Fraudsters continue to innovate and improve their techniques, making it challenging for companies to identify and fast track “good" customers. As consumers increasingly use digital channels, they expect seamless, safe and fast interactions with businesses.
In a recent webinar, we discussed how financial services companies view the fight against fraud. A guest speaker from Forrester joined us to share the findings of a study of 153 financial services leaders in the U.S., Canada and India.
1. Fraudsters are one step ahead of financial institutions
Fraudsters have distinct advantages over lenders in the fraud battle: Fraudsters don't have to maintain compliance, and they only have to get it right once. Lenders face greater risks as fraud affects their profitability, reputation and compliance. Financial institutions have to follow Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations, among others, but fraudsters can constantly evolve their tactics.
The study, commissioned by TransUnion and conducted by Forrester Consulting, found that almost 70% of financial services firms agree that fraudsters are always one step ahead, leaving firms unsuspecting of the latest threats.
2. Financial institutions are detecting more loan stacking, new account and card-not-present fraud
According to the study1, less than 30% of financial services firms are very confident in their ability to identify varying types of fraud, such as identity theft, account takeover, card-not-present, loan stacking or synthetic identity fraud.
In fact, 67% of financial institutions reported slightly or significantly more loan stacking fraud. Companies also reported an increase in identity theft / new account fraud (64%), card-not-present fraud (62%) and synthetic identity fraud (60%).
TransUnion's own proprietary fraud data found that outstanding balances of suspected synthetic fraud for auto loans, bankcards, retail cards and personal loans have now surpassed $1 billion as of Q2 2018.
3. Companies are measuring return on investment for fraud detection in promising ways
Good identity verification methods are about more than just stopping fraud. They also consider the customer experience and focus on delivering experiences that are both seamless and safe. Nearly 7 in 10 (67%) of financial institutions measure their return on investment for fraud detection and identity verification by whether it improves their customer experience. Today's fraud detection and identity verification solutions must mitigate risk, while maintaining a fast, effective customer experience.
4. Linking personal and digital data is essential
To establish identity with confidence and authenticate consumers, lenders need solutions that unify online and offline identities. With a view into both online and offline behavior, lenders can verify the claimed identity is who they say they are. They can also assess the risk of the devices used for the transaction. They can also assess the risk of the devices used for the transaction, identify potentially fraudulent actions and investigate suspicious behavior and inconsistent data elements.
With a single customer view, lenders can deliver a customer experience than exceeds expectations while keeping fraudsters out and consumers safe.
1 Fraud Detection And ID Verification In Financial Services, an August 2018 commissioned study conducted by Forrester Consulting on behalf of TransUnion