By John Buzzard, Industry Fraud Specialist, CO-OP Financial Services
Editor’s Note: This article appeared earlier in the week on CUInsight.
Fraud has so many moving pieces these days, making it increasingly difficult for credit union executives to keep up. The components are complex and that very complexity results in our need for specialization on topics ranging from plastic cards to cybersecurity.
If you ever have subliminal conversations with yourself that begin with “Am I doing the right thing?” then congratulations – you are not alone. This is what successful people do. How do we make sure that our practices meet or exceed those of our peers? We tinker and then we tinker some more. With respectful acknowledgement to a great Cold War spy novel by John le Carré, I would like to share four distinct fraud-fighting personas I’ve observed to energize your fraud prevention efforts this year.
Tinkers are pragmatic and experimental. They love to find a wobble and squeak that needs fixing.
Chip technology is finally taking a stronger foothold and we are seeing a quantifiable shift to card-not-present (CNP) fraud. This shift has been promised for years but trust me – it’s actually happening and the time to revisit and strengthen your CNP strategy is now.
Remember also that debit and credit are two very different aspects of your business. When you review statistics, look at your numbers separately because they should be dramatically different when compared. Fraud basis points (BP) are typically lower on the debit side of the house and, if they aren’t, then it may be time to tinker with your approach to see if certain merchant category codes (MCC) require additional fraud strategy to meet your personal expectations.
Remember the pragmatic balance between fraud prevention and member experience. Fraud cannot be eliminated but you can find a sweet spot to rock the member experience, drive innovation and protect your fiscal reputation. It may simply be the right mix of technology that allows you to tailor a superior member experience while meeting key performance indicators.
The tailor is a busy person with a business day that involves experimenting, testing, adjusting and deploying.
Amazing online presence, friendly and functional social media channels, and best-in-class mobile products are the only way to be successful. Digital strategy isn’t a precious cliché. The most recent example of why you need to move the ball forward digitally comes via an article in the January 21, 2018 edition of The Washington Post (“Could Millennials Kill Costco, Sam’s Club?”) One of the biggest decisions today’s consumers make is to migrate away from businesses that lack robust and secure digital channels. The resounding message? Consumers need smart applications and continuous delivery encapsulated inside of a secure transactional experience. This is our new reality and we can get there by ensuring that our mobile presence is on-point and that our security and communication is both strategic and frequent.
Credit unions should be asking themselves right now, “Are we easy to do business with from the seat of an airplane or more importantly at 3 a.m. on a Tuesday? Can our members reach us in a variety of ways from the helm of a grocery cart when their transaction is denied?” If you don’t know the answer to these questions then make a list and soldier onward into a more digital version of your business this year.
Part of being a good soldier is patience, preparation and readiness.
Offering a strong digital experience to fight fraud and wow members is the secret to longevity in this business. Fraud fighters all agree that empowering the member with simple to use account alerts for setting balance alerts and transactional thresholds is a slam dunk. More and more credit unions see the value in adopting card controls to empower the consumer to protect their payment card and lower fraud risk. You lock your doors at night before bed. Why not lock your payment card down for the night as well?
Consider reviewing your overall mobile experience to ensure that you are offering your members a chance to be willing participants in your success. Shine up your website, make sure you read the online reviews for your payment apps to see if the member ratings are fair and consider launching a new digital presence this year that is truly empowering to the consumer.
Every successful spy in history has an inscrutable face: discreet, constantly learning and always mindful of what the competition is up to.
The fraud landscape is full of big bank fraud messaging these days because it gives them competitive advantage. You can play at this game too through simple, straightforward communications that focus on member education and awareness. Don’t forget to position your credit union as a safe harbor for secure payments because spies from other organizations are counting on your failure to do so.
Community-based financial institutions have the same fraud-sighting tools as the big banks, but we need to do a better job of storytelling this year.
The time is right for taking your story to the streets. Make sure those streets are digital, and include your website and mobile app right on down to the screen prompts on your fleet of ATMs. Remember, we just need to call on our inner Tinkers, Soldiers, Tailors and Spies to get the job done properly.
CO-OP Financial Services offers a layered fraud mitigation strategy for credit unions. Learn more about how CO-OP can partner with you to enable the best fraud mitigation solutions and tactics to keep fraud at a minimum.