The global COVID-19 pandemic accelerated digital adoption, shifting business roadmaps and increasing scrutiny on future investments. Company executives seek assurance investments will deliver measurable returns and help insulate performance against new demands. In this context, fraud leaders are in a prime position to unlock business-wide gains. Let’s drill down to how the right customer experience (CX) technology can help deliver an effective ‘total cost of fraud model.’
Digital transformation is a target for fraudsters
Adjusting to the deeper penetration of online transactions has placed increased pressure on businesses. Many pre-COVID-19 contingency plans likely cannot withstand the unprecedented changes to the macro environment. Whilst we can expect consumers will settle towards a more balanced mix of digital and physical engagement, it’s safe to predict a legacy uplift in digital transactions. As such, multipurpose solutions offering business’ wide advantages have never been more vital to any digital transformation roadmap.
A significant and costly hindrance to profitable performance during digital change is fraud. Unsurprisingly, during the pandemic, opportunistic fraudsters are piggy-backing on consumer trends. TransUnion conducted an analysis of suspected online fraud across industries in the UK between January and July which revealed retail saw the biggest increase (44%) in fraud compared to pre-pandemic levels and telecoms saw a significant increase (24%). As consumers shop more online and work more from home, enhanced security in these areas is critical. More broadly, the list of companies with warning notices against them on the FCA website indicates fraudsters are exploiting the psychological and economic shift wrought by the crisis. A TransUnion UK survey on COVID-19 online and offline scams showed by 18 May 2020, fraud related to the pandemic cost consumers £3.6billion, and 1 in 10 UK consumers (12%) had fallen victim to a scam with an average cost of £550.
Gartner’s timely report — How to Create a Payment Fraud Detection Strategy at the Organisational Level — provides this takeaway: ‘If you don’t understand the total cost of fraud to your business, you’re not tackling fraud effectively’. With 2021 planning underway, it’s important to go deeper. A route to developing an effective total cost of fraud model includes deploying technological solutions that focus on the optimal zone of fraud where you balance customer experience with security and additional business benefits. With the right approach, you’ll be more successful in adapting to increasing digital interactions while strengthening your businesses’ future capabilities.
Align business and team goals to optimise budgets
These straitened times present fraud leaders with the opportunity to satisfy a broad set of stakeholders by demonstrating the benefits solving fraud can have across business areas. Executing this requires an understanding of other business unit’s KPIs, and developing a cross-functional strategy aligned to organisational goals. The business case for investment is that it will bolster commercial performance.
“Conversations with fraud professionals indicate their KPIs are expanding as businesses start to understand that fraud has a deeper impact than just fraud losses,” explains John Cannon, Managing Director of Fraud and ID at TransUnion in the UK. “Fraud leaders are working with stakeholders across fraud loss, CX, Compliance, top-line revenue, marketing, etc., and find themselves brought into conversations earlier, enabling projects to cover both convenience and security — not just one or the other.”
Moving from a siloed to collaborative approach helps drive cross-business change. For example, if the objective is reducing fraud costs on Finance’s loss line, this approach empowers the fraud leader to canvas business units about their needs, and spot opportunities when scoping and investing in fraud control technology.
A key consideration to solution selection is customer experience. Consumers value speed, accurate decisions and safe processes — aspects businesses stake huge importance in at the front and back end of their operations. Pinpointing solutions that streamline customer journeys — matching or exceeding expectations with less effort — whilst leveraging new value to business units and supporting their response to new demands is a clearly an optimal zone.
Emerging technologies that are meeting consumers CX expectations while building trust
The best additional layers of security and authentication are practically invisible to consumers and help create a friction-right sign up or sign in experience. Below, we outline three emerging digital first solutions that balance CX and fraud and how they can help your business.
Document Verification and Facial Recognition (DVFR) — Streamlining the customer journey
We know from our CX report, consumers expect a quick, seamless digital onboarding experience; 75% of respondents said it’s important or very important applications are completed online or via an app. Fifty percent noted dropping out of an application due to poor CX; 33% dropped out due to the process being too time-consuming; and 24% dropped out due to too many questions.
Integrating a document verification and facial recognition solution into the digital customer journey allows you to quickly verify you’re dealing with a genuine customer — helping build trust between you and consumers.
