By John Love
As you plan your budget for 2016, you may be considering investing in a fraud prevention upgrade.
Many financial institutions are doing just that — especially in light of increased risk from the vast amount of data in fraudsters’ hands, the proven ineffectiveness of authentication, and the impending availability of same-day ACH, which will further increase fraud risk.
However, many financial institutions make a common mistake when building a business case for investing in improving their ability to mitigate fraud risk: When they calculate the estimated return on investment, they only consider the expected decrease in fraud losses.
If you only consider the reduction in fraud losses, you’ll significantly undervalue what a fraud prevention upgrade will deliver to your financial institution.
As you prioritize investments for 2016, think about what you’d be able to do once you’ve mitigated fraud risk. You could:
- Add online and mobile products and improve service levels, improving competitiveness and increasing revenue
- Win new customers by offering faster payment processing, higher limits and advanced payment services such as online bill payment and P2P payment
- Improve operational efficiency by automatically releasing low-risk wire and ACH payments, minimizing false positives, speeding up investigations and eliminating the need to write and maintain rules
- Build customer loyalty by taking responsibility for securing their assets and proactively alerting them to suspicious account activity
- Reduce the full cost of fraud, which includes the nominal loss, legal costs, time spent on investigations, damaged reputation and customer churn
- Enhance compliance with FFIEC guidance that explicitly calls for using behavior to detect anomalies in banking activity
Several financial institutions have received higher-level strategic and business value from improving their fraud prevention.
To hear firsthand stories from some of your peers, join us for our panel discussion at the Innovation Conference, “The ROI of Fraud Prevention: It’s Bigger Than You Think.” The session will be held from 8 to 9 a.m. on Monday, Oct. 5.
And please stop by our kiosk to find out how more than 350 financial institutions — including nearly 100 Digital Insight customers — are using our behavioral analytics solutions to mitigate fraud risk across banking channels and payment types.
Now, I’d like to hear about your financial institution.
What might be the biggest benefit your financial institution would gain by improving its fraud prevention?
John Love is the director of corporate marketing at Guardian Analytics.