Balancing security and user experience to improve fraud prevention strategies

In this Help Net Security interview, Jennifer White, Senior Director for Banking and Payments Intelligence at J.D. Power, discusses how financial institutions can improve customer satisfaction during fraud resolution, covering proactive fraud prevention, clear communication, and empathetic issue resolution.

White also touches on the role of technology, such as AI, in enhancing fraud detection and balancing security with a user-friendly experience for customers.

What best practices can banks and credit card issuers implement to enhance customer satisfaction during fraud resolution?

One of the big takeaways from the study is that preventing fraud alone (without ever experiencing) has an impact on likelihood of the customer to reuse the partner for their next new account, on customer experience ratings, and on a customer’s likelihood to switch primary bank or card partner. The importance of strong security expands well beyond protection and functions to aid financial institutions in preventing attrition.

More specifically, the research shows that customers generally believe they are taking the right actions to protect themselves but often are not actually implementing best practices. Once fraud occurs, it is key that the financial institution alert the customer versus the customer identifying the concern passively themselves. We also see that resolving instances of fraud, best practices like single contact resolution, empathetic apologies, providing timelines to resolve (even if that is more than one day), and remembering that full resolution is more than just turning off a debit or credit card and issuing a new one.

Overall, research indicates that effective fraud prevention via account protection and strong resolution practices not only enhances security but also boosts customer experience, retention, and loyalty.

How can financial institutions effectively educate and motivate customers to adopt proactive fraud prevention strategies?

In addition to maintaining proper communication, financial institutions should consider offering online security center experiences which are at a minimum a digital landing page reviewing security options but could also be a gamified experience walking customers through best practices to secure their accounts. There should also be clear calls to action and efforts to educate customers on best practices and standards. In other words, make them active participants by bringing them into the process and keeping them informed.

What role do technologies like AI play in enhancing fraud detection and prevention efforts within financial institutions?

Bearing in mind I’m not an expert in artificial intelligence, everything suggests the technology could be a boon for both financial institutions and their customers. Among other things, it may allow for better monitoring and fraud protection and enable financial institutions to resolve issues faster and more efficiently when they do occur. That sort of dynamic may mean fewer problems for both financial institutions and their customers, and this means greater loyalty and brand advocacy and stronger peace of mind. It could also build greater confidence among customers for handling more transactions electronically. That could prove beneficial to customers, financial institutions, and any businesses involved that are part of a transaction.

How can financial institutions balance implementing robust security measures and maintaining a user-friendly customer experience?

There may not be one right way of handling the balance of security and user-friendly customer experience. Different institutions and their customers will have different needs, and processes might vary somewhat. But overall, there should be clear, easy-to-follow standards and checkpoints built into whatever financial institutions do. For instance, some banks or credit card companies may allow customers to institute their own stop gap for purchases over a certain amount, which may reduce the incentive for relatively large-scale fraud. These companies could also introduce some level of personalization into the processes, like how a credit or debit card could be easily turned on and turned off by customers themselves via an app or site.

There should also be a consistent process in place if something does go wrong. That should allow for financial institutions to maintain best practices more easily and for customers to have clear expectations and confidence.

What trends or developments should financial institutions anticipate in the next five years, and how can they prepare to address these challenges effectively?

For one thing, there may be a lot of low-hanging fruit when it comes to bringing customers into the process and making them active participants. According to J.D. Power data, 26% of bank customers and 31% of credit card customers say they have not taken any steps to secure their accounts. Merely improving on that should be and likely will be a focus for financial institutions in the years ahead.

Beyond that, there may be demands from customers themselves that will force institutions to up their game. The various research we’ve done at J.D. Power has shown banks and credit card providers are doing well when it comes to providing digital experiences via apps and sites. But it’s also shown different firms and brands are struggling to stand out from one another and that customers want advice and personalized financial management, particularly among those who say they are struggling financially.

Meanwhile, it seems like barely a day goes by when there’s not some coverage of fraud or a release of personal info via hacking from some corporation, and some speculate increasingly advanced technology may make it easier for those who want to perpetrate fraud. With this in mind, there may be a greater emphasis placed on enhancing security and experimentation in what different institutions do to find what works best and to have a process in place that allows customers to have confidence in their banks and credit card companies.

You could argue that peace of mind when it comes to fraud is just as important as financial health – or is even part of financial health. After all, if your accounts are associated with fraud and you’re limited, even for a short period of time, from paying your bills or using your debit or credit cards, that could lead to problems as well as being just frustrating and time-consuming in general. But who wants to spend a lot of time thinking about this? People want to know they are secure and then move on with their lives.

Financial institutions should look at this as an opportunity as much as a challenge. If they get this right, it’ll be good for their customers and for them, too.