I just read an interesting court ruling on an online-banking fraud case where a federal court ruled in favor of the bank.
Long story short, Choice Escrow Land Title had $440,000 stolen from their accounts about three years ago via fraudulent wire transfers. Choice was quick to accuse BancorpSouth, but Choice had twice refused to take advantage of BancorpSouth’s dual-control service, which is specifically designed to help prevent fraudulent wire transfers.
So, the courts (and any reasonable human being as well) came to the conclusion that Choice was at fault and the bank should not be held liable. While the logic is sound, I can’t help but raise the question: why didn’t Choice take advantage of the dual-controls service? Did they not care if money was stolen from their account? Were they overly naïve thinking that they would never be a fraud target? Did they not want to be burdened with cumbersome processes?
In the varied discussions I have had with clients, market analysts and peers in the industry, I often hear that security controls are burdensome. They delay or slow business and demand actions from end-users that their jobs more difficult. In the end, security is at best a necessary evil. But, it doesn’t have to be.
Banking security solutions have come a long way over the past years and no longer do end-customers need to be burdened with hardware tokens, being forced to log in to complex computer systems to release wire transfers, or visiting a bank to sign documents and contracts.
Mobile, when implemented correctly, has the power to deliver unmatched security and user convenience, while also enabling new business processes that actually lead to delighting customers and engaging them in the fight against fraud.
While Choice should have perhaps known better, I think the banks also need to step up and start rolling out mobile-based security solutions that enable, rather than hinder, business. My bet is that they’d be pleasantly surprised; not only in the decrease in fraud, but also in the new opportunities to improve customer interactions and implement new revenue-generating services.