Banks and bad actors: the race to digitally adapt

It is well-known that the pandemic has been a catalyst for digital transformation, forcing companies to re-evaluate how they do business. However, as fraud surges 40% this year, according to the Organised Crime and Corruption Reporting Project, amidst an unprecedented transition to online shopping – financial services are far from reaching a “new normal”.

Financial services are far from reaching a “new normal”.

Firms must start building on the lessons learned during the initial crisis if they are to survive the second wave, meaning customer experience and fraud should be working hand in hand right now for banking leaders.

As an industry, banking has always been open to technology – and in some cases become trail blazers – through implementing credit cards, ATM machines, and electric cash counters over the last 70 years. Banks are, in essence, further along the digital journey when compared to other industries, and yet, a vast quantity have stuck by traditional approaches that encourage customers to visit branches. A significant number of these customers still enjoy the traditional face-to-face approach, such as a risk assessment over coffee, leaving many banks hesitant to move their services online.

Now, through the COVID-19 pandemic and a surge of internet traffic that increased between 50 -70%, as shown by Omdia research figures, banks have pivoted to create a personalised digital experience open to more customers than ever before. Consumer-centric channels are now part of the “hyperconnected new normal” – the experience allowing customers to connect to banking services using apps, emails, calls, or using chat.

Although email remains the most popular channel used by customers, Barracuda researchers show that the engagement tool has been tested with a surge of COVID-19 related scams occurring in March alone. Barracuda’s study shows that criminal activity has risen sharply since the beginning of the year with an average of 375 new cyber threats per minute, as bad actors seek to take advantage of the digital surge and vulnerable users. The work-at-home revolution is also putting business at risk, with almost half of remote workers browsing on unsecured remote desktop machines, leading to increased security breaches, according to OpenText company, Webroot.

Teleperformance research shows that, millennials – who grew up with technology – are choosing to use more secure channels such as live chat, and have remained largely unscathed. Conversely, other generations that had previously resisted using digital services are being forced online, and are now more prone to scams or threats, creating a heap of challenges for banks to overcome.

Fraud, in particular, has been rife during the pandemic with a huge uptick in criminal activity and social engineering over the last few months – emphasising the importance of keeping customer channels secure. Luckily, front-facing digital tools such as artificial intelligence (AI) are now being used to detect, manage, and remove threats posed to customers at the same time as enhancing the customer experience. AI can identify who is high-risk by using data compiled from dynamic machine learning interactions. This involves using data to track preferences, spending habits, and assets, and intelligently allocate attention to customers that may be prone to threats.

Banks that utilise AI analytics now know their customers with greater detail than ever before, and predictive tools used in the back-end are detecting fraud by scanning for irregular behaviours, anomalies, or unusual activity by pushing proactive alerts. A money transfer request made through a different region or device outside of a customer’s familiar habits will be flagged, acted upon, and can be blocked automatically. For resolutions AI cannot directly fix, it can talk a customer or financial representative through the next steps via various channels such as chatbots, messengers, or video interactions.

Chatbots – software recognised as the “face of AI” – are now projected to overtake traditional forms of customer service chat due to instant responses and quick resolutions. If integrated with back and front office systems, chatbots can hold conservations, complete time-consuming tasks using Robotic Process Automation (RPA), and list self-help options.

With AI’s machine learning capabilities, tasks are being completed at maximum efficiency and without the need for human intervention, which is also reducing the risk of data breaches. Last year, human error was responsible for a staggering 90% of data breaches, according to Cybersafe analysis of data from the UK Information Commissioner’s Office (ICO). Allowing cognitive computing to resolve potential issues mitigates the risks of data being leaked or finding its way into the wrong hands.

When an agent is required, customers can understandably be hesitant to hand over information, and particularly sensitive information concerning debt or financial management online. These concerns are only natural, and banks are taking the initiative to troubleshoot with customers in real-time without information being divulged. A customer that cannot transfer money through an app can talk to a chatbot, confirm their identity, and later talk to a human agent aware that they are speaking to the current account holder.

Banks are becoming flexible, and many across the country will be juggling traditional approaches to customer service as well as assisting people online as we enter the New Year. The number of people using digital banking is only set to increase, and financial firms will need to ensure they offer a secure, safe, streamlined, and customer-centric experience if they want to stay ahead of the curve.