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Avoiding the Back of the Wallet: What Banks Can Do About Card Fraud

Banks that invest in the right tools AND provide education and awareness to their credit cardholders can help protect their customers and preserve portfolio profitability.  

But that’s easier said than done.

Credit card fraud is not a new phenomenon. 

An eye-opening study recently released by global research and advisory firm Aite Group revealed that “Of all cardholders—debit, credit, and prepaid—30% have experienced card fraud in the past five years.”

Moreover, “In 2016, 17% of debit and credit card holders cite having experienced fraud multiple times during the past five years, compared to 13% in 2014.”

After experiencing fraud, 40% of consumers use the replacement card less, at least in some situations, than they used that card previously.

Source: Aite Group LLC.

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Tips for Banks to Deal with Card Fraud

Unfortunately, the Aite study also showed: “After experiencing fraud, 40% of consumers use the replacement card less, at least in some situations, than they used that card previously. This back-of-wallet behavior is lost revenue for the financial institution.”

Card fraud is an ugly fact of life. Here are some measures your institution may want to consider:

Invest in Latest Fraud Management Tools: Notice I wrote tools, as in plural. From prevention to detection to resolution, ensure you have a customized strategy to navigate the overall fraud lifecycle.

Integrate “Integrated Token Services” Into Your Strategy: As tokenization becomes increasingly common in payments, consider how you can leverage this technology to enhance safety and security to mobile, online and point-of-sale transactions.

Add Analytics: Fraud continues to grow in speed and sophistication. Invest in a robust reporting tool that captures and analyzes transaction data to identify and inform you of fraud trends within your portfolio. 

Minimize Manual Monitoring: Reducing your manual analysis efforts through standard generated reporting and ad hoc capabilities can give you a deeper view of fraud trends and statistics within your portfolio, helping you build more efficient fraud detection strategies.  

Launch/Enhance Customer Education Programs: Communicate early and often with your customers. There are so many ways to address education and awareness. However, the two core elements that are must-haves are (1) what your cardholders can do to enhance their security and (2) what your institution offers in terms of fraud prevention and recovery.

Make Recovery a Priority: “Consumers who are dissatisfied with how they are treated by their financial institution after experiencing fraud sometimes change providers, resulting in a global attrition rate of 20%,” according to the Aite Group report. Truly empathize with your card customers and invest in a comprehensive program with the post-attack customer-care resources that may help ensure they can move on from a negative experience with relatively minimal impact.

Want to learn how you can add fraud management solutions? Request a free briefing with one of our Security & Fraud Management Solutions Specialists.

 

Source: “2016 Global Consumer Card Fraud: Where Card Fraud Is Coming From,” Aite Group LLC.