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Insights Digital & Analytics

Improving the Customer Experience Through Stronger Fraud Protection

Saba Shariff June 28, 2018
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The Right Fraud Prevention Strategy is Money in the Bank!

Fifty-four percent of surveyed banking executives consider a frictionless customer experience retail banking’s most important trend, with big data and artificial intelligence (AI) running a close second. However, poorly designed fraud controls create friction for good customers, and this can lead to lost revenue.
To identify the impact, we first have to acknowledge challenges banks are facing, including increased onboarding times, rising application abandonment rates, and customer retention and acquisition issues.

Increased Onboarding Times
Increased regulations associated with KYC activities, makes onboarding more complex and costly. As a result, onboarding takes 22% longer than it did in 2015. The primary challenge is accurately separating good customers from bad customers, in order to onboard good customers quicker. How can banks know if customers qualify as good actors, or are who they say they are, without great manual effort, and limited visibility into past behaviour?

Higher Abandonment Rates
The current average online application abandonment rate sits at 43% for millennial customers, 25% for Gen X customers, and 13% for Baby Boomers due to poor user experience with online banking platforms. Other reasons for abandonment include extensive account activation forms and challenges with authentication.
The impact of abandonment is significant. With an average Customer Lifetime Value (CLV) of $6,700 per customer, a 43% abandonment rate can add up to significant missed revenue per bank.

Customer Retention & Acquisition Issues
Millennials expect digital channels as a key way to interact with their FI. 61% of high-value customers want faster ways to transact online, and 60% of high-value customers want to access their online accounts with ease. That means frictionless digital experiences are key differentiators for banks wanting to win and retain a large customer segment.
The stakes become clearer when 45% of millennial customers surveyed, indicated that they would switch banks based on fees or a negative fraud-related experience, and 16% of those would switch to an online-only bank.

According to Forrester’s research, a one-point improvement on the Customer Experience (CX) Index can lead to $30M in revenue for direct banks and up to $119M for large retail banks. Missed revenue opportunities can be recouped with customer-friendly fraud controls, using analysis on cross-bank data to determine the risk of the customer when onboarding, and then applying the related controls based on risk level. Greater visibility through cross-bank data can mitigate a one size fits all approach, and encourage customers to successfully complete their online banking applications. With collaboration and cross-FI data, customer history can be uncovered with greater visibility, such accuracy means fewer false positives, so customers, including those onboarding through online applications, get in the door faster and with less friction. To conclude, a robust and balanced fraud detection and prevention strategy contribute to accelerated revenue!


Saba Shariff

Saba Shariff is an acknowledged leader at Symcor Inc., a leading provider of business processing and data management services, supporting major banks, insurance, retail, and telecommunications companies in Canada. As Head of New Product Development and Innovation, Saba leads a passionate team of professionals in designing new and exciting ways to solve real customer problems and leverage data to both improve today's services and discover new ones. With over 20 years of experience in IT and Product, Saba is a frequent public speaker in the private and public sector on topics such as Collaborations or Partnerships in Canada, and Breaking Stereotypes in Business Technology Management. In her spare time, Saba enjoys being active while managing the joys and tribulations of raising a teenage son.

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