“If you’re not on your game and protecting your customers,” Tom Shell, vice president of business development and solutions engineering at DataVisor, told PYMNTS, “the switching cost is just not very high” and could lead to lost business.
Shell noted that the sheer volume of interaction between consumers and banks makes ferreting out fraud akin to finding the needles in the proverbial haystack.
As it stands now, he said, there is a deluge of “blind activity” hitting financial institutions (FIs) as their end users apply for home loans or credit cards — and billions of transactions coming through the door means that FIs are hard-pressed to find the “noise” in a transaction that would raise red flags.
Read more: Fraud Execs Say ACH and Check Fraud Pose Ongoing FI Threat
The fact that a significant percentage of consumers aren’t very confident about how effectively their banks can fight fraud is in part spurred by the flurry of headlines covering new data breaches, bank vulnerabilities and phishing scams. Passwords are increasingly ineffective at defending against the bad actors — and many consumers are lax when it comes to changing them frequently.
Fraudsters Get More Innovative
At the same time, fraudsters are innovating more quickly than ever — and the lines of defense, at least at the consumer level, are less than robust.
Regardless of whether consumers are writing checks or pivoting toward real-time payments, there’s one outstanding truism across financial services, said Shell: The banks’ fraud detection efforts are not keeping pace with a trend towards payments digitization.
A full 22% of U.S. consumers said they lack confidence in their banks’ ability to handle suspicious activity, yet 25% spend less than an hour annually checking their accounts for fraud. Banks, he said, need to do a better job of educating people and making sure they know what to do to prevent fraudulent schemes — not clicking on suspicious emails, for example.
See also: PYMNTS Intelligence: Fighting Check and Payment Platform Fraud
But beyond education, Shell noted that advanced technologies, including biometrics, can be potent weapons against cybercriminals.
Biometrics, he said, offer a “simpler way for individuals and for businesses to really interrogate and understand who someone actually is.”
Thus far, he said, consumer embrace of biometrics has been relatively muted, despite widespread recognition of its promise. That’s due in part to the fact that, as Shell explained, there’s still a lot of legacy technology that doesn’t allow biometrics to be fully implemented, such as older smartphones.
For banks, replacing the technology they control, such as ATMs, is challenging enough in terms of time and money. As Shell told PYMNTS, not all devices support biometrics the same way. Trying to capture that biometric-related data is not always homogenous.
As a result, it’s incumbent on the larger FIs to combine a range of tools and strategies to better protect their consumers around the world. A combination of fraud detection, strong authentication and biometrics, and consumer-level education gives the right signals that can raise the red flags necessary to spot illicit activity.
For providers such as DataVisor, he said, “We’re finding that our customers are looking for unique and compelling ways to figure out where the risk is.”
DataVisor, he said, helps automate banks’ interactions and integrations with a number of trusted vendors to examine transaction-level details and follow consumers across their life cycle with the bank. In this way, the trust level increases — and acts as a strategic differentiator.
The urgency for banks to adopt this multi-layered approach is there, Shell said, because the competition for consumers is getting fierce. As he observed, it seems like every week there is a new neobank or payments platform launching, and all manner of digital upstarts are launching loan programs, micropayments and new services.
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