Fraud Feels Inevitable to Bank Members. Losing Their Money Shouldn’t Be.
Nearly 1 in 4 consumers fell victim to digital transaction fraud in the last three months, according to a recent
State of Digital Banking survey. For credit unions and community banks, that
makes fraud defense a retention question, not just an IT one.Tellingly, 36% of consumers feel resigned to the idea that fraud is
"inevitable,"
but resignation isn’t forgiveness. Members may accept that fraudsters will try,
but they won’t accept a financial institution that lets their money leave. The
same survey found that the ability to stop fraudulent transactions in-flight
has become a competitive differentiator, shaping where consumers keep their
money.
The stakes are rising as more
credit unions and community banks join instant payment options like FedNow and
Zelle. Payments become final in seconds, making in-flight decisioning the only
real point of prevention. As of early 2026, Zelle reaches 80% of U.S. bank and credit union accounts,
with community banks and credit unions making up 97% of participating financial
institutions on the network.
Today’s biggest threat isn’t a
stolen password; it’s a scam in which the genuine member, on their own trusted
device, is talked into approving a payment. Strong authentication confirms who
is acting, but it cannot tell whether they’re being manipulated. That’s why
leading institutions are now authenticating intent, not just identity, by
pairing strong authentication with context-aware risk decisioning that
evaluates behavioral biometrics, device telemetry, location, and transaction
history in real time.
Context also works in both
directions by letting familiar members move without friction, and institutions
can intervene precisely when something is off, with a targeted scam warning or
step-up rather than a blanket decline. For example, Chartway Credit Union used
this approach to cut false positives by 30% and fraud-related
inbound calls by 25%.
Smaller institutions don’t need
big-bank fraud teams to do this. An ecosystem that can pull in shared
intelligence across institutions and payment networks in real time means a
pattern spotted elsewhere can protect your members before it reaches them.
Every credit union and community
bank should ask its digital banking or fraud vendor three questions. Does the
fraud decision happen before a payment is released, or after? What signals are
available at that moment? And what does the member see when a transaction is
stopped? If the answer to the first is “after,” a financial institution is
reconciling losses, not preventing them, and members won’t forgive that twice.
Author Bio
Dewald
Nolte is Chief Product Strategy and Market Engagement Officer at Entersekt,
a fintech company specializing in secure authentication solutions. He helped
establish Entersekt in 2008 to provide transaction authentication using digital
certificate technology deployed to mobile phones. He’s a computer engineer by
training, but swapped writing code for driving innovation and identifying new
ways in which organizations can unlock their potential through digital
transformation.