Studies Examine ‘Delicate Balance’ Between Customer Experience, Fraud Prevention
Striking the “delicate balance” between customer experience and fraud prevention is not an easy feat, a series of studies by Forrester Consulting and TransUnion reported.
Each study can be downloaded at the TransUnion Fraud Trends 2018 website, https://solutions.transunion.com/fraud-study/?utmsource=press-release&utm_medium=press-release&utm_campaign=MULT-18-228908&utm_source=press-release.
The studies come as TransUnion’s own proprietary fraud data found outstanding balances of suspected synthetic fraud for auto loans, bankcards, retail cards and personal loans have now surpassed $1 billion as of the second quarter. Insurers and large and small property managers also face new fraud schemes as the prevalence of online applications continues to rise. The Forrester research collaborated TransUnion’s findings, said Geoff Miller, head of global fraud and identity solutions for TransUnion.
Key findings:
–Nearly all financial services firms (94%) in the study recognized that they have experienced some sort of fraud, whether it’s identity theft/new account fraud, synthetic identity fraud or account takeover fraud in the past two years.
–Nearly two-thirds of insurance companies (62%) have seen an increase in soft fraud and 57% have seen an increase in identity fraud in the past year.
–Virtually all property management companies (97%) have experienced fraud in the properties they manage in the past two years.
“It’s clear that a major hurdle for decision makers in industries such as financial services, insurance and the rental market is how to fight fraud while ensuring prospective customers have a good experience,” Miller said. “Consumers are demanding a better experience and those businesses that are not delivering on this are losing out to their competitors. It’s also apparent that many of the same fraud issues that plague American financial services and insurance companies are impacting similar businesses in Canada, India and likely other countries around the world.”
Exceptional customer experience is critical for most decision makers featured in the studies. Nearly three in four financial services firms (71%) said customer expectations influence the methods they use to detect fraud. Two-thirds (65%) of insurance professionals said tactics they have in place to weed out fraudsters can negatively impact their good customers.
Respondents also noted a major problem in fraud prevention and detection is that many fraud solutions lack the flexibility to adjust in real time. As well, the end user verification process is too complicated, resulting in poor customer experience.
“To effectively fight fraud, businesses cannot wait days, hours or even minutes to make the right decision,” Miller said. “They need effective tools that utilize evolving, overlapping networks of physical and digital risk signals that will inevitably help both businesses and the consumers they serve.”
Forrester study participants included 465 decision makers from the financial services, insurance and property management industries. Executives from the United States, Canada and India participated in the financial services and insurance studies while leaders from the United States contributed to the property management research.
