Fraud Prevention Measures to Enhance Customer Experiences

Fraud is a persistent threat, and there is no end in sight as the e-commerce sector continues to evolve and increase online payment platform usage. This necessitates the need for precautious solutions to mitigate fraudulent activity.

FREMONT, CA: A recent study reveals that e-commerce merchants, consumers, and financial services providers lose approximately 6.4 billion USD to fraud annually. Customers expect their accounts and transactions to be secure. However, an interaction taking too long, growing too complex, or resulting in rejection could prompt them to abandon the effort and shift their business to other platforms.

The friction-free journey expectation has made financial institutions rethink the false dichotomy between maintaining stringent security and a positive customer experience. However, modern fraud prevention and authentication strategies can improve both aspects.

The Need for Security Measures is the Solution

Savvy financial institutions realise that rather than choosing between customer experience and fraud loss, they need to identify and implement more efficient and effective tools for verifying with whom they are conducting business. Today, numerous innovative security resources exist to authenticate a user's identity and prevent illegitimate access to customer accounts. However, fraudsters are innovating rapidly and incorporating new technologies and more exacerbated methods. This causes financial services companies to experience indecision and solution overload in choosing the optimal solution.

On the other hand, organisations can gain confidence in their authentication process without introducing overt, disruptive speed bumps for customers by leveraging various digital identity markers in the background, such as location, IP address, and device-specific data, and assessing the connections between customers’ online and offline identities and behaviours. The market cannot offer a single solution to prevent all fraud instances but can provide intelligence that, when optimally collated and cross-referenced, can effectively avert a significant amount of fraud loss and also protect the customer experience.

Optimising Data Insights in Practice

Many institutions are already using a host of online, offline, and device-based elements to verify an existing customer’s digital information or a prospective customer’s application and are extracting larger benefits. For instance, a financial organisation found that its new customer acquisition efforts were being stopped by its high rate of reviewing new applications manually to eliminate fraudulent instances. The manual process was expensive, time-consuming, and difficult to handle high-volume resources. It optimised data intelligence in its original process but failed to reduce the false flag instances.

This resulted in the financial institution bringing a solution incorporating IP address attributes. New applicants were then assessed based on certain elements besides IP, including behaviours related to browning and phone activity and the way digital footprints related to people or households. These factors were only the beginning since the collected data was later verified against authoritative online and offline customer data.

The gathered and analysed information resulted in a score denoting the fraud risk level. Applicants found to be low risk continued through the sign-up process uninterrupted. A manual review was triggered for people identified as high risk, launching additional verification steps to eliminate fraudulent activity. This minimised the number of manual reviews to prevent potential fraud, saving organisations valuable time and resources.