Mark Roper, Commercial Director at Collinson Group discusses a bank’s role in preventing fraudulent activity.
Telco TalkTalk suffered its second data breach in a year recently, as the Wi-Fi codes of 57,000 customers were revealed, while in December a cyber-attack on Tesco Bank forced the company to repay £2.5 million of losses to over 9,000 customers.Experts claim that customers who don’t bank with Tesco Bank were also left at risk of cybercrime because the bank issued sequential debit card numbers, which means it is easier for hackers to work undetected as they move through customer accounts quickly. While cyber threats aren’t just of concern to financial organisations, these high-profile cases have ensured that banks recognise the need to invest more money in protecting customer’s data.
The scale of fraud continues as internet use grows. In Singapore alone, 72 per cent of residents have experienced cyber-crime in their lifetime. The cost of which almost exceeds US$1 billion. Meanwhile, cyber-attacks are predicted to cost Middle Eastern economies more than US$100 billion by 2020. Social media also plays its role in identity fraud. In 2015 there was a 52 per cent rise in younger victims of cybercrime in the UK due to their use of social networks.
For decades, financial services organisations have provided add-ons to accounts and cards that protect someone’s computer when it stops working, an antique when it gets broken, or luggage when it gets lost. But, when a customer’s identity gets stolen there are few products on offer that either help to resolve the matter quickly or better still prevent it from happening in the first place.
The current scenario
It’s pretty much impossible not to interact with a financial services brand online now almost 60 percent of us use online banking. Not only does it provide a valuable service to customers and deliver cost efficiencies, it also enables banks to collate, analyse and use this data as an important asset. It helps them to understand their customers’ behaviours and tailor products and services to them that encourage customer loyalty.
Most of us do not think twice about where their personal information is being stored online, trusting that it is being protected. Banks should ensure that their customers understand the benefits of ID protection, and the impacts of phishing. When we polled 6,125 of the top 10-15 percent of earners globally (the middle-class mass affluent), we found that there’s a strong demand for ID protection with 57 percent of consumers seeing ID protection as a valuable product. Looking across generations, it’s the millennials (62 percent) and generation X (58 percent) who rate ID protection as more important than the global average.
With more of our personal data being stored online, it’s not clear why identity theft protection is rarely provided as a benefit on a card or account, or within a loyalty programme. It is certainly not due to a lack of consumer demand.
As the facilitators of online transactions and holders of valuable data, retail banks could seize the opportunity to provide their customers peace of mind and enrich their digital experiences by offering identity protection products.
An opportunity for financial service providers
With the falling of the interchange fee credit card loyalty programmes aren’t as lucrative they once were for banks. This creates a strong argument for banks to provide ID protection as a value-added benefit. When Collinson Group conducted their mass affluent research, it was revealed that only 13 percent purchase it from their bank; much lower than specialist providers (22 percent) and credit card providers (20 percent). Educating customers on the importance of online protection and offering specialist products will help banks re-establish trust with their customers, encourage a better digital customer experience and help build brand loyalty.
At Collinson Group, we recommend that banks consider three points. How do their customers …
- Mitigate risk of public or stolen personal information online
Criminals scan the internet for personal information that can be used illegally or traded on the ‘dark web’. Banks need to be providing online monitoring platforms to mitigate the risk of customers falling victim to identity crime.
Monitoring solutions will alert customers when they are in danger of fraud or identity theft, and classify the level of risk. Details of any potential security risks or breaches can be viewed and assessed, so that action can be taken as required.
- Protect lost or stolen cards and documents
Card and document assistance helps keep a customer’s identity secure in the event that cards, documents, and data is lost or stolen. Assistance in blocking or cancelling lost or stolen cards, while making sure that copies of important documents are stored securely for easy retrieval, will allow access to missing items without delay.
- Protect personal information when online, across multiple devices
Today’s consumers access services and information across a variety of devices. Whether customers use their desktop, or a mobile while on the move, protection from phishing and key-logging attacks (two of the fastest-growing online threats) can be offered.
Banks have provided additional products to protect our homes, cars and livelihoods as part and parcel of their services for years. As more of us spend time on social media, and indeed the vast majority of transactional banking is done online, banks need to help us protect our identities and personal information from fraud too. Ensuring consumers understand the importance of ID protection, and providing it as an additional customer service will help banks build trust with their customers and build loyalty towards their brand.