The Twitter vs. Elon Musk issue should serve as a lesson to any company built on user numbers: quantity does not equate to quality. Banks and FinTechs must now switch from a growth-focused strategy to one that caters to the demands of its key demographics and fosters loyalty in order to become profitable, powerful, and able to endure the current economic storm.
This was a key topic on the Money 20/20 program this year. Together, the four pillars of effective strategy—customer experience, loyalty, digital transformation, and fraud—have pointed to a new paradigm of slower growth and higher quality. Neobanks like Starling, for instance, stated that rather than focusing on acquiring more accounts, their strategy is focused on luring and keeping customers who suit their target demographics in order to produce profitability.
That’s a smart decision considering that fraud affects 85% of new account opening applications, according to BankInfo Security. The days of valuing anything based on how many users there are quickly passing away. It is evident that when banks are just interested in obtaining a big number of new accounts, criminals will gladly open fictitious accounts to further their illegal activities because banking systems may not be up to the greatest cybersecurity standards. For precisely these reasons, FinTechs actually see three times more fraud than traditional banks.
Soaring account openings, which show significant user adoption and brand identification, are a reason for joy for the majority of expanding businesses. Growing businesses aiming to bring on new clients quickly present criminals with a golden opportunity. One bank, for instance, advertised to high-income prospects that they could apply for a credit card and a deposit account at the same time, which resulted in a subset of criminal applications. Later, these were connected to losses from credit fraud and the abuse of mule accounts.
Similar to how digital and automated account operations have helped banks serve consumers more quickly, they are also vulnerable to fraudsters who can open new accounts using stolen or fake identities. This can cost individual institutions millions of dollars in fraud losses and damage trust.
Fraudulent account openings that go undetected are a surefire recipe for disaster. Building genuine client loyalty—which calls for a comprehensive strategy that includes the newest digital technology, seamless customer experiences, and more effective fraud detection and prevention—is how success and long-term viability are demonstrated.
Everlasting loyalty, and how to achieve it
Two crucial elements for banks in developing customer loyalty are ensuring a faultless client experience (both online and offline) and ensuring the greatest degree of fraud protection and prevention. Fighting fraud is crucial for client protection, but users also need the quick and seamless digital interactions they come to expect from consumer-style apps.
For both conventional and new banks, this is their biggest challenge. Consumer-friendly application and transfer procedures must be implemented, along with rigorous fraud checks. Banks must keep providing loyal clients with a frictionless experience while putting up significant effort to safeguard them as they use an increasing number of services. While increasingly sophisticated criminal networks continue to readily evade many of the current fraud protection tools and procedures, the addition of ever-increasing layers of identity authentication might alienate customers and cause genuine application abandonment. Banks are unable to keep up with how hackers are getting through every security measure in place, including passwords, device IDs, one-time passcodes, and other forms of identification.
Criminals are skilled at employing digital deception to get past security measures, from credential stuffing to social engineering. They cannot, however, imitate a real customer’s true behavior. Behavioral biometrics is taking a stance on the front lines of the battle against fraud and in the direction of safe, simplified customer experiences.
Reshaping the route of criminal behavior
In order to discriminate between law-abiding users and criminals, behavioral biometrics uses machine learning to analyze user behavior. This technique reduces fraud and identity theft while also enhancing consumer experiences. This is accomplished by profiling user activity at both the user and population levels to discover behavioral anomalies and trends associated with legitimate and fraudulent activity. This is done by analyzing real-time physical interactions such as keystrokes, mouse movements, swipes, and touches.
Cybercriminals are unable to hide the tiny behaviors that distinguish them from legitimate clients, much like poker players always have their “tell.” When repeatedly entering personal information, for instance, genuine users can draw on their long-term memory because they are familiar with the facts, but cybercriminals frequently pause to consult resources or make use of copy-and-paste tools as they enter unknown information. Another illustration focuses on age-related behavior. Senior users enter data differently than younger users, which can be a hint that a cybercriminal is attempting to access the account.
Micro-behaviors can even reveal the user’s emotional condition, even if the profile looks to mirror the physical attributes and preferences of a recognized legitimate user. For instance, cognitive analysis can reveal even the most sophisticated social engineering tricks by identifying whether a user is acting on purpose or under duress. Only when fraud prevention technologies continuously scan a session for the subtlest changes in user behavior can some of today’s most sophisticated attacks be identified.
Fighting fraud is fundamentally what makes today’s financial services successful, from account opening through unwavering devotion. Criminal behavior patterns stand out in a huge group of real users; it requires cutting-edge technology to find them, but they can never be hidden. Thanks to the implementation of behavioral biometrics, real customers can gain from frictionless interactions and fraud protection by simply being themselves. The banking sector has been technologically changed in recent years, and seamless services and secure protection are essential. Thanks to robust AI and machine learning, we can now use criminals’ actions against them and give loyal consumers an even better experience.