With fraudsters setting their sights on digital channels, financial services providers have to walk a fine line to balance security with consumer demand for a fast, frictionless payment experience. A new report, commissioned by IDology Inc. and conducted by Mercator Advisory Group, canvassed fraud management executives across multiple industries—including mainstream and alternative financial services—to gain insight into the latest techniques and strategies to meet evolving fraud challenges.
Among the study’s key findings were:
- The rising frequency of data breaches is making it easier for fraudsters to access ID and account information.
- Multilayered authentication methods are “critical” for providing security while maintaining a positive customer experience.
- Mobile account acquisition, opening and self-service are important areas in which to focus fraud-prevention efforts and investment.
“In the ongoing battle to fend off fraudsters, companies are at a significant disadvantage … because they have to ensure that their products and services are customer-friendly and avoid any noticeable customer friction that is likely to induce the consumers who are end users to look to competing providers,” the report noted.
Fraudsters are exploiting social media and email channels to trick victims into divulging account information and credentials, the report warned. Once fraudsters have access to that information, they can rack up unauthorized charges and use or sell the information for ID theft purposes. Breaches can lead to significant damage for companies, eroding customer trust and brand reputation and leading to millions of dollars in chargebacks and other costs. In the face of such consequences, many firms have turned to multifactor authentication, including biometric applications such as fingerprint, voice and facial recognition to ensure users are who they say they are when accessing systems. Prior behavior patterns and device recognition also are promising anti-fraud measures, the study noted.
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Image Credits: Andrey_Popov