Fraud has a significant reputational effect on banks. Customers want to trust your bank, and if they feel like they can’t, they will take their business elsewhere. Even if they leave their accounts open, they will use your service less if they don’t trust you.
The way your financial institution responds to bank fraud has a direct impact on your reputation. To protect the integrity of your brand, keep these tips in mind.
1. Mea culpa — admit your role.
If fraud occurs, don’t try to sweep it under the rug. When the media or even just customers are asking questions, it can be tempting to minimize your role, but you should be open about what happened.
Customers prefer to work with transparent brands. Although it may feel counterintuitive, admitting your mistakes can help you in the long run. If you claim that you didn’t do anything wrong and your involvement comes to light later, you will suffer more reputational damage than if you were honest from the beginning.
That said, create consistent messaging. Have your public relations and fraud management teams work together to draft statements for the media and customers.
2. Work with an external investigation team.
To protect your reputation, get objective third parties involved. Work with lawyers, auditors, and forensic experts to review the fraud incident. They can analyze the extent of the damage and find out what went wrong.
As necessary, send out press releases to let the public know you’re working with third parties to research the fraud or data theft. In some cases, you may be legally required to bring in outside investigators. Even if you’re not required to do so, bringing in objective outsiders helps to demonstrate that you’re committed to a culture of trust.
3. Change vulnerable processes.
If you aren’t learning from your mistakes, you’re failing. Once you and the external team complete the post-fraud analysis, you need to change the processes that allowed the fraud to happen.
For example, if the fraud was committed by an employee who never took vacations, implement mandatory time-off for all employees. When employees don’t take time off, they may end up being the only ones responsible for certain duties. This creates a heightened risk of fraud that you can mitigate by letting other people handle these duties once in a while.
To give you another example, imagine that the fraud happened because the incident was outside of the parameters of your static detection controls. In this case, you should consider implementing dynamic controls that analyze patterns of behavior for aberrations.
Or maybe the fraud started due to a phishing attack on an employee. In this situation, you may need to beef up your employee fraud training programs. In all cases, be open with the public. Let them know what you did wrong and how you’re changing. Make sure they know you’re a human institution that’s working as hard as possible to protect them.
If you’re not sure what to change, consult with a fraud prevention expert. They can assess your current anti-fraud practices and help you identify what needs to be changed to prevent this type of incident from happening again.
4. Tell your customers before someone else does.
You don’t want your customers to learn that their account was drained when their card gets declined at the grocery store. Similarly, if they’ve been the victim of identity theft, you don’t want them to learn about it by reviewing their credit report or getting a call from a debt collector.
This is a very dramatic way to learn about fraud or identity theft, and these jarring experiences will affect how customers feel about your bank. To protect your brand and your reputation, you should always try to be the one who tells your customers about fraud.
Make sure that you have controls in place that detect fraud as soon as possible. Then, set up processes for alerting your customers. The person who contacts the customer should be well trained. They should know how to deliver the news in a comforting way. They should have the expertise to answer your customers’ questions and let them know what to expect.
This rule also applies when the fraud or data breach affects multiple customers. Don’t let your customers see a story about the incident on the news or social media. Instead, make sure you reach them first. This requires you to keep contact details up to date and draft a fraud remediation plan that’s ready to put into action when fraud occurs.
5. Minimize the time and cost of fraud for customers.
When someone becomes the victim of fraud, they often blame the bank even if the bank is not responsible. As they attempt to rectify the situation, their anger often intensifies. This leads to even more reputational damage to the bank.
To minimize this effect, develop processes that help your customers deal with fraud as quickly and as inexpensively as possible. For instance, account takeover generally costs customers $300 and takes them 16 hours to address. By reducing these numbers, you protect your relationship with your customers.
To protect your reputation, you need a strong response to fraud, but regardless of how strong your response is, you will experience some reputational damage. To protect yourself, you must try to stop fraud before it occurs.
This requires real-time cross-transaction monitoring that leverages machine learning to detect all types of bank fraud. Want to protect your brand? Want to safeguard your reputation? Then, you need the right fraud prevention and detection tools. We can help.
At SQN Banking Systems, we offer robust anti-fraud tools and solutions that help to protect your bank, your assets, and your reputation. To get a free review of your fraud-prevention processes and to learn how our tools can improve your security, contact us today.