When it comes to how consumers think about where their funds are the safest, large banks can benefit from somewhat of a perception gap. The issue isn’t one of actual capability, but of awareness and communication, according to CO-OP Financial Service’s Head of Security John Buzzard.
During the last couple of years, he noted, the industry has really embraced what he called “fraud marketing.” Flip on the television or check out The Wall Street Journal, and one can find all kinds of ads from the biggest banks and players in financial services, loudly touting all the latest and greatest things they are doing to keep their customers safe — like card control products or credit scoring. These things are great and very useful, but because consumers tend to hear about them most vociferously from the big banks, it can be easy to overlook that the largest banks in the country are far from the only players offering these services.
“We are doing and offering the same things to credit union members as an industry, but we need to be mindful that we actually have to socialize our members to know this — and know that we are using all kinds of advanced tools to battle against fraudsters,” Buzzard said.
Banks and credit unions, from the largest to the smallest, are all facing similar issues these days: a spike in card-not-present (CNP) fraud, an ever-mounting pool of consumer data that bad actors monetize on the dark web. Consumers have a right to be concerned, and have a desire to make sure they are being protected.
“Someone is always going to be talking about keeping the customer safe in financial services these days because it is a top-of-mind concern,” he said. “Credit unions very much have to make sure they are part of that bigger conversation.”
Optimizing For The Consumer
Credit union customers are, generally, looking for a more personalized relationship with their financial institution (FI) — a more individualized focus and more community centric purview. That means security in transactions and payments is, in some sense, more important in this environment, as trust and familiarity play a big part in this type of work.
Curing friction and preserving security are not necessarily natural allies. There is always at least a concern, Buzzard noted, that consumers won’t appreciate how well they are being protected, and “feel so suffocated by authentication that they don’t enjoy the experience or the convenience, or the speed they are looking for,” he said.
That, however, happens less and less these days for two reasons.
The first is technological. As authentication has become more advanced, the focus is less on stopping the consumer’s journey to ask for information. Instead, there is a much closer look at the back end and profiling usage, the devices, the network carrier and a host of other identifying factors that are difficult to fake.
The second is consumer awareness. Most people are pretty smart — they know how many breaches there have been and are aware of the high exposure level of their data. However, they aren’t entirely opposed to a little friction, particularly if that small friction injection will save them a lot of heartache down the line.
“I think consumers understand and embrace authentication far more than we give them credit for,” Buzzard noted. “I think customers have a good idea that this is part of our contemporary world, and they understand that. I don’t think we are going to see a lot of big public outcries.”
Building For The Organizations
The best thing about working with credit unions on digital security — as CO-OP does with over 3,800 nationwide — is that the availability of services CO-OP provides means smaller institutions can do something that, even a decade ago, would have been difficult to contemplate.
“We want to see this segment democratized so that robust fraud prevention, card controls and digital services aren’t a hurdle like they would have been a decade or two ago,” Buzzard said.
The challenge, though, isn’t around building tools or heavy integrations. It’s about CO-OP handing its partners an API-enabled toolbox so they can skip to the part of digitizing that actually needs their focus, apart from simple technical possibility.
“The really tough part of this can be asking organizations to really pull out their digital crystal balls and having them start developing an ongoing strategy,” he noted.
At this point, there are a lot of products, offerings and tools out there. However, the limitations aren’t about what credit unions can do, but deciding where to start, what offerings are the most important and where the customer needs lie.
“That can look like a pretty ponderous task at first,” he said, “especially when businesses are trying to figure out what their first step is while also trying to think a year or two ahead.”
It is a challenge that gets more difficult in an environment where hacks are to be expected and personally identifiable information (PII) is an abundant resource. As the world moves into a more digital mindset, where consumers are using a host of mobile devices and financial tools, credit unions will have more to do in both reaching out to customers on those channels and making sure all the data passed along them is secure. Credit unions of all sizes are invested and along for the ride — even if there is some remaining trepidation about first steps and increasing risk in the environment.
“What we hear over and over from our credit unions is that they are for this,” Buzzard said. “What they see is that digital is the future, and they want to make sure they are building a reliable and lively community and industry for the next 10, 20 or 40 years. I think we are going to see credit unions really work to push that progress forward for the rest of this year and into next year.”
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