As the payments landscape continues to evolve, fraud is only going to continue to increase, putting members’ financial health at risk. Case in point: Account takeover fraud alone increased by 90% from 2020 to 2021, according to a 2022 study from Javelin Strategy and Research.
It is vital to stop fraudsters in their tracks before members are affected. But protections must be established with members as the foremost consideration or credit unions risk creating a negative member experience, such as a card that is declined when fraud is not present.
Fortunately, credit unions have a wealth of data that makes it possible to create connected experiences, which in turn allows them to prevent fraud in the most intelligent and efficient way possible while also delivering an unparalleled member experience.
Understanding Connected Experiences
Connected experiences stems from a vision to bring all member data and channels together to produce highly personalized interactions. It involves integrating consumer-focused processes across all available channels, as well as optimizing the individual channel experience.
For example, credit unions can use the data they have to identify that a member prefers to receive information about promotions through the app but would rather come into a physical branch to open a new account. Additionally, if a member wants to start a process online, pause, and finish it at the branch, they should be able to seamlessly pick up where the process left off.
Using Data To Stop Fraud In Its Tracks
There are two main considerations when it comes to leveraging connected experiences to enhance fraud protection.
First, credit unions must know when to engage with a member about fraud. In other words, they must be able to accurately determine when fraud is present. Data-driven tools and strategies such as “known geo-footprints” can help. If a credit union incorrectly flags a cardholder activity as fraud while traveling, it can cause a major pain point for the member. Credit unions can avoid this misstep by leveraging data they have on file for the member — for example, owning a second residence in another state or frequently traveling to a particular destination — and adjusting distance rules to reduce unnecessary fraud suspends.
Credit unions also can use data to recognize an individual’s “natural purchasing pattern,” which varies from member to member and can sometimes seemingly resemble fraudulent activity. By identifying these patterns, credit unions can mitigate a false positive for fraud if transaction volume for certain types of purchases increases.
The second consideration is to communicate with members in or on their preferred channel. Using the wealth of data at their disposal, credit unions can identify that a member typically would rather interact with them on the app but in the case of fraud prefers to be alerted by text. This can be taken even further by, for example, tailoring the tone or formality of the message to the member’s preferred communication style.
Using connected experiences to fight fraud can seem daunting. Although it is a process that will take time, credit unions can take several immediate steps to get started:
Leverage investments in digital, data, and fraud mitigation. Evaluate what you have today. Are your current capabilities able to be expanded or improved, or are they limited? Is it time to upgrade so you have flexibility, and are there other partners that would allow you to do more?
Unify data. Look at data across platforms. It is of utmost importance to protect members’ data while also considering what data can be cross-referenced to create a better experience.
Integrate platforms with APIs. Identify what API consumption capabilities you already have and what capabilities new partners might be able to offer.
Evolve existing use cases. Start to build out use cases so you know what to execute on once the capabilities become available.
Investing in these technologies and capabilities is vital to keep up with competing financial institutions and continue to deliver the best member experience possible. Amid rising fraud risks and the ever-increasing expectation for a more personalized experience, credit unions must deliberately invest in data to intelligently protect and serve members.
Karen Postma is Vice President of Risk Analytics at PSCU, where she helps clients implement comprehensive fraud mitigation strategies that encompass authentication, transactional fraud, and account takeover, just to name a few. Her background of over 20 years of Fiserv processing experience, with direct leadership of fraud prevention, fraud detection, chargeback, and risk management expertise, has allowed her to understand both detailed and strategic practices that allow credit unions to balance their fraud and member experience. She also has extensive client management and engagement experience within the credit union industry.