Source: Nigel Moden, Unisys
Consumer complacency and poor security education breed ideal conditions for identity theft and fraud says Nigel Moden, retail banking partner at Unisys.
Security remains one of the unchanged headaches of the financial services industry as the risks of online banking hit the headlines once again. The biggest thing on the mind of banks is the protection of customer information from the multitude of schemes that are out there. Whether this is phishing, pharming, online banking fraud or false cash machine card readers, the threat to consumers is greater than ever.
Banks need to examine a wider array of data to identify fraud trends. This means investing in more-sophisticated technology systems, adding personnel and employing additional fraud-fighting processes to better protect themselves and their customers.
As an example to many - Lloyds TSB last week opted to trial new technology aimed at protecting internet banking users - some 30,000 of the bank's customers have been given key ring sized random number generators to use when they log on to their bank accounts, as an additional authentication measure. The innovative, simple to use solution has been designed to help thwart the growing threat from phishing scams.
However, despite such developments, consumers remain complacent about online banking security, and UK banks still face big communication and security problems. Although many UK surfers have taken some basic precautions, their lack of interest in learning more about threats like identity theft smacks of complacency rather than vigilance.
Research commissioned by Unisys reveals that 1 in 10 UK consumers have now been the victims of fraud. Despite this figure, 58% of respondents say they have no desire to be educated about fraud, and 73% had not been contacted by a bank to discuss potential identity theft. Only nine per cent had heard about phishing from their bank.
This laissez-faire attitude, as consumers continue to bank blindly online, not only encourages audacious and industrial-scale fraud but also translates into millions of pounds being stolen each year from unsuspecting customers. To combat this problem, banks need to take a two-pronged approach. The first is creating the right technology solution and the second is to educate the consumer. The fact is that many financial institutions current fraud systems are unprepared to address the growing, sophisticated forms of identity theft
Whilst the standalone fraud detection solutions available today are good, there is a need for banks to integrate that technology, knowledge and information across all channels – branch, online, telephone, etc. – to create a fraud monitoring "ecosystem" that holistically addresses the problem. Only with stronger, more coordinated systems can banks continue to safeguard the trust customers put in their brand.
Today, financial institutions and banks must incentivise consumers to join the fight against fraud, to help users police their own accounts, and let customers know that they are taking action in order to boost their confidence in online banking security. Even though many Internet users have heard about these threats, they want banks to solve the problem without their involvement, ideally with a blanket guarantee against fraud. To combat this attitude, a renewed commitment to effective consumer security education is key. At the end of the day, banks have to tread a delicate path between reassuring customers and revealing so much information that they undermine their own defences or create vulnerabilities.