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Removing Member Friction: The Number One Fraud Prevention Challenge for Credit Unions

BY CHRIS LUTTRELL

Recent data confirms that trying to balance the need for fraud prevention with member expectations for frictionless experiences, all in a competitive environment, is no easy task for credit unions. IDology’s Sixth Annual Fraud Report revealed that 63 percent of credit unions consider the biggest challenge to fighting fraud is balancing customer friction and fraud prevention.

Meanwhile, with the growing number of data breaches and the increased number of personal data available in the dark web, fraud is trending upward, especially mobile and online fraud: 58 percent of businesses experienced more fraud compared to last year, online fraud was up among 67 percent of companies and mobile fraud increased 63 percent across the board.

The majority of companies (85 percent) now consider identity verification a strategic differentiator due to the rise in more sophisticated forms of fraud, competitive pressures and consumer expectations for fast and easy digital onboarding.

Consumer opinion backs up that consideration. A recent consumer study revealed that 55 percent of credit union members would be much more likely or somewhat more likely to select a financial institution that used a more advanced identity verification method and 86 percent would be extremely or very willing to switch to an easier and more secure identification method to access online accounts.

For consumers and credit unions alike, the importance of identity verification is growing and moving from a back-office compliance check to a front office strategic consideration. Verifying identities is no longer a matter of basic or static identity matching. There is too much personal information already available for criminals to use. Fraudsters are perpetually becoming more innovative. The end result is that 75 percent of businesses say identity verification has become more complicated in the last three years.


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