Fraud Management with a competitive edge – transaction technology for the Financial Services Industry

The financial services industry has recently experienced a number of significant events that have altered the competitive landscape. While much attention has of late been focused on the global repercussions of the US mortgage crisis, strategic, technology-driven developments such as the introduction of online-only financial institutions and Internet banking have arguably had a more fundamental impact on the business environment. These ongoing developments fuel the need for differentiation, steering institutions to find ways to deliver services that establish a competitive advantage.

The age of transaction anonymity
Providing consumers with improved access, convenience and speed in conducting secure self-service transactions can create that competitive advantage. Recent advances in technology enable institutions to deliver these enhancements while simultaneously containing costs. Unfortunately, the implementation of new technologies for transaction processing can also give rise to heightened vulnerability to fraud. Cross-channel migrations to environments in which the customer is not physically present at the “Point of Sale” (such as Internet and telephone banking) result in increased exposure to hackers and imposters. This “transaction anonymity” can put an institution in a vulnerable position, unless rigorous fraud controls are in place.

Many institutions strive to gain a competitive edge by expanding their service portfolios or attaining economies of scale through internal growth, or via mergers and acquisitions. However, with increasingly larger and disparate databases to manage, these institutions are facing the added challenge that a single breach could place millions of accounts and customers at risk.

Effective fraud management
Given the financial impact of fraud and the need to comply with industry regulations, it is incumbent upon institutions to actively integrate fraud management into their strategy. Loss prevention and compliance, however, are not the only reasons for addressing fraud management. In fact, enhanced fraud control can provide a marketplace differentiator by improving customer confidence in the security of transactions.

A holistic approach should therefore be considered when developing a competitive strategy. Institutions can differentiate themselves from their competition while simultaneously controlling operational costs by addressing business challenges collectively. This approach requires two broad areas of focus:

• Targeting improvements throughout the business cycle to include both: customer service touch points and areas of customer exposure/risk
• Addressing risk management across the organisation in a centralised fashion (vs. a siloed product/department approach)

In doing so, financial institutions can leverage best practices, exchange information throughout the organisation, and respond to the threat of fraud more effectively.

The resulting improved service levels throughout the organisation enhance the customer experience both in the consistent quality of service offered and the privacy and security of their financial data – which can lead to increased loyalty and to the purchase of additional services.

Choosing a Technology Provider
Choosing a technology provider that is strategically aligned with a financial institution’s competitive approach is critical to the success of execution. Providers must offer comprehensive functionality to address all service and exposure impacting touch points, and the infrastructure and integration capabilities to centralize risk management. This is critical to institutions that manage a broad scope of transaction responsibility.

To protect technology investment value, the partner chosen to implement risk avoidance and competitive strategies should bring the following to the table:

• Broad scope of products and services to support financial transactions
• Interoperable products and services that seamlessly uphold security standards
• A consulting practice with deep financial industry expertise and an integrated approach to building solutions
• Comprehensive security programs
• Automated Reporting and Tracking Tools to provide access to key metrics
• Products that support robust authentication measures
• Flexible delivery of technology in support of unique information security policies/control requirements, hosted telephony infrastructure combined with enterprise control of sensitive customer data
• Proven expertise in implementation and delivery of customer contact and risk avoidance functionality
• A secure network infrastructure

Considering the cost of fraud and fraud management, coupled with the pressures financial institutions face to differentiate themselves in the marketplace, technology investments should be considered in the context of their ability to deliver the highest overall value. Improving access, accuracy, speed and safety in transacting are key elements of service enhancements that the right technology can deliver.

Secure and Efficient Customer Contact Technology
Verizon Business offers a comprehensive portfolio of technology and services to holistically address the business needs of the financial sector. Enterprise solutions are custom designed, integrating the specific capabilities needed to effectively improve customer service while reducing exposure to fraud across the organisation. The company can enable institutions to deliver innovative services and realize contact centre efficiencies, while simultaneously managing exposure to fraud.

Verizon Business offers a comprehensive suite of contact centre services that can deliver essential benefits to financial services enterprises:

• Transaction security
• Enterprise control of customer data
• Added value services for end users
• Efficient customer handling

Verizon Business’ Hosted IVR platform addresses these areas with built-in redundancy, scalability and security, efficiently routing inbound calls, reducing agent connect times and even freeing up agents to handle specialized calls.  The company delivers contact centre solutions by employing robust, network-based platforms that dynamically access customer-controlled data. In fact, Verizon’s network provides some of the highest levels of performance and security in the industry. Customer data is protected by maintaining multiple layers of security, including physical, perimeter, host-based, personnel, and procedural measures.

Verizon Business is the established Hosted IVR market leader in North America1, having provided network-based voice response services for more than 15 years and handling over 2 billion minutes of monthly traffic.  In fact, Verizon Business provides Hosted IVR services to eight of the ten largest US banks2.  Verizon Business recently expanded availability of its Hosted IVR service to eleven European countries, offering multiple language support, call originations from over 70 countries, and transfers to call centres throughout the world.

Conclusion
For secure customer contact solutions in the financial services industry, the choice of technology supplier can have a dramatic impact on an institution’s ability to successfully meet its customers, and its own growth, needs. You could do worse than giving Verizon Business a call.

1. – Recipient of Frost & Sullivan’s 2007 North American Market Leadership Award for Hosted IVR Services
2. – Ranking based on total deposits; source: http://nyjobsource.com/banks.html