10 bank fraud lessons of 2012

Posted on: December 26th, 2012 by Art Barger

As much as we’d like to think that remote banking is safe, the reality is threats across all customer channels still exist. If we aren’t ready for them we could find ourselves victims of these often preventable crimes.

Persistent criminals proved throughout the year that they aren’t going to stop anytime soon. With new and emerging threats facing financial institutions every day, banks need to stay one step ahead of today’s tenacious criminals. Throughout 2012, we’ve covered many issues around the threats and authentication solutions that directly affect call center environments.

As we gear up for a new year, I wanted to take a look back at some of the lessons of 2012, and what we learned that can help us better protect our customers and business information moving ahead. Here are some of the top stories and lessons we discussed:

1. Continued education is essential for fighting bank fraud: With crooks cooking up new schemes all the time, bank fraud teams need to keep up with the latest criminal trends and tactics.

2. Financial institutions could face liability for failing to prevent fraudulent transfers: Several court cases have ruled against banks for failing to detect and stop bad transactions despite having fraud defenses in place.

3. Exceptional customer service has become a banking necessity: The way banks service their customers can have a direct impact on customer satisfaction and retention.

4. Customers want a quick, safe and hassle-free banking experience: The best banking experience is one that resolves issues in a timely fashion without requiring anything from the customer.

5. FFIEC compliance means understanding true multi-factor authentication: To meet the FFIEC standards, banks need to understand the three categories for multi-factor authentication.

6. Out-of-band verification is counterproductive to compliance and security efforts: Knowledge-based authentication tools increase expenses, frustrate customers and don’t always stop criminals.

7. Ignoring the telephone channel leaves banks susceptible to social engineering: With all eyes on online banking, financial institutions need to also turn their focus on the call center.

8. Call center service has a direct impact on a bank’s bottom line: As one of the most frequent touch points for customers, poor service over the telephone can impact a bank’s ability to retain existing customers and attract new ones.

9. A single layer of authentication is an open door to phone fraud: Any bank call center still relying on a single layer to identify customers is setting themselves up for trouble.

10. The call center is a growing target for bank criminals: Security analysts agree that call centers are once again becoming a sweet spot for fraudsters.

With the demise of Caller ID and ANI, banking institutions need to take proactive steps to ensure they meet new authentication guidelines to better detect and stop fraudulent transactions before they happen. They also need to continually educate themselves about fraud trends and re-evaluate their current security strategies to make sure they have the most effective authentication methods in place to stop evolving forms of fraud over all customer channels.

As we move into 2013, we appreciate you reading the TRUSTID blog. We look forward to discussing these and other important issues that affect the financial services industry, and what we can do to better protect our customers and banking environments in the years to come.

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