Close your eyes and think about what comes to mind when you hear the word “bank.” What do you see? A vault? Big iron doors? A portico with marble columns?
Most of us imagine strong, secure structures when we think about banks. That’s why the bank emoji depicts a big stone building, complete with the portico and columns.
Banks have spent literally hundreds of years fostering that image of stability and security in people’s minds. “Bank” must connote “safe” for our financial systems to work.
But that connotation is under attack today. Via digitalization, we have made it easier than ever for money to move from account to account — and also easier than ever for scammers to coax large sums of money from anyone with a bank account. Consumers are now asking, “Is my money safe?”
A bank’s ability to answer that question depends on the bank’s ability to combat fraud. Indeed, customers are choosing certain banks over others because of those banks’ fraud prevention capabilities.
At the beginning of the year, Featurespace Founder David Excell wrote that the perceived trustworthiness of each and every bank is now on the line. In generations past, marble columns and blast-proof vaults were the symbols of a bank’s trustworthiness. Today, it’s how quickly and effectively a bank can anticipate and respond to potential instances of fraud.
The risks that banking fraud poses to a bank’s reputation
Anyone who follows the news, even casually, understands how rampant financial fraud has become. There is ample evidence of it every single day.
Here are just two recent examples from the UK:
- The Guardian’s Lizzie Cernik had a collection of stories of Britons who had been defrauded via romance scams. One woman, who believed the person she was getting to know had been kidnapped, was defrauded of £350,000. Another was defrauded into selling her house and giving the money, about £250,000, to a fraudster.
- UK Finance issued a warning to small and medium-sized businesses, which were defrauded of nearly £60 million in just the first half of 2021.
Understandably, consumers are worried about their money. They are worried that they are one bad right swipe or one hacked email account away from financial ruin.
Bank executives know this. They know customers are seeking reassurance that their savings are safe, that their data hasn’t been compromised, that their money is where it ought to be.
And those executives are committed to building out fraud prevention systems that deliver this reassurance.
Fraud prevention cannot hinder customer experiences
Of course, banks have been investing in fraud prevention tools for a long time. This is not new territory for them.
Nor for many consumers, some of whom have been banking online for more than two decades now. Those people have seen massive evolutions in banking security. They probably started by protecting their accounts with a short, memorable password. Then came two-factor authentication. Then came banking apps and mobile alerts.
The digital customer experience has evolved rapidly in that time. Banks have done a great job of giving customers useful tools for managing and transferring money.
The problem is security tools don’t necessarily evolve in the same user-friendly direction. In fact, security would be much easier if user friendliness weren’t a concern at all. Customer do see some level of friction as a necessary evil that actually gives a feeling of security that there is something going on in the background to protect them. Each transaction could be run through a series of checks and sign-offs, like container ships passing locks in the Panama Canal. Authorized push payment fraud would become a thing of the past.
But that’s not how money works. People also need to be able to access and move their money when they need it. Anything that impedes that access diminishes the customer experience and ultimately harms the bank’s business.
Understand customer behaviors and spot anomalies in real time
To win in this contest of reputations, then, banks must be able to secure a customer’s money without hampering the customer experience.
This is what we designed and built ARIC™ Risk Hub to do. It quickly analyses the entire payment journey and accurately predicts individual behavior in real time, understanding risk even as underlying behaviors change. With this self-learning technology, anomalies in customer behavior are rapidly understood, evaluated and acted on to stop fraud and financial crime. Suspicious transactions are flagged immediately for the bank’s fraud prevention teams to act on.
A few years ago, UK bank NatWest adopted ARIC™ Risk Hub to help its team monitor transactions and spot scams. Within 24 hours of deployment, the fraud team was identifying more instances of authentic fraud, and the number of erroneously declined transactions had fallen.
That’s how a bank can secure someone’s account without compromising the customer’s access to their own money — and that is a capability any bank can stake its reputation on.