The cost of bank fraud and operational inefficiency

Posted on: May 08th, 2013 by Art Barger

When we talk about call center authentication, we’re essentially talking about two things — accuracy and efficiency.

Sure, there are many tools that are designed to identify customers in their own way. But what differentiates one solution from another is the speed and accuracy that it takes to validate calls. In the end, authenticating customers over the telephone channel comes down to how quickly we can analyze risk, which is the indicator that helps banks agents determine whether or not the caller is who they say they are.

While caller ID spoofing can impact banks in many different ways, including bank fraud, the bank-customer relationship and damage to a corporate brand, the time takes to validate customers over the telephone channel can be just as important, and costly. Relying on traditional knowledge-based authentication (KBA) to verify customers over the telephone can also have a negative impact on banks due to the amount of time it takes to verify customers.

For financial institutions that depend on KBA to identify customers over the phone, here are a few things to consider:

  • First, there’s the cost of customer trust and goodwill. By this I mean disrupting the customer experience. For example, an authentication solution that require customers to first answer a bunch of challenge questions can be very disruptive to the process. Of course customers want to know they are being protected, but by taking too much of their valuable time to verify who they are before their needs are addressed can test the customer’s patience. Having a solution that automatically validates callers before the phone is picked up can eliminate unnecessary security questions that can impact the profitable bank-customer relationship.
  • The average call handling (ACH) time is important to every contact center. You can bet every call center manager knows their ACH time because it plays a critical role in their operating costs. The more bank call centers can lower their ACH time, the more money they can save on operations. This underscores the need to deploy fast, accurate solutions for validating callers.
  • Finally, without the ability to accurately identify callers, banking institutions are pretty much operating in the dark. What’s so problematic about this scenario is that authentication solutions that rely on personally identifiable information (PII) are essentially operating on blind faith, which puts both their customers and systems at risk. With personal information so accessible over the Internet today, PII-based authentication solutions should no longer be the basis for customer identification.

The bottom line is there are various costs that come with authenticating customers. Cost in the form of trust, cost in the form of labor and operational expenses, and cost in the form of fraud. All of this can weigh in the balance of how fast call centers can authenticate callers without disrupting the overall customer experience.

There will always be a cost for authenticating customers over any bank sales channel, including the call center. However, banks should not have to accept telephone fraud, lost customers and operational inefficiencies as the cost of doing business.