Many consumers have, at some stage, experienced fraud or suspected fraud with their debit or credit card. According to a 2016 AITE group report on global consumer fraud, one in three consumers experience some type of fraud every five years.
How a bank responds when it suspects fraud and how it communicates with its cardholders, is of crucial importance to the ongoing satisfaction and retention of its customers.
Many fraud departments have fraud reduction in their Key Performance Indicators. However, keeping cardholders happy and minimising the impact to them doesn’t usually feature in their KPI’s.
Some of the bad processes we’ve all experienced as consumers:
- You’re travelling and haven’t told the bank. The bank blocks your card on the first foreign transaction and leaves a message on your home or mobile phone to ring them during business hours.
- The bank's fraud system declines your transaction based on a real time rule but does not communicate with you, and you need to ring them whilst roaming in another country. Even worse if they use real time rules but do not have a 24/7 call centre. A transaction that occurs on Friday night cannot be remedied until the Monday.
- The bank blocks your card after a suspicious transaction and you find out when you try and use it the next time, leaving you embarrassed at the shop.
- You are on the road and the bank rings you to verify a transaction and starts with a 10 minute dialogue, asking personal questions to verify your identity, although you can't verify it is the bank ringing.
By not having sound customer service processes, banks can quickly lose customers. In addition, the money spent acquiring the account and the ongoing revenue the customer could have provided is often not considered when measuring the effectiveness of fraud prevention.
Good customer service isn’t that hard
On a positive note, there is not usually any conflict between good customer service and efficient fraud prevention. It is all about communications and using the channels that consumers use themselves.
Most people accept fraud occurs and also understand they’re part of the solution. Although they are typically not liable, cardholders are always affected in some way when their card is compromised. Whether it’s not being able to access funds or not being able to complete a purchase, it’s annoying and embarrassing for them.
The immediate solution
Often banks will face some attrition due to cardholders being dissatisfied with the way fraud is handled or with repeated denial of service. This can mean using the card less for larger purchases, or when travelling, or leaving the bank altogether and taking out another card. Good communications on fraud will reduce attrition and help banks to retain customers longer and maximise their cardholders’ use of the card.
When a suspicious transaction occurs, consumers now expect an immediate text message or push alert in their mobile banking app which they can respond to and rectify the issue.
This takes seconds and the message can tell the cardholder what transaction occurred, and what actions were taken so far. They can then confirm or deny the transaction simply by pressing a button.
Spectrum Message Services MoneyGuard solution enables banks to send these notifications automatically from their fraud system, such as ACI's PRM, to the customer's handset. The system can then reach out to customers using SMS, Push alerts, Email or Automated Voice, depending on the bank or consumer preferences and data available. This interaction is triggered by the rules firing and selects the correct message dialogue for the type of transaction.
More than 27 million cardholders in 12 countries currently receive alerts generated by MoneyGuard.
The cardholder is fully informed of what is happening in near real time and they can feel in control and they’re no longer embarrassed when their card doesn’t work suddenly at the checkout.
When the bank declines a suspicious transaction and the cardholder confirms it’s safe, the system can prevent that same transaction from being declined a second time, and also advise the cardholder they can repeat the transaction.
From our experience, cardholders tend to become more loyal to their bank as a result of these interactions. If cardholders know they can use their card overseas and quickly address suspicious transactions, they will trust your card and remain loyal to your brand.
One of Mexico's largest banks first used MoneyGuard in 2015 in conjunction with real time declines. Not only did the system pay for itself in just three months because of a reduction in fraud, it also significantly improved their customer service feedback.
Using automation for customer interactions can also bring additional cost savings. One of our clients, a large Canadian bank, has reduced the call volume for suspicious transactions by more than 10,000 calls a month. They also found consumers were willing to participate and freely give their mobile number. Within 18 months of going live, they doubled the number of client mobile phone numbers in their system to more than nine million. The cost of an average interaction went from $8 to $10 for a manual interaction to a few cents for sending text messages.
Most fraud systems have what is called a false – positive rate, and that’s the ratio to when the system suspects that a transaction is fraudulent, versus when it is actually fraudulent. Rules that decline and block cards need to be the best, but are often still 3 to 1. The rules that just flag a transaction as suspicious often have more than an 8 to 1 ratio. By using automated interactions, fraud operators only need to follow up the confirmed fraud cases or 1/8 of the alert volume thereby further reducing unwelcome customer interactions.
These speedy yet simple interactions reduce fraud, reduce the cost of customer interactions, and result in satisfied customers who are part of the process and have faith when using their card.