SAN DIEGO-Even as CUs place more resources toward fraud detection and prevention, home banking applications are not receiving the attention they need, according to one industry expert.
Ted Bilke, president of Symitar, a Jack Henry company, says credit unions and their members have not suffered a great deal of loss in this area only because they have been flying "below the radar. You see a lot of home banking attacks at the large banks because they are much better known. However, if someone were to start systematically looking at the smaller community banks and credit unions . . ."
Bilke said he is aware of many credit unions that have done little more than the minimum with home- banking fraud prevention and not suffered a loss. "But the risk is certainly there. I believe we will begin to see a greater credit union focus around home banking security."
The main reason: The bad guys are getting more creative, said Bilke. "I think we will see credit unions counter with things like token cards and keys."
But what will make the biggest difference is being more proactive with member fraud communication and alerts, especially when potentially fraudulent activity is spotted, Bilke said. "I think we will see more real-time e-mail and text alerts to shut down fraudulent activity very quickly."
Bilke said Symitar is among those developing applications to help monitor for fraud and then reach out to members rapidly. He suggested that some new applications could be tagged onto solutions already in place for overdraft alerts, "such as how Bank of America manages NSF. If you present an item that will overdraft they send you a text real-time and let you know you have the option to pay the fee or come in that afternoon and make a deposit to cover the overdraft amount. We think financial institutions will begin linking fraud detection technology to these same types of real-time communications."
When a suspicious transaction is spotted the new applications could ask members to provide a second level of validation, explained Bilke. The CU could establish a protocol whereby any transaction over $500 could generate a message to the member to ask for confirmation that the transaction is valid. "Possibly a two-way text message capability. The faster you can shut down fraud the more you save, because criminals can do a lot of shopping in 24 hours."
