It’s true. You’ve read as many stories as I have on the increase in fraud attempts, especially in the last 12 months or so. While FIs of all types try to decrease fraud exposure and limit losses, collateral damage from those efforts can be the decrease in conversion. As I pointed out in my last blog, “Stop Driving Away Good Customers,” customers getting caught in the dragnet and being declined is even worse than the fraud itself.
One article in the FINTECH TIMES cited a study conducted by Feedzai stating:
Online banking isn’t new, but it’s newly popular. There’s been a 200% increase in mobile banking, and fraudsters worked to blend in among them. Online banking experienced a 250% increase in attempted fraud.
I understand the need for tightening up the verification process, however, using legacy systems to reduce fraud generally means a higher number of false declines and lower conversion rates. Fraudsters and cyber-shoplifters are deploying extremely sophisticated fraud tools and techniques to try and fit in with the massive shift to digital channels.
The article also points this out:
Feedzai’s fraud experts noticed an uptick of stolen credentials for sale on the dark web in 2020. The proliferation of stolen credentials, along with the exponential rise in online transactions, provided ideal conditions for fraudsters to blend in with legitimate consumer traffic without being detected.
We have to look at the problem from a new perspective, with new tools, and perhaps more important...new data. Recognizing that conversion is directly affected by how tight the fraud screws have been twisted, it seems like an impossibility to get out of this Catch-22. But these two goals – reduced fraud and higher conversion rates – don’t have to be mutually exclusive. In fact, they can work together to provide an ideal environment, balanced to where fraud and risk is minimized and conversion is optimized.
The answer is the implementation of behavioral data gathering and analysis. It's a new source of data, and a game-changing lens into what’s actually happening on the other side of your online form. It's available to organizations immediately and can give companies valuable insight into which customers are real and valuable...and which are fraudulent or risky, from day-one. What would you do if you could accurately separate your genuine and fraudulent customers?
Want to know more? Let’s connect and I’ll show you how.