According to a recent study, every dollar lost to fraud costs FIs roughly $4.36 in total, much above the actual amount stolen. Additionally, this only includes directly relevant expenses, such as recovery and legal fees: When client loyalty is taken into account, the full cost of fraud is probably impossible to calculate.
Despite being pricey, fraud-fighting technologies more than cover their costs when this cost is taken into account. The most effective strategies banks may use to stop cybercrime and the resulting financial losses are described in this month's PYMNTS Intelligence.
Security and convenience are balanced
Although a high level of fraud protection is one of the top three factors that customers look for when applying for financial accounts, 25% of customers report that they have given up on a checking account application because of onerous verification requirements.
To strike a balance between the opposing demands for security and ease, banks must realize that a customer lost to friction is just as likely to leave as one lost to bank fraud.
Biometrics, which provides outstanding protection and is favored by a huge number of clients, is one of the most efficient ways to verify customers securely and seamlessly. Customers prefer fingerprint scans over facial recognition technologies by a margin of more than 36% to 34%.
To combat the growing threat of digital fraud, businesses of all stripes, including banks, are adopting biometrics in historic numbers. Facial recognition is offered by 56% of organizations using document verification solutions globally, and 91% plan to spend more on identity verification procedures over the next three years.
One strategy for accelerating the adoption of fraud prevention measures is to collaborate with third-party vendors.
The importance of collaborations in enhancing cybersecurity
The cost of implementing some sophisticated biometric security measures can be high, especially for smaller financial institutions (FIs) without an internal biometrics staff. According to a poll of bank executives, 70% of them lack the data analysis and AI skills necessary to compete effectively over the long run with banks that have the funds to build their security technologies.
To fill these knowledge gaps, third-party partnerships are a crucial resource since they provide plug-and-play solutions that prevent fraud and confirm customers' identities without the requirement for in-house expertise. In 2023, six out of ten banks intend to raise their IT expenditures for fraud management, and third-party verification solutions may prove to be a particularly worthwhile investment.
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