Enabling digital document capture at the optimal point in your processes can elevate your CX proposition — simplifying and speeding up the customer journey whilst simultaneously embedding robust ID and verification checks. All information is captured securely through the consumer’s device, and each experience can be highly personalised to each consumer — with frontend user guidance making it quick and easy. Leveraging OCR for form pre-fill and data capture, consumers enjoy real-time, online electronic verification and ID document-enabled user journeys. Business benefits include: The ability to identify fraudulent activity at the point of transaction, and bolstering verification by enhancing identity validation — including those consumers with thinner credit files —whilst aiding conversion rates. Additionally, you’ll reduce manual processes and create verifiable audit trails, including attributes about the transaction and how it was performed, alongside comprehensive response information from integrity checks.
As we’ve discussed previously, facial recognition technology is likely to be an important battleground for CX and fraud prevention with respect to authentication and data security. Businesses can leverage consumers’ increasing confidence through the DVFR solution. Using live image capture, DVFR verifies facial biometric values from the ID document match the customer’s and determines proof of life within a sequence of secure transactions. On the flip side, businesses must be aware of the growth of deepfakes as the technique further infiltrates the public realm. It’s worth considering how consumers can be educated on the potential uses of facial applications and who they give access to their data. Organisations should consider the criminal opportunities these techniques present around identity and verification, and seek to develop approaches to counter them.
Linking traditional and digital identity data — Harnessing new data points
A consumer’s digital footprint includes datapoints you should be assessing to prevent fraud. You can utilise services to forensically profile contact data alongside identity attributes to establish the number of positive and negative indicators, including insights to identify potential ownership or vulnerability of an email address and/or telephone number. This serves as an additional path to identify potential impersonation fraud, obtain increased confidence in the presented identity and contact channel, and reduce the need for additional validation information — all whilst boosting your customer management operations.
“The wider benefits of a fraud prevention solution are always contextual. Commonly linking a telephone number to an established identity across robust data sources to build trust, or conversely, identifying attributes which can be highly indicative of risk,” outlines Cannon. “Now consider the same veracity check to all contact data you hold on consumers. If you have technologies like this which can be invoked in real time or as part of ongoing due diligence and KYC screening, you have to maintain a bona fide link to that contact data through the identity. Having evidence to link a customer to an email address and phone number is incredibly rich and opens up new efficiencies for customer management and onward customer authentication controls.”
To demonstrate the impact the solution can have, let’s look at it in action. Working with a client, TransUnion ID, Email, Mobile and Real-Time Fraud Alerts (RTFA) solutions achieved a 67%* fraud detection rate whilst simultaneously improving the customer journey (automatic verification) for 58%* of good customers who had been manually reviewed unnecessarily.
TransUnion CreditView — Dark web monitoring for consumers
The first two technologies mentioned lift your CX whilst invisibly reducing fraud risk and assisting across business endeavours. The final suggestion again enhances the customer experience but focuses on offering tangible tools directly to consumers to help them assess their fraud risk better by checking if their data has been compromised on the dark web.
TransUnion CreditView provides education to customers about credit data we’ve enriched to help them understand risk. It can be baked into a customer engagement strategy around fraud by alerting them to suspicious activity and educating them on fraud risks. By offering accessible content that educates and informs, we can raise the collective awareness that fraud isn’t a victimless crime — but one that costs us all in the pricing of products and services we seek. Consumers should begin to think more seriously about fraud and be proactive if they’re worried about being a victim of crime.
Looking at the bigger picture, a well-planned programme will build trust and strengthen relationships with customers by supporting marketing and communication endeavours around customer lifetime value, brand loyalty and reputation.
Build and validate your business case and approach
At TransUnion, we aim to help businesses build trusting relationships with consumers whilst understanding, detecting and mitigating fraud risks. That’s why our dedicated fraud team constantly tracks and horizon scans for new insights and trends and potential solutions. Our extensive data attributes, consultancy and flexible, CX-centric products provide our partners the tools needed to effectively address fraud and identity challenges whilst ensuring a friction-right consumer experience. That way, your customers, reputation and bottom line are all better protected.
Let’s discuss how we can help you build a total cost of fraud model, and produce proof of concept work and insights for a business case that protects your customers, increases profits, secures jobs and budgets, and strengthens your hard-earned reputation.
*Fraud & ID Case Study Pack -Feb 2020, page 23, CS 145