In the digital age, how we move, tap and swipe can give financial institutions (FIs) the clues of the personalities behind the screen.
Neuro-ID Director of Behavioral Analytics James Craddick told PYMNTS that in the wake of the pandemic, companies are innovating and fine-tuning their online interactions with customers. They’ve been leveraging Behavior-as-a-Service to combat fraudsters and make it easier for “good” customers to get through verification and anti-fraud defenses.
In the past year and a half, he said, we’ve seen digital transformation and adoption at a pace that no one anticipated. That opens the door for FIs, FinTechs and merchants to interact with customers in new digital ways. But those firms have to rethink their access points to keep customers in place and attract new business.
That’s true not only in commerce, but also in financial services, where we’ve all been moving online — and FIs are not only encountering younger, tech-savvy customers from the Generation Z and millennial demographic cohorts, but also more and more baby boomer and silent generation demographic cohorts due to the pandemic.
As a result, said Craddick, firms across all verticals must strive to understand the online behaviors of new populations that are flocking to their websites or apps.
“When you look at innovation in general, digital transformation and conversion are definitely top of mind for every customer that we [at Neuro-ID] talk to,” he said. “And when you think about FinTechs and neobanks disrupting the financial services space … conversion is really where these financial institutions are going to live or die.”
Streamlined interactions online, with better authentication processes in place, also help with cost savings tied to reduced manual reviews and increased efficiency.
Viewing The Customer Experience
As Craddick told PYMNTS: “When you think of both customer experience and fraud, it’s really more than just a slick UI or user interface that the customer interacts with. It’s really about understanding an applicant’s behavior and being able to personalize their journey — all in real time.”
That’s easier said than done, perhaps, as product development and risk management teams are essentially arm wrestling on a daily basis with what that customer journey should actually entail. Craddick said Behavior-as-a-service can help enterprises apply what he termed a “risk-appropriate” verification strategy based on whether end users are exhibiting genuine or fraudulent behaviors as they interact in digital channels to open accounts or transact — or even streamline the experience when genuine users are displaying levels of frustration.
The journey must be tailored to the customer, and no two customers are exactly alike in how they onboard and interact with eCommerce firms and traditional FIs, he said.
It’s best to identify fraudulent behaviors — or red flags in “intent” — sooner rather than later. After all, shoring up defenses at the initial point of access and making sure that people are who they say they are can reduce fraud (especially synthetic fraud) while also paving the way for reduced friction for genuine applicants through the rest of the customer journey, which boosts conversion rates.
Craddick recounted that being able to identify whether an applicant is genuine or fraudulent as they swipe and tap while filling out an application “really enables FIs to intelligently route applicants through verification strategies that are appropriate” based on their behavior. That approach can help firms avoid the bottleneck that happens when applicants are unnecessarily flagged due to gaps in the data, resulting in a poor customer experience. Or, conversely, it can help with uncovering bad actors by their “online body language.”
Hypothetically, an individual applying online for new financing — a would-be fraudster — might be exposed as they move through the process, said Craddick. When interacting with personally identifiable information (PII)-related fields, they might hesitate or may show other behaviors which indicate a relative lack of familiarity with that (potentially stolen) information.
Said Craddick: “We’re starting to pick up on that with our behavior and enabling our customers to pull that data in real time, to identify and flag specific behaviors and apply a risk-appropriate verification experience.”
Depending on the interactions, the sensitivity of data involved and the type of transaction, it might be appropriate to ask for “stepped-up” measures, such as presenting a driver’s license or a selfie, he said.
In another example, he said, a Neuro-ID customer was able to reduce friction on a single data field — date of birth — by 20 percent, thus reducing abandonment rates by 40 percent, all with a simple configuration change that was not identified by other form analytics providers that were being used.
“Ultimately, this results in better conversion rates when you make sure that your customers have an optimized experience and that they’re not running into [user experience (UX)] and UI issues,” Craddick told PYMNTS.
Selected by EFXA