Why banks need consumers to detect imposters

In the first half of 2016 alone, there were more than one million incidents of financial fraud, an increase of 53 per cent on the same period last year; with identity fraud against individuals costing an estimated five billion pounds last year.

Identity fraud occurs when an imposter pretends to be someone else. To prevent this, banks ask customers for passwords, but judging from the fraud figures, this isn’t working and things are getting worse. The reason is simple: data cannot differentiate. A password provided by the true customer is exactly the same when that same password is provided by an impostor.

imaginBank: Simpler banking for the digital age

"I don’t need an elaborate banking service with branches, passbooks, letters in the post, an annual financial review and a bank manager that knows my name. Interest? I don’t save enough to accrue any, or I put my money somewhere else. All I really want is an account that will accept my deposits, hold my money and release it when I want to make a payment or transfer. I don’t want to wait for transactions to appear on my balance or for transfers to clear. An automatic payment function would be useful, so I can settle my bills easily. But most important of all, I want to do everything, repeat everything, on my phone. Some exclusive offers and deals would be good too. That’s it."

Welcome to the mindset of a growing demographic of today’s banking customers. All are committed device users - not power users or early adopters - just people that manage their lives using phones and tablets. Many are young – Millennials - but not all. Most have modest incomes and are determined to live debt-free and unconstrained by financial commitments.

Rebuilding customer relationships

Banks have grown too large and complex and are struggling to deliver added value to final investment relationships in a world of high fees, frequent financial crises, damage of reputation and zero interest rates.

Banking regulation has stepped up the cost of capital. However, market regulation was also strengthened to foster higher customer protection in the aftermath of the global financial crisis, and enforce full transparency about costs and risks negotiated with taxable investors. This has been a perfect storm for retail and private banks: compliance costs sky-rocket while FinTech competition erodes their profitability.

Keeping the customer front of mind

Banks have focused their efforts on trying to create and launch products that will generate revenue for them but have forgotten the essential element to making a product successful; the customer. FIs must invest in innovation, but only if the intended product seeks to serve the customer. 

In keeping the product customer-focused it creates a need amongst customers and ensures that the offering becomes a necessity when they’re conducting everyday transactions. When a bank brings a product to market that actually solves real problems, it will ultimately become a new revenue channel.

The strategic importance of dynamic pricing in financial services

At its foundation, dynamic pricing is simply flexible pricing based on current market demands for a particular product or service. It is second nature to the hospitality and travel industries, even the retail goods market, where algorithms account for competitive pricing, supply and demand, time of day, and on-demand service spikes to affect an ever-changing real time price and profit margin. 

But in banking, dynamic pricing is a different story: more of a Utopic dream than a reality, with some nuances unique to the industry.