Credit Risk

3 Ways Credit Unions Can Digitally Reduce Fraud While Protecting Their Members’ Experience

3 Ways Credit Unions Can Digitally Reduce Fraud While Protecting Their Members’ Experience

May 22, 2023 | Nancy Mills

Fraud is an ever-present threat. It is especially harmful at a time when credit unions are needing to shore up liquidity and fight for every new dollar and new member. Creating a safe, secure, and positive member experience while mitigating potential fraud loss is top-of-mind for most credit unions. However, some are hesitant to implement new processes and solutions. They fear they might damage their members’ banking experience -- especially at account opening when new member first impressions matter most.

Account opening can be an unexpected place to battle fraud. But, it is an important point in the journey given the prevalence of:

  • Synthetic identity

  • Stolen identities

  • Fraudulent information

Below are three ways in which credit unions can combat fraud at account opening.

1. Look out for signs of synthetic fraud  

36% of people with good credit are being manipulated via synthetic ID fraud.* This occurs when fraudulent member profiles are created based on several different members' real data. How can credit unions ensure members are who they say they are? 

  • Leverage comprehensive data insights. Better analyze potential synthetic ID behaviors and patterns with multidimensional data sources. This allows you to identify fraudulent requests and segment fraudster behavior from legitimate member behaviors while protecting the member experience.

  • Better analyze PII mismatches using data assets that can build holistic identity profiles to signal PII anomalies between primary owners and authorized users to help cut false positives and protect from losses associated with synthetic ID fraud.

  • Sort applications that trigger a synthetic ID alert. It is important to have a manual process in place once an identity has triggered a synthetic ID alert. This provides an extra layer of security and protection for the credit union and can help mitigate potential loss in the future.

Implementing these best practices have shown real results. For example, one company improved its fraud catch rate by 7x*. Other benefits can include less application fraud and reduced first payment defaults on personal lines of credit. 

2. Establish identity trust with new members 

Another way to prevent fraud from digital channels is to verify the identity of both online and in-person members at account opening. Carefully orchestrated verification strategies are critical in today’s digital era. These strategies fight existing and evolving fraud without disrupting the members' experience. 

  •  Enable real-time verification for key member data such as phone, email, address, SSN, DOB, and devices — either standalone or as part of a layered risk mitigation strategy which allows a credit union to react quickly to potential fraud and confirm a new member’s data. Real time verification can help prevent fraud and also remove friction to enhance the member experience. 

  •  Pair risk mitigation with other identity solutions to confirm identity legitimacy by cross-checking multiple data points which can increase the ability to approve more identities and enable greater efficiency.

 3. Provide less friction for members

When it comes to entering personal information, members can be deterred by having to manually enter too much application data. This could lead to transaction abandonment and loss of revenue. To prevent this, credit unions need a way to identify and authenticate the unknown member while reducing application friction.

  • Implement pre-fill solutions to help simplify the generally tedious process of data entry on a mobile device and other digital channels to enhance the member experience. As an added bonus, this can help identify and authenticate members at the point of account opening -- specifically during the application process.

  • Automation is key when it comes to verifying a new member’s identity. The more seamless the application process, the better the member experience.

Automated processes can help identify fraudulent applicants, minimize manual tasks, and help ensure the authentic identity of potential members. 

Bridging the gap between risk mitigation and member experience is challenging, but with a member-friendly account opening process that also integrates these robust, behind-the-scenes fraud prevention methods, credit unions can better verify the information of their members so they can mitigate fraud, enable greater efficiency, and reduce costs.

Discover more ways to achieve a frictionless experience and security with this presentation. 

*Equifax data

Nancy Mills

Nancy Mills

VP, Credit Union Vertical

Nancy has over twenty years of experience working with financial institutions in technology, data and analytics. Nancy joined Equifax in May of 2012 and currently is responsible for the Credit Union Vertical which provides credit unions with the data, analytics and technology necessary to help members live their financ[...]