Consumers and financial institutions share a common, stealthy enemy that works around the clock to deplete them of billions of dollars (and countless hours) every year.
It’s because of these faceless foes that $4 billion is spent annually on consumer identity protection products (LifeLock, for example) to protect against more than $40 billion in annual fraud, for which financial institutions ultimately bear most of the losses. In turn, financial institutions invest heavily in their own cybersecurity, as well as in creating digital security tools for their customers to adopt.
And yet, despite the massive investments, very little can be accomplished because identity protection and digital banking don’t work hand-in-hand.
Despite their shared goals, today’s digital banking and consumer identity protection solutions are as far apart as east is west. The siloed approach is an obstacle to making real headway against the problem and creating a richer digital financial management experience.
Identity protection products are heavily focused on monitoring services that unfortunately, lack the larger holistic context needed to make them much more useful. This is noticeable in three key areas.
• Credit monitoring is the hallmark of most identity protection solutions, and certainly can provide essential information when risks of particular ID crimes are raised. Yet with less than one quarter of all financial identity crime losses involving new credit account creation, credit monitoring misses the majority of all potential financial fraud. Further, reporting of credit activity necessarily comes late in the fraud cycle – after a crime has already taken place. It’s almost always universally prescribed to the victims of data breaches, but has little value in actually preventing fraud.
• Identity protection products are starting to increasingly monitor the dark web activity of consumer identity records, but this only represents a fraction of personal information compromised in the thousands data breaches that occur each year. Further, when consumers are notified that their records have been found, they never receive a holistic analysis of the pertinent risks or clear guidance for preventing them.
• Today’s identity protection services have almost no functional connection to digital banking, which is where the potential is for stopping a significant portion of consumer financial fraud. Sixty-five percent of identity crime occurs as account takeovers or card fraud, which today’s current identity protection services largely don’t touch.
The digital security tools offered by financial institutions bring the potential to stop fraud in the first place, or at least detect it much earlier – if only consumers would actually use them!
Ironically, despite the $4 billion spent on consumer identity protection products, bankers generally report that fewer than 1 in 10 adopt the simple and free – but very effective – actions available through their bank or credit union, such as two-factor authentication and account alerts.
Bankers are rightfully frustrated at the seeming paradox of this low engagement. Despite their apparent concern, why do consumers ignore the most powerful fraud-prevention controls available to them?
It comes down to clarity and customer experience.
Consumers are aware of, and concerned about, identity protection risks, but they are never given the full picture of their personalized risk clearly connected to the appropriate and effective action steps. It’s time for a next-generation identity protection solution that unites the consumer and financial provider through the digital banking platforms consumers increasingly rely on to manage their financial affairs.
Integrating identity protection and digital banking is the natural, logical marriage of the services consumers know they need with the platforms they already use. There’s no question about the power of simple, intuitive digital tools. Look no further than how Amazon, Apple, and Netflix have changed many lives for the better by delivering what people want and need through convenient modern methods.
Isn’t it time we integrate the tools designed for protecting consumers’ financial lives with the financial accounts themselves? Once we bring the two together, we’ll finally see consumers and bankers working together to invest their time and resources where it counts.
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