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Identity Fraud: Shift from Resolution to Prevention

The financial services industry has met over 80% of consuemrs fraud resolution needs, and it's high time to devote more attention to the relatively weak areas of prevention and detection. The law of diminishing returns states that you recieve relatively less value after a particular point of investment, and on a *comparative* basis, it's time for banks, vendors and regulators to divert their focus to enable citizens to stop these crimes from occurring in the first place. Our annual mystery-shopping research of large U.S. banks and card issuers has shown for years that the institutions now have eight in ten of the Javelin-reccomended fraud resolution capabilities, while the availability of customer-facing prevention and detection capabilities pale in comparison. With scarce resources available, we're overly focused on cleaning up problems and not focused enough on stopping problems from occurring in the first place (and customers are leaving banks as a result). New interactive technology such as mobile banking, SMS alerts, paperless statements and user-defined limits and prohibitions (UDLAPs) make breakthrough gains against the annual US $48B of ID fraud possible now. And contrary to popular belief, our data proves that customers will willingly make reasonable sacrifices of convenience for improved security. The answers are in the data: customers want more proactive security, they want personal invovlement in security, and banks and vendors will be more profitable when they fulfill these unmet needs. Opportunty is knocking...

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