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Mitigate Fraud by Engaging Your Customers

The recent ACI Global Fraud Survey reveals a number of important takeaways for financial institutions.  One of the many key data points in this study is the 21 % post-fraud attrition figure.  To be specific, more than one-in-five card holders will either switch to another bank or stop using their card altogether after experiencing fraud.  This indicates a kind of post traumatic stress affect, if you will.

I can’t say that I blame them.  Having your personal financial data compromised is unquestionably a stressful experience.  And it can be made worse by the often time-consuming resolution process, perceived by consumers as poor communication or a lack of interest for their well being.  The good news in all of this is that there are immediate steps issuers can take to increase the odds that affected customers maintain their card relationship with your institution.

Part of the solution, I believe, lies in another interesting statistic from this year’s fraud survey, and that is the very high percentage of consumers who wish to be engaged and play an active role in the fraud mitigation process.  82% of respondents indicate they want to be contacted by their institution prior to any action taking place on the affected account.  Customers also indicated a strong preference towards being contacted immediately when fraud is detected.

With the explosion of mobile devices and mobile banking applications, the opportunity exists to reach out and engage customers immediately when fraud is suspected. The technology exists, and this approach has been used effectively by OTP Bank. More proactive, regular communication with consumers means that issuers are not only likely to see a reduction in fraud exposure, but they also benefit from decreased odds that consumers place their cards in the “back of wallet”, or leave the issuer altogether.   

Our research shows that a significant number of consumers will shut out a financial institution with whom they’ve experienced fraud.  If an issuer treats fraud as a cost of business and isn’t transparent with consumers about their fraud resolution processes,, then they will most likely end up with both the losses associated with fraud and the additional loss of a long standing customer.  Fraudsters have benefitted from disjointed and opaque processes card issuers have traditionally used to manage fraud on behalf of their customers.  But technology, and now it seems the willingness of consumers to engage with financial institutions in the fight against fraud, has the potential to change the game.