Credit unions in 2019 continue to face the incredible challenge of balancing member experience with fraud prevention. In the wake of numerous high-profile data breaches and privacy incidents, consumers are more aware and concerned than ever about the security of their identity information. According to IDology’s Consumer Digital Identity Study, 53 percent of consumers said they were “extremely” or “very” concerned that their personal information had been exposed in a data breach. At the same time, fraud is evolving and constantly increasing.
With mobile fraud on the rise and other tactics such as synthetic identity fraud being more prevalent, identity verification is no longer just a compliance checkbox. Successful credit unions are strategically leveraging identity verification for more value in terms of fraud deterrence, risk assessment and a frictionless consumer experience. In fact, in
Staying ahead of fraud requires changing perspective and looking at identity verification as a strategic and competitive priority, both behind the scenes and in member-facing interactions.
The rise in frequency and depth of high-profile breaches have made consumers more aware of fraud and increased their concern about how financial institutions are protecting their data. In a recent IDology
Traditionally, credit unions have had to balance the desire to offer a low-effort, simple online and mobile banking experience with the need for additional layers of verification to deter fraud. However, in executing identity verification to mitigate risk, they often implement processes that are cumbersome and time-consuming. Research shows that one in three consumers have abandoned signing up for an account online because the process was too difficult or took too long.
Many credit unions are thinking holistically about the member experience across all channels and scenarios, but there are a number of questions when these instances arise. For example, how is the online experience different for a member who has all of the necessary documents on-hand to meet the requirements for a loan approval versus one with a thin file who will need additional mechanisms (including ID document scans) to get approved? Also, how do you authenticate return members and approve high-risk transactions on mobile or online channels with little to no friction for better engagement?
The fact that established fraud schemes are constantly growing and new threats are emerging has made fraud prevention and identity verification increasingly complex. The IDology fraud report revealed that mobile device attacks, phishing and account takeovers have become significantly more prevalent over the past year. Specifically, mobile device attacks were more common in banking than any other industry and were reported as a common issue among 38 percent of credit unions.
The same report also highlighted that identity verification has become more challenging and complex for 80 percent of financial institutions. Navigating this challenge while preventing fraud and delivering a seamless member experience has increased pressure for many credit unions that struggle to find the balance.
Leveraging multiple smart layers of data in the identity-verification process is necessary to stay ahead of fraud and deliver a positive member experience. This includes diverse data sources – such as mobile network data, device information and geolocation – as well as the integration of machine learning and artificial intelligence to improve the processing of that data. By utilizing smart layers of identity attributes and data diversification, and analyzing disparate identity characteristics behind the scenes, you can escalate to additional authentication methods only when necessary and quickly green light legitimate members without friction. The use of fraud consortium data will also allow you to stay ahead of the fraud curve with shared intelligence across industries and channels.
Basic static identity proofing and data matching are no longer sufficient methods for verifying identities or preventing fraud. While staying ahead of fraud can feel like a game of cat and mouse, it’s important to remember that the vast majority of transactions aren’t attempted fraud—they’re the actions of legitimate members. Fraud prevention is important, but member experience is paramount.
