In this day and age, most business leaders recognize that their data is among their most valuable assets. For financial institutions, data can provide strategic insights to support a variety of important business functions across their digital banking platform, including fraud detection, marketing and customer service.

Recently, Alkami hosted a webinar titled “Defense in Depth” featuring fintech fraud prevention industry leading experts from Appgate and BioCatch, as well as Gilbert Young, vice president of information security for ORNL Federal Credit Union. The discussion centered around educating financial institutions about the ways fraudsters operate, the operational risk imperative to boost security protocols, and how these technologies, in most cases, can identify fraudsters tostop them before damage is done.

In this blog, we will review ways that properly applied data can support not only fraud detection, but also the customer service side of fraud prevention.

Leverage Data To Detect, Prevent, and Protect Against Fraud

Fraud is a major expense for financial institutions. According to a Bank Fraud Trends report put out in 2023 by SEON, “Financial services providers in the US, including banks, investment firms, mortgage firms, and lenders, see fraud costs vary from between $2.92 per dollar to $4.81 as the variety of scams increases. Innovations in data science and machine learning can help financial institutions combat the threat of fraud in a number of ways—even as fraudsters adopt ever more sophisticated tactics.

For example, financial institutions can tap into applications that leverage machine learning to detect fraud using “behavioral biometrics” data. By collecting and analyzing user data from thousands of interactions per digital banking session, including patterns in mouse activity, keystroke movement, touchscreen behavior, and device movement, the application can distinguish between genuine users and cybercriminals. These online fraud detection applications can help financial institutions detect and mitigate account takeover attempts, reducing fraud losses while improving the user experience. Financial institutions can also leverage data and analytics to determine the validity of new account applications, and forecast potential fraud before it occurs.

We have addressed how behind the scenes data insights can be used to proactively monitor the health of account holders’ assets for fraudulent activity. Now, the second part of the optimal use case for providing excellent service is to externally communicate on these important issues.

Executing Data-Driven, Targeted Marketing Campaigns To Support Fraud-Risk Education

Customer data insights can support goals on both marketing and customer service teams to build trust with account holders. Audience segmentation and marketing automation powered by artificial intelligence predictive modeling help financial institutions stay top-of-mind with account holders through regular engagements that are tailored to match the stage they are navigating in their financial journey.

This personalization is based not on simple demographics or account balances. Instead, they should be fueled by transaction data analysis. What account holders spend money on highlights what’s important to them. That’s why insights built from transaction data are key to executing personalized campaigns that make account holders feel seen and understood.

Here are some examples:

• Build an audience and an automated, omnichannel communication journey to alert “wealth building” account holders to common investment scams, or tips and tricks to best secure their financial future.
• Assemble all of your paper check users into an audience who are treated to a campaign where they receive content, across their preferred channels including through teller engagement, about the institution’s new, more secure digital payment options or Check Positive Pay for business fraud prevention.

In other words, financial institutions can tap into real-time transaction and channel behavior data to get the right message to the right customer or member at the right time, and in turn increase product adoption, and achieve primary financial institution status. Marketing automation tools and data also enable financial institutions to monitor the return-on-investment or ROI of their marketing campaigns, drive sales from any channel (including the teller system), and deliver customer service through virtual assistants and chatbots.

Tips for Fraud Prevention from ORNL Federal Credit Union

• Education: Educate account holders on ways fraud occurs, warning signs, and how to deal with and report fraud when it does occur.
• Stay In-The-Know: Meet regularly with your fraud vendors and keep a pulse on industry trends.
• Channel Consistency: Fraudsters map out financial institution processes, limits, and irregularities between channels and leverage that knowledge against you. Ensure you have consistency between channels with no gaps.
• Ongoing Maintenance: Keep rules up-to-date and mark positively confirmed fraud cases as fraud in your portals to build more accurate decisions.

When it comes to the ways financial institutions can leverage data to protect and grow their businesses, using a single source for data and insights can support a nearly limitless set of use cases, ensuring the institution can adapt and pivot strategies to fit the economy and needs of individual account holders.

Watch Alkami’s security bundle webinar featuring ORNL Federal Credit Union here!