With the upcoming changes to overdraft fee policies coming to the banking industry July 1st, courtesy of the Federal Reserve, banks and credit unions are re-examining the revenue growth opportunities through their new account opening process.
We frequently hear from our fraud risk and operations client partners that when there is a push for revenue growth, fraud detection gets de-prioritized as a trade off to bringing in more new customers. A DDA-friendly risk based authentication approach may offer some compromise to this seemingly “one for one” exchange. Here are some quick revenue-friendly, risk-averse practices being seen in the branches, call centers, and online channels of Experian clients:
• Drive referrals to knowledge based authentication (KBA), negative record checks (account abuse, fraud records) or both off of an upfront fraud score, such as the Precise ID(SM) for Account Opening score. Segmenting based on risk is cost efficient and promotes an improved customer experience.
• Bolster the fraud defenses of your online channel by raising the “pass” or “accept” threshold. The lower acquisition costs for this online account opening are tempting but this is also the venue most exploited by fraudsters. Some incremental manual reviews should work out as a small price to pay to catch the higher prevalence of fraud.
• Cross sell and up sell with confidence based on more comprehensive authentication. By applying appropriate risk based authentication strategies, more products can be offered and exposure is reduced because you know you are dealing with the true consumer.