There is plenty of talk about cybersecurity both internally and externally. And it’s no surprise that cybersecurity in the financial sector in particular is a huge industry.
Cybercrime in general is a $600 billion industry, and at some point in all those breached accounts and compromised security, financial institutions will pay either directly or indirectly.
According to the American Bankers Association, banks stopped $17 billion in fraudulent transactions in 2016. Fraud against deposit accounts cost banks $2.2 billion. In the UK, the UK Public Accounts Committee reports that fraud cost consumers about $15 billion.
And these numbers keep growing at an unnerving clip.
The First Line of Defense: Your Customer
Obviously, internally financial institutions have to deploy a significant amount of money, time and energy making sure their internal as well as external systems meet all the privacy requirements as well as the highest security standards.
But in all this, many FIs forget a powerful tool that will allow their customers to become their first line defense against fraud: a personal financial management solution. Robust PFMs have evolved far beyond their humble roots into multi-faceted digital financial
By allowing customers to aggregate their accounts in their PFM, customers can see all their accounts in one place. For example, with aggregated accounts, customers (individuals or merchants) don’t have to jump across their various loan or credit card sites
or apps, to monitor transactions.
It’s crucial that FIs offer tools that monitor transactions and allow easy reconciliation of bank and card accounts; it’s no longer just a nice option.
Aggregation: An Added Layer of Security
WIth aggregated accounts, it’s all there.
Aggregation is a very powerful tool, since customers know where they’re spending their money better than anyone. If something looks fishy, they’ll likely spot it before any algorithm.
It makes fraudulent account activity faster to catch, which certainly helps both the customer and the FI, since the longer the fraud goes on, the more difficult it is to unwind the transactions and deal with the liability.
And to that point, empowering your customers to police their accounts is something most will do happily, and see it as a benefit rather than an FI-imposed obligation. It also makes it cheaper for FIs to address any inappropriate activity since they are likely
able to discover the fraud quicker.
Do You Have an Aggregation Tool?
It also means FIs can use their ability to provide customers with aggregation services as a unique and valuable benefit of an integrated PFM. A quality PFM keeps FIs’ customers closer to them. It also demonstrates the FI’s active interest in keeping their customers
safe from security threats.
Aggregation has the added benefit of allowing FIs to see customers’ entire financial picture, who they look to for loans, what credit cards they use, etc. This is a treasure trove of granular marketing information that would have been nearly impossible to unearth
just a decade ago.
All these advantages also apply to integrated PFM platforms focused on businesses as well. The fundamental reasoning is the same, although businesses exposure is that much greater than an individual’s exposure since they handle significantly more transactions
on a daily basis. Every $1 of fraud to merchants and businesses costs $2.66 to mitigate on average.
The point is, aggregating accounts should be seen as a need to have tool for customers rather than a nice to have tool. And its values - ease, efficiencies and security - should be communicated to the customers so they take advantage of it.
The security aspect of your PFM is an empowerment tool for your customers, so make sure they know about it. Fraud costs everyone money, so awareness and early detection are great ways to mitigate fraud. And a good PFM is a powerful tool to help.