Originally posted on forwardbanker.com.
Deluxe Financial Services is the NAFCU Services Preferred Partner for Check Printing, Online Check Ordering, Check Fraud Prevention, and Member Loyalty Solutions.
Banking margins are being squeezed and fraud continues to rise. This is not a good combination. To combat this, financial institutions want to stay aware of the trends and opportunities to mitigate losses to help improve bottom line profits.
A survey of both financial institutions and non-financial institutions compiled by the Federal Reserve Bank of Minneapolis provided some great insights into payments fraud.
What they found was fraud is a problem across all those surveyed no matter what their asset size, type of institution, or payment products offered. For financial institutions, the payment method most vulnerable to fraud was signature debit cards with over 83 percent experiencing an attempt. However, that’s only one of nine possible methods documented in the survey that fraudsters have tried to use.
The next issue was how they access your customer’s information. Thirteen different schemes were identified with the top scheme of counterfeit or stolen cards used at POS impacting 80 percent of respondents.
To combat fraud losses, the survey showed financial institutions have made some key changes in risk management practices. Sixty-eight percent reported these changes had reduced losses through various means such as:
• Seventy percent enhanced fraud monitoring
• Sixty-two percent staff training and education
• Forty-six percent enhanced internal procedures and controls
In spite of these efforts, over half of all financial institutions reported an increase in fraud compared to the previous year.
As your financial institution knows, protecting against fraud is not a perfect science, which can be frustrating. Balancing the costs of fraud prevention with the actual cost of fraud is complicated since your financial institution needs to consider more than just the dollar loss of the fraud.
Taking an active role in the fight against fraud may not only help save financial institution’s money, but it will retain customers.
What does your financial institution do to prevent fraud issues?
More educational resources and contact information are available at www.nafcu.org/Deluxe.
Also available: Use Member Retention to Improve Your Bottom Line (Podcast) »