How to reduce fraud and offer a smooth onboarding experience

There’s no question that fraud is bad business. Beyond financial loss, the impact on customer experience (CX) is significant, with broken trust and reputational damage key concerns.

Fraud prevention isn’t solved with a heavy hand, though. Too stringent an approach has detrimental effects on the majority of honest customers. Too relaxed, and fraudsters will reap the benefits.

So where is the balance?

Ultimately, customers want a quick, easy and secure banking service. FI’s want minimal fraud losses, strong levels of product buy-in and satisfied customers.

Finding a solution to such a challenge couldn’t be more time-sensitive for FIs, who are facing soaring rates of fraud.

At 96%, almost all the respondents in GBG’s latest fraud report: Smoothing the customer journey and preventing fraud, identified an increase in some type of fraud in 2020. While levels of phishing or third-party identity theft increased, it was scams that saw the most growth, with more than 50% of respondents reporting growing numbers of cases.

Prevention is better than detection

It’s clear that while strong anti-fraud measures couldn’t be more important, they also have an extensive - potentially negative - impact on customer experience.

Our report found that FIs are finding this a more challenging balance to strike at onboarding, than any other stage of the customer experience.

We know that prevention is key. Accurate risk rating at the onboarding stage means identifying threat actors before the transaction stage. But gathering the information required to do so can mean friction for customers.

And the stakes are high. Forrester suggests that as many as 54% of people filling out financial application forms abandon before completion, often as a result of frustration with the sheer volume of touchpoints and paperwork involved.

Undoubtedly, if FI’s don’t deliver a fast and seamless onboarding experience and, in particular a mobile one, customers will go elsewhere.

Striking the right balance means using intelligent fraud reduction technology that offers unrivalled results across three key areas: speed, agility, and integration.

Making the right decision - fast

There’s no doubt that the COVID-19 pandemic has accelerated the need for business to adopt remote and automated client onboarding.

And while the benefits of automation are many, at the forefront is speed.

The time needed to complete many onboarding tasks can be significantly reduced with the right tools. For example, mobile and web identity document validation technology (IDVT), allows FIs to automatically extract details from identity and Proof of Address documents in seconds.

Automated workflows like this not only remove subjective judgement but facilitate quick decision making.

Evolutionary solutions

The world of fraud is evolving - and so should your fraud capabilities.

As fraudsters become more sophisticated, agile technology solutions that can remain one step ahead are vital in reducing your and your customers' risk.

Flexible options that facilitate that integration of intelligence from any number of data sets whether they're from your own internal records, a third-party source, or a technology partner’s portfolio of identity and location data, are key.

The ever-changing regulatory landscape requires agility, too. Your ability to respond quickly to nuances in the financial crime landscape impacts the cost of fraud to your business through losses and investigation costs - not to mention the detrimental effect on CX programmes. Single-click solutions that allow you to adapt to changing AML, CTF and KYC regulatory requirements by adjusting rules, workflows and data sources will keep you at the forefront of compliance with minimal impact on the customer onboarding experience.

Together is better

A key takeaway from our report was the importance placed by FIs on integration. In fact, 33% cited a ‘Tight integration of fraud detection tools into CX workflow’ as the most essential feature of ideal fraud technology.

It’s no surprise then, that while only 28% currently had fully integrated fraud and/or compliance

Processes, 34% plan a full integration in 2021.

Why? Integration is not only a smart fraud management move but a great business one as well. Beyond decreasing the risk of financial attacks and regulatory fines, it can elevate operational efficiency across organisations by improving transparency and communication between otherwise siloed departments. Not to mention the cost savings.

Integration means staff and processes can react in real-time to fraud threats. Technology equipped with artificial intelligence can strengthen this integration by identifying suspicious patterns occurring across multiple sources.

Protected customers are happy customers

Despite the challenges of onboarding customers while meeting fraud and compliance targets, taking the time to ensure a smooth journey is vital. Satisfying customers on entry can correlate to a significant reduction in customer churn rates and happier clients in the long term.

Want to know more about preventing fraud while offering a smooth customer journey? Download our report.