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how improved customer experience can help beat banking fraud


Lenders are balancing providing a leading experience in a highly competitive market with protecting customers from increasingly sophisticated fraudster threats. Latest figures show that every hour, UK bank transfer scam victims lose more money than the average UK worker earns in a year. Here are four key lessons of how an improved customer experience can support the battle against fraud.

Lesson 1: The importance of clear, and targeted, communication for prevention

In a digital world, fraud is no longer simply targeted at the vulnerable. Knowing who to educate is crucial to keeping customers informed on a constantly evolving series of tactics from fraudsters, whilst maintaining confidence in the use of digital.

  • Targeting communications to the vulnerable will always be a priority. However, there are other segments who are increasingly impacted by fraud. Two examples are company directors and millennials. The former segment, form 20% of all identity fraud cases. Meantime, the growing number of millennials are targeted by fraudsters because of the ease of accessing their shared information online. A constant review of who is being targeted can help identify segments that may otherwise be obscured from view.
  • To drive adoption of digital banking, messaging is often focused on building financial confidence online. Promoting the uptake of digital needs to be carefully balanced with encouraging customers to undertake precautionary behaviours. While digital security is a reassuring message to customers, if the message is too overbearing, or inconsistent, it may undermine their financial confidence overall.
  • Internal terminology should also be reviewed. Often in financial institutions, if fraud occurs, it will be to “customers”. This labelling may underplay the mental and financial impact to these individuals. The use of terminology such as “victim” can lead to cultural change in the way these individuals are perceived and treated.

Lesson 2: Make reporting cases as easy as possible

Speed is critical to both ensuring customer welfare and improving the chances of financial recovery. But reporting fraud can be a time-consuming journey for customers today.

  • One of the long-standing arguments against making fraud reporting easy for customers is that a bank will be overwhelmed with false claims and be taken advantage by both customers and fraudsters. However, for banks that have invested in automated refunds, such as TSB, there has been no evidence of a large rise in false reporting.
  • Making it fast and easy to report is operationally crucial, increasing the chances of recovering losses. It is also critical for customer wellbeing to not encounter any further stress in an already debilitating experience. Monzo’s in-app reporting is a great example of simplifying the journey for customers.
  • Fraudsters are continually seeking to find new vulnerabilities in banking, as well as using changing the economic and social backdrop to opportunistically trial new methods. Another benefit of making reporting easy is the identification of emerging threats, allowing quicker alerts to customers for what to watch out for.

Lesson 3: The public can handle, and benefit from, seeing data

The pandemic has taught us that the public can benefit from seeing data – when presented at the right level. However today, there’s very little customer facing data on the fraud threats they may encounter that can help raise vigilance.

  • Making the scale of fraud clearer to customers with in-app trackers and access to data would help to make the issue more transparent and visible. Fraud is increasingly growing, with £479m of losses in 2020. Making this information readily available to customers could nudge them into realising this needs an “always on” mentality to protect their finances.
  • However, within this growth figure there is volatility. There was a 5% rise in authorised fraud in 2020, but a 94% increase in impersonation scams. Here, transparent
  • There is a risk that any data provided may encourage fraudsters that they are being successful. Ideation around what would deter fraudsters while providing additional customer trust will be critical to implementing the right metrics.

Lesson 4: Getting the balance between controls & confidence

Building the right security for customers needs to go in tandem with increasing their confidence and happiness with using digital propositions, which are intrinsically more secure than cash.

  • Fraud and Digital CX teams can often be at loggerheads. On one side there is a push from CX teams to make digital banking frictionless. Meantime, fraud teams benefit from more controls, especially on payments and login/access. It is therefore crucial for these teams to work together on a common, consistent controls approach for customers, that aligns with the messaging, data and the overall digital strategy.
  • To bridge this gap, collaboration between fraud and CX teams, especially those located in digital, is crucial. Some examples have already emerged of collaboration, including proactive “check” SMS messages to customers, as well as neobanks using ML to identify emergent threats (e.g. Monzo and Ticketmaster)

Concluding Thoughts

Historically, fraud teams have often worked in silos away from the customer experience. This made sense in the past when fraudulent activity was often low volume but high in complexity. The quality of investigation was a key determinant in the outcome. With the rise of digital, the scale of fraud has exploded. Fraud teams need to constantly find new ways to expand the battlefield against fraudsters and improve prevention methods. Through equipping customers with the right data, controls and messages, CX innovations can help ensure customers reduce the chance they will fall victim to the constantly evolving threats within the fraud landscape.

Greg Beckett is a manager at digital and business transformation consultancy Gate One



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