Mobile banking grew 50% in the first half of 2020 as consumers embraced the convenience — and growing necessity — of digital payments.
However, like with any data hosted over the internet, the potential for financial information to be breached by bad actors is also surging. During the same time period, global identity fraud losses reached a whopping $56 billion with financial institutions, businesses and consumers all suffering. And that doesn’t include indirect costs such as damaged reputations or time spent remediating the situation.
In The Great Payments Disruption report, Entrust found in a survey of 1,350 consumers from nine countries that most respondents have major concerns about digital banking, credit security and the potential for fraud. In fact, 67% of consumers who suffer fraud will switch their bank or credit union as a result.
Given this risk, it’s imperative for financial institutions to adopt strong security postures. The financial institutions that will be victorious in the battle for consumer loyalty will be those that invest in a full suite of anti-fraud security solutions and provide ongoing education for their customers.
Findings from The Great Payments Disruption report
Consumer demand is high for digital banking and payment experiences. The report from Entrust found that 88% of consumers prefer to do their banking online and digital banking capabilities are the single most important factor for consumers when evaluating banks. The majority (72%) are even willing to switch from traditional banks and credit unions to branchless online banking services like Chime and Revolut, which offer digitally native banking experiences.
But just because consumers are eager for digital experiences doesn’t mean they’re willing to compromise on security. Ninety percent (90%) of respondents said they were concerned about the potential of banking or credit fraud as both become more digital.
There are good reasons for their concerns as many of these consumers have experienced fraud themselves: Nearly half (42%) of all respondents were notified of a personal banking or credit fraud in the past 12 months. And like we said earlier of those who experienced fraud, more than two-thirds changed their bank or credit union as a result.
Financial institutions have a lot to lose from fraud — not only the direct costs of the fraud itself or non-compliance fines, but also indirect costs like lost customer loyalty. Given the amount of competition in the space (from established traditional financial institutions to emerging fintech disruptors) today’s consumers have more options for who to do business with than ever before. To avoid these consequences, banks and credit unions will not only need to improve their security offerings, but also communicate with customers on how advanced technology keeps their payments and accounts secure.
3 ways to secure payments and ease customer concerns
Given the major concerns that consumers expressed about fraud, banks and credit unions need to strengthen their security posture with high-quality security tools that help reduce the frequency and severity of data breaches.
By investing in advanced technologies, you can capitalize on consumers’ growing interest in digital banking right now and more importantly, keep your customer base for years to come. You’ll want to consider a security portfolio built on trusted identities, data and payments. Here are three pieces of advice to help you get started:
1. Tokenize sensitive information: First, ensure sensitive customer data is protected at its source and when shared using tactics like tokenization or encryption. Tokenization is the process of obscuring personally identifiable information so it’s only interpretable to systems or authorized users with the correct security key.
In the context of digital payments, when a consumer charges a cup of coffee to, say, their contactless credit card, instead of sharing the credit card number directly, you can provide a merchant-specific encrypted token for each purchase. In the event the coffee shop suffers a data breach, your customer’s payment information is unreadable to hackers and effectively worthless.
2. Authenticate identity: In addition to protecting sensitive data, be sure to leverage solutions that ensure users are who they claim they are — a process known as authentication. Considering 61% of breaches are caused by stolen or compromised credentials, authentication can effectively block the majority of today’s attacks.
Tactics like passwordless access, device reputation management, transaction verification and adaptive authentication can help fight fraud without disrupting the consumer experience. These solutions both validate users and devices, while also proactively detecting and alerting you to fraudulent patterns for quick remediation.
3. Educate customers: While customers don’t need to know the mechanics of your security technology, you should still provide them with ongoing education about your institution protects their accounts.
When it came to account access security, Entrust’s findings revealed that most consumers are aware of basic security tactics like username and password, security questions, two-factor authentication and fingerprint recognition, but consumers likely need more education on advanced features like biometric authentication methods.
For more insights, access The Great Payments Disruption report
Consumers expect a lot from their financial institutions amid today’s evolving payments landscape — and security is an essential piece of the puzzle.
For a deeper understanding of what consumers want from the digital revolution currently underway, check out Entrust’s The Great Payments Disruption report. In addition to our survey findings, you’ll learn how to provide a first-rate trusted digital experience that earns persistent customer loyalty.
Contact us to learn more about how we can help your organization fight digital payments fraud and embrace the future of banking.