I had a recent “bank activity” experience many others might relate to: A person supposedly called from my bank to ask if I’d recently set up a checking account. Without verifying my information, they asked about charges made over Zelle. I very quickly realized it was not actually my bank calling, but a scam call. Considering 55% of all US phone calls are scam calls, I’m sure my experience is not unique. So, how do organizations safeguard consumers’ private financial information from fraudulent calls and text messages like the one I received?
Security is essential to a positive customer experience (CX). In this digital age, with cyberattacks far too prevalent, consumers are concerned about how their data is being used—and protected. Almost half (48%) of US consumers report they’ve been victims of a data breach. The U.S. financial services industry experienced 268 data compromise incidents (i.e., data breaches, exposures and leaks) in 2022, second only to the healthcare industry (with more than 300 incidents).
Data breaches take a toll on businesses and consumers. According to one survey, more than one-fifth (21%) of consumers severed ties with companies that suffered a data breach, and 42% of those individuals requested the business delete their information. To trust digital service providers and be willing to share their personal information, consumers must be confident their data is secure. Banks and other financial institutions can build customer confidence by strengthening data security through features like quick customer authentication and proactive real-time fraud alerts. Fortifying data security is one of four major trends identified in the CSG State of the Customer Experience 2023 Report that are expected to drive consumer behaviors and CX business decisions throughout the next year.
The High Cost of Cyberattacks
Both internal factors (mistakes or malicious acts by staff or contractors) and external ones (human hackers and automated bots) threaten cybersecurity.
Digital (online and mobile) interactions open the door to cyberattacks, including phishing, identity theft and credit card fraud. Customers jeopardize their data—and themselves—by not taking appropriate security precautions. Logging on through open internet connections, using predictable passwords, and neglecting to update security credentials are all oversights that increase customers’ risk of falling victim to cybercrimes
Cybercrimes could cost the world as much as $8 trillion USD in 2023, according to predictions from cyber economy research firm Cybersecurity Ventures. By 2025, cybercrime costs are expected to reach$10.5 trillion per year. Cybercrime costs include:
- Damage and destruction of data
- Theft of personal and financial data
- Lost productivity
- Post-attack disruption to the normal course of business
- Forensic investigation
- Restoration and deletion of hacked data and systems
Worldwide spending on information security and risk management products and services across all industries will top $188 billion in 2023, according to Gartner, Inc. predictions. These costs are ultimately passed on to consumers, so anything the industry can do to reduce or mitigate fraudulent activities will benefit us all.
Related Blog: Reducing Bank Run Risk with Proactive Communication
Strategies to Increase Cybersecurity
To deliver the personalized experiences customers expect, banks must gather and analyze customer data while also protecting it. More access to data means greater vulnerability to cyberattacks. Paradoxically, having accurate and thorough customer data also helps prevent fraud.
Financial institutions and banks that want to address customer concerns about cybersecurity should incorporate these strategies:
Analyze customer data to identify patterns in purchase behavior. Maintaining real-time customer data profiles makes it easy to detect unusual (i.e., potentially fraudulent) activity, such as suspicious credit card charges. Proactive fraud alerts confirm whether the customer made the charges in question.
Implement frictionless multifactor authentication. Using “password-less” solutions that require multifactor authentication makes it difficult for cybercriminals to access private/sensitive information. To improve CX, financial institutions and other businesses must revamp the authentication process, reducing friction so the system recognizes and authenticates customers in seconds. Given that people often use multiple devices—switching between a smartphone and laptop during a single experience—software must be able to detect multi-channel switching and adapt accordingly.
Use AI-driven security tools. Automated, AI-powered tools allow customers to verify messages they receive from a brand. Customers can forward suspicious text messages to a “short code” to confirm whether the message is legitimate. This solution performs real-time, automated security checks, notifying the customer to call the brand immediately if the message is determined to be fraudulent.
Related Report: The Future of Financial Services and Insurance
Proactive Communication Prevents Fraud and Improves CX
How can you show customers you take security seriously?
Send real-time, contextual notifications. Customers depend on their financial institution to deliver the communications they need, when they need them, wherever they are. They want real-time, easy, intuitive notifications regarding their loan applications, alerts about fraudulent charges on their credit card accounts and reminders so they don’t miss payments.
Use a journey management platform to send personalized messages at the right time, via the customer’s preferred communication channel. Implement these customer journeys to safeguard credit card usage:
Receive and activate credit cards. Customers need to know when they will receive their new credit cards and how those cards are being protected. Banks should notify customers that their credit card(s) are on the way and that PIN(s) will be mailed separately. To prevent anxiety due to delays (“I wonder if my card was stolen?”), organizations need to notify customers about any holdups. Inform them when the card(s) and PIN(s) have been delivered and prompt them to report undelivered items. If credit cards and/or PINs are late, the “report missing or stolen card” journey should begin automatically. Taking prompt action limits potential damage.
Receive proactive alerts about suspicious activity. When suspicious charges appear on customers’ credit card accounts, they need to either verify the charges or report them as fraudulent. In the latter case, the customer will need to cancel the existing card and get a new one. To orchestrate this journey, banks and financial institutions must immediately deliver personalized fraud alert messages via the customer’s preferred communication channel, sending an email or text message with a link or Interactive Voice Response (IVR) number to confirm the charges. The customer receives a confirmation message on the channel where they responded. If the customer does not recognize the charges, the message describes the next steps (e.g., contact the fraud department).
Request new PIN or two-factor authentication device. When the system detects a customer’s request for a new PIN or two-factor authentication device, it guides the customer through the process using digital channels. The system can also direct customers who want assistance to an agent.
By implementing comprehensive security measures and clearly communicating with customers about them, financial institutions can build trust and loyalty.