By: Joe Gillen
Consumers are protective over their hard-earned income, and many may turn away from financial institutions that have a history of payments fraud and data breaches. In fact, the 2012 consumer complaint survey issued by the Federal Trade Commission marked the first year that consumer grievances relating to fraud and identity theft reached 2 million. In addition, banks and lenders made up the second highest category for consumer complaints, as they related to fraud and identity theft, the FTC found. For these reasons, many community banks have adopted new technology to better mitigate the risks of payments fraud and encourage higher levels of customer satisfaction.
The Independent Community Bankers of America released a new report highlighting the efforts community banks were taking to help protect consumer data and their money. For example, 70 percent of banks surveyed said they deployed enhanced fraud-monitoring systems and another 63 percent launched new staff training and education programs. Signature debit card fraud makes up the most prevalent category of this multifaceted crime at 84 percent, and 95 percent of community institutions focused on this type of transaction when establishing training sessions and using new technology to mitigate potential abuses.
"The 2012 Federal Reserve Fraud Survey once again confirms that increased fraud losses are a serious concern for community banks, which are deploying a variety of tools to reduce losses," said ICBA senior vice president of Regulatory Policy Viveca Ware. "Despite these fraud and compliance challenges, community banks remain committed to serving Main Street communities."
Enhanced security measures may drive strong customer relationships
Customer satisfaction research cites trust as one of the leading factors in consumers' decisions in choosing and remaining with a bank. Consumers who don't feel their financial institution is properly protecting their money may seek out banks or credit unions that provide sophisticated security features and safeguards. The issue of financial safety has already been demonstrated with mobile banking adoption, as a large number of consumers who have not yet utilized the service cite security concerns as the primary reason. Community banks and credit unions should also understand that security concerns do not simply apply to new technologies, but to standard accounts as well. Banks and credit unions that can demonstrate they are taking the proper steps to shield customers' and members' accounts from harm are more likely to retain existing customers and avoid reputational damage.