How NASA Federal Credit Union reduced friction for 97% of new applicants, without increasing fraud risk
Fraudsters today use increasingly sophisticated tactics and target a wide range of industries. Account takeover and new account fraud are on the rise, including in new areas such as merchant debit cards, prepaid cards and mobile phone accounts. One of our good colleagues shared a stat on his blog, Frank on Fraud, that demonstrates the meteoric rise of mobile fraud— a 600% increase over the last three years, accounting for more than 65% of fraud transactions. He predicts that in 2019, mobile fraud could increase to 75% of all fraud transactions. Additionally, Aite Group reports that new account fraud rates in the online channel are eight times that of accounts opened in the branch.
Consumers are also increasing their use of mobile devices for banking. A 2018 study by Citi showed that mobile banking users are growing at a record pace and that 91% of those users prefer using their app over going to a physical branch.
As both fraudsters and consumers opt for the ease of the mobile channel, how do financial institutions and service providers know if they are dealing with a real person or an imposter? ID Analytics works with our clients every day to help them answer this challenging question.
One of our clients, NASA Federal Credit Union (FCU), experienced what these statistics are telling us—the number of online applications they receive had grown to nearly 60% and they wanted a solution to improve the customer experience and their bottom line without sacrificing their fraud defense strategy.
NASA FCU completed a retrospective analysis with ID Analytics and discovered that they would be able to reduce friction for 97% of new account applicants, while still capturing 50% of fraud within the riskiest 3% of applications. Of note, this was a 200% improvement over their incumbent solution (see Figure 1).
With instant access to nearly everything these days from groceries to an inflatable pool with Amazon Prime Now, or a restaurant reservation through Open Table, people are accustomed to convenience and speed. That puts a lot of pressure on businesses to provide a customer experience that stands apart—at the very least, one with as little friction as possible.
We stand ready to provide services to our clients that help them determine the level of identity verification necessary to protect their businesses from losses and their customers from identity theft, while supporting the on-demand culture we live in today. For more information read our new case study, How NASA Federal Credit Union Reduced Friction for 97% of New Applicants, without Increasing Fraud Risk.
Gavin Sollinger is Vice President, Business Development and Account Management at ID Analytics