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.

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.

How to keep a corporate customer

If corporate banking customers are unhappy with the customer service their bank offers them, the chances of them leaving are higher today than ever before, was the stern warning by panellists at the recent summit organised by billing and pricing software supplier, Zafin. Steve Murphy, research director at CEB Tower Group, cited research that the 68 per cent of corporates will not hesitate to move to another bank if they feel their current provider is not offering them top service.