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Nearly all financial service firms have experienced some sort of fraud within the last two years, whether it’s identity theft or new account fraud, synthetic identity fraud or account takeover fraud.
That’s according to a new study that Forrester conducted for TransUnion that explored fraud in the financial services, insurance and single- and multifamily rental industries. Forrester study participants included 465 decision makers from the financial services, insurance and property management industries.
The studies come at a time when TransUnion’s own proprietary fraud data found that outstanding balances of suspected synthetic fraud for auto loans, bankcards, retail cards and personal loans have now surpassed $1 billion as of the second quarter 2018.
The study found that a whopping 94 percent of financial services firms experienced some sort of fraud; 62 percent of insurance companies reported an increase in soft fraud and 57 percent have seen an increase in identity fraud in the past year. Additionally, virtually all – 97 percent – property management companies have experienced fraud in the properties they manage in the past two years.
“It’s clear that a major hurdle for decision makers in industries such as financial services, insurance and the rental market is how to fight fraud while ensuring prospective customers have a good experience. Consumers are demanding a better experience and those businesses that are not delivering on this are losing out to their competitors,” Geoff Miller, head of global fraud and identity solutions for TransUnion, said in a statement. “It’s also apparent that many of the same fraud issues that plague American financial services and insurance companies are impacting similar businesses in Canada, India and likely other countries around the world.”
The study also found that exceptional customer experience is critical for most decision makers featured in the studies. Nearly three in four financial services firms said customer expectations influence the methods they use to detect fraud and about two-thirds of insurance professionals agree that the tactics they have in place to weed out fraudsters can negatively impact their good customers.
Executives also lamented that a major problem in fraud prevention and detection is that many fraud solutions lack the flexibility to adjust in real time and that the end user verification process is too complicated, resulting in poor customer experience.
“To effectively fight fraud, businesses cannot wait days, hours or even minutes to make the right decision. They need effective tools that utilize evolving, overlapping networks of physical and digital risk signals that will inevitably help both businesses and the consumers they serve,” Miller said.
