In the wake of the Great Recession, it seems there has been little on which financial institutions and consumers can agree. The mood between the two parties has gotten so sour at points, that commentators have even taken to keeping score when profiling news events.
However, a new poll suggests there is one issue both parties recognize as a common problem: fraud. That being said, each side is quick to blame the other for the strain the threat is putting on the economy.
On July 24, IDology released its 2013 Fraud Report and revealed that suspected fraud is rampant in the banking and financial services industries.
The Georgia-based identity verification provider found that 86 percent of its banking industry customers said they had experienced suspected fraud in the last year, while 74 percent of financial industry respondents reported suspected fraud during the same time period.
Thirty-one percent of total respondents across all industries were C-level executives, 18 percent were product managers and 17 percent were operations managers. Respondent titles included terms such as IT, risk management, security operations and fraud managers, the report said.
These findings echoed the results of a similar poll conducted by transaction authentication provider Entersekt. It surveyed U.S. bank customers from May 14 to May 16 and found that 85 percent were concerned with fraud, and that these concerns affected how they viewed their relationship with major banks.
In this PYMNTS.com Data Point, we’ll go behind the reports to illustrate what businesses and financial institutions are saying about fraud, and analyze the data to determine how they could better work with consumers to address the issue.
Large Businesses Cite Consumer Awareness As Biggest Industry Challenge
IDology’s data suggested that small merchants may be at a greater risk for fraud than larger businesses. Only 25 percent of representatives from the large organizations it surveyed reported suspected fraud attempts within the last 12 months. By comparison, 64 percent of small businesses reported these suspected threats.
Despite this, IDology found that large enterprises and Fortune 500 companies across all industries were more likely to cite the lack of consumer awareness as a major challenge that affects how their industry can address fraud. Overall, 44 percent of respondents said this was a major challenge. It ranked behind only the changing tactics of fraudsters as the most commonly given answer.
Credit, Debit And Prepaid Fraud Most Prevalent
One reason that consumer awareness may have been cited so often was that across all industries, respondents said suspected credit, debit and prepaid card was most prevalent type of fraud. Account takeover placed second with 35 percent, while information theft, loss and attack was the third most prevalent type of suspected fraud.
The banking industry said it faces the largest threat from card fraud, with 57 percent of respondents saying suspected card fraud was most common. This was followed by transfers of loads and deposits, account takeover and money laundering.
50 Percent Of Consumers Are Willing To Take Action
Entersekt indicated that consumers are also pointing the finger at banks when it comes to fraud. It found that 71 percent of U.S. adults would be likely to switch banks if they were the victim of fraud while at their current bank.
However, Entersekt suggested that financial institutions may be in a position to work with consumers on this issue.
The poll found that 58 percent of U.S. adults said they would be willing to take an active role in securing their online banking transactions. This was provided they could use their mobile phones to verify purchases, logins, transfers and bill payments.
For more insights from IDology’s findings, read the full report here.