Recession Readiness Insights

3 Benefits for Credit Unions Investing in a Secure Frictionless Digital Experience

3 Benefits for Credit Unions Investing in a Secure Frictionless Digital Experience

November 28, 2022 | Anna Fisher

In an ever changing digital environment there is an increasing need for Credit Unions to simultaneously achieve fraud prevention, efficient operations, and a low-friction customer experience. Historically these have been at odds with each other. After speaking to decision-makers at credit unions and other clients, I’ve identified some best practices Credit Unions can take to have a frictionless experience for their valued members without sacrificing security or exposing themselves to fraud. 

Why are CU leaders prioritizing digital functionality and security?

Digital enablement and security are at the forefront of credit union leaders’ minds. In fact 43% of credit unions are investing in authentication and verification and 2/3rds are investing in digital solutions for their members and customers. *70% of credit union leaders who responded to a survey by Baymard Institute cited consumer trust as a key motivation to invest². Firms are  committed to building identity trust with their customers. The need for scrutiny is clear. 36% of consumers with good credit are being manipulated by synthetic identities. Even more alarming, 60% of consumers misrepresent their personal data online.³

As identity manipulation evolves, particularly in the digital realm, credit unions and other lenders are paying the price for it. False positives in e-commerce cost $2B in loss and remediation.* Additionally, accounts created with synthetic IDs resulted in $25M in charge-offs.* Beyond hefty dollar losses from fraud, there are operational costs to consider. In fact, 42% of credit unions and banks reference operational challenges associated with authentication and verification.*

What are the challenges when it comes to digital enablement?

The big challenge is having the right amount of friction. Too little, and you leave yourself vulnerable to fraud. But, with too much, members may take their business elsewhere. It’s clear members desire convenience. 80% of consumers cite convenience as the most important factor in user experience.* Inconvenience - or friction - takes many forms, including:

  • Multiple forms to complete 
  • Number of keystrokes 
  • Privacy concerns about submitting sensitive data 

Credit Unions are also wary when it comes to digital enablement. They are looking for ways to identify and isolate risks, including:

  • Risky digital signals 
  • Fraudulent application data
  • Data entry errors and inaccuracy
  • Revenue opportunities lost to abandonment

What are the solutions? 

Targeted workflows can lower verification cycles from weeks of manual review to seconds. This results in both better member experience and lower costs.  You can achieve this by 

  • Automatically pre-populating forms and applications with authenticated consumer contacts- reducing keystrokes 
  • Using embedded authentication solutions - which can reduce  the effort required for your members
  • Leveraging present contexts - Contextual clues from real-time data signals can help provide the best member experience while managing risk

These effects multiply when you embed digital enablement across the member journey.

What are the challenges to security?

Smart financial institutions are simultaneously evaluating risk behind the scenes in real time. At the moment, their potential and current members are completing online applications. The ability to determine connections between data to hone in on signals of risk or to establish confidence is now a necessity. Digital monitoring allows the good guys to get through with minimal friction.  Also, it identifies where friction is needed to help prevent fraudsters. Compliance further requires you to know who you're doing business with, and that you're allowed to do business with them. Financial institutions and credit unions face many challenges trying to achieve these goals:

  • Knowing how to use data to protect against fraud 
  • Addressing account takeover, and P2P fraud risks
  • Ensuring security measures are meeting compliance regulations
  • Being able to trust in digital identities
  • Identifying current risk exposure

What are the solutions for these security challenges?

  • Verify that the identity information provided by the consumer is legitimate by: 

    • Check transactions via digital signals and AI 
    • Authenticate applicants with validated pre-fill application data
    • Confirm applicant provided name and Social Security Number (SSN)
    • Gain insights into asserted PII data
  • Perform your due diligence to ensure you are legally allowed to do business with members.

    • Complete compliance reviews for OFAC, Red Flags, CIP, KYC  
  • Ensure only legitimate users can access account information. 

    • Confirm the session/connection is secure
    • Validate that repeat users are who they say they are
    • Require step-up authentication for account changes to mitigate ATO risk
  • Swiftly and accurately identify malicious attacks on members using 

    • Machine learning interrogating millions of discrete events within networked datasets
    • Isolate risky attributes associated with IP traffic
    • Identify when behavioral attributes are not aligned with typical traffic patterns
    • Reporting to quickly identify trends and adjust risk profiles in real time without IT intervention
    • Dynamic Friction to differentiate user experience for low and high risk transactions
  • Leverage Secure multi-factor authentication (MFA) for added security and improved confidence for digital interactions across the customer lifecycle

What are the benefits of these solutions? 

  • REDUCED OVERHEAD: One company reduced overhead by ~30%*
  • IMPROVED FRAUD CATCH RATE: A company improved its fraud catch rate by 7x*
  • LOWER MANUAL REVIEWS: One financial institution used system reviews to lower its alert volume by more than 90%*

Using these solutions, financial institutions are empowered to reduce overhead, decrease risks, and limit consumer friction - all by leveraging the power of data. Linking what we know about past behavior with what we see happening now drives decisions that impact future outcomes. Combining more efficient data entry, with the power of knowing based on decades of vetted historical data with device information, is the edge required to get the most out of online data entry securely. Authenticated prefill increases convenience for consumers. Especially with the rise in mobile banking, authenticated prefill creates a much faster and easier experience for members and prospects.

To learn more about digital enablement and fraud solutions visit our webinar. 



*Source: Equifax D&A
2 Baymard Institute, 2019
3 Marketing Week
4 Juniper Research. 2021

Anna Fisher

Anna Fisher

Vice President, Identity & Fraud Consulting

Anna joined Equifax in 2021 as Vice President, Identity and Fraud Consulting with over 15 years of leadership experience in consulting, sales support, analysis, and client services in the financial, telco, insurance, and property industries. Anna prides herself on surfacing clients’ true, unarticulated needs and drivi[...]