs and $300,000 for small CUs.

In the latest “Credit Union Tracker,” PSCU and PYMNTS examine how the latest fraud prevention tools and software can help CUs to effectively mitigate and prevent fraud while still offering the high-level customer service that they are known for.

Around the Credit Union Space

Credit unions are not immune to the increase in fraud attempts plaguing larger financial institutions (FIs). A small portion of Redstone Federal Credit Union’s 650,000 members recently fell victim to a bank identification number (BIN) attack. The CUs fraud prevention experts responded immediately to moderate and hinder further attacks. Fortunately, most of the amounts processed on successfully compromised accounts were under $10, and members will be reimbursed as quickly as possible. The attack comes after a similar security breach that impacted Air Force Federal Credit Union earlier this year, exemplifying the fraud risks in the credit union space.

Credit unions are looking toward the future with an eye on cloud migration. Cloud technology has the power to meet the digital-first expectations of today’s members while improving workflow conditions. While credit union leaders historically have found the cloud intimidating due to the nuances of their existing legacy systems, plunging member satisfaction rates have forced them to reconsider. Now, three-quarters of U.S. consumers have converted to mobile banking, leading 42% of CUs to commit to cloud solutions.

For more on these and other stories, visit the Tracker’s News and Trends.

Mountain America Credit Union on How AI, ML Can Help CUs to Minimize Fraud

Digital innovation has been necessary for many organizations during the pandemic, and credit unions are no exception. These innovations have given members convenient and safe banking options, but the surge in user profiles — paired with CUs’ sometimes outdated infrastructure — provides fraudsters opportunities to launch attacks. In this month’s Feature Story, Kelly Albiston, senior vice president and chief technology officer of digital product development at Mountain America Credit Union (MACU), said implementing advanced technologies such as artificial intelligence (AI) can help credit unions give members the digital services they need without sacrificing security.

PYMNTS Intelligence: CUs Leverage Innovation to Combat Fraud Risks Head-On

CUs have always emphasized developing personal relationships with their members. This level of intimacy has continuously helped CUs outrank competitors in customer approval ratings, but the digital-first mentality that emerged during the pandemic threw a wrench in the formula. Many CUs fell behind challenger banks and FinTechs, which resulted in 11% of their members turning to other institutions for financial tools and fraud prevention technology.

To regain their footing among their tech-driven counterparts, CUs must harness the powers of AI and machine learning (ML) or risk irreparable damages to their brands’ reputations. To learn more about how the latest technology can help CUs to continue meeting members’ demands and expectations, visit the Tracker’s PYMNTS Intelligence.

“The Credit Union Tracker®,” a PYMNTS and PSCU collaboration, is your go-to monthly resource for updates on trends and changes in the credit union industry.