There is plenty of talk about cybersecurity both internally and externally. And it’s no surprise that cybersecurity in the financial sector, in particular, is a huge industry. Cybercrime, in general, is a $600 billion industry, and at some point in all those breached accounts and all that compromised security, financial institutions will pay either directly or indirectly.
According to the American Bankers Association, banks topped $17 billion in fraudulent transactions in 2016. Fraud against deposit accounts cost banks $2.2 billion. In the UK, the UK Public Accounts Committee reports that fraud cost consumers about $15 billion.
And these numbers keep growing at an unnerving clip.
The First Line of Defense: Your Customer
Obviously, internally financial institutions have to commit a huge amount of money, time and energy making sure their internal, as well as external systems, meet all the privacy requirements as well as the highest security standards.
But in all this, many FIs forget a powerful tool that will allow their customers to become their first line of defense against fraud: a personal financial management solution. PFM has evolved as a digital financial management solution, far beyond its humble roots.
By allowing customers to aggregate their accounts in their PFM, it allows customers to see all their accounts in one place. For example, with aggregated accounts, they don’t have to jump across their various credit card sites or apps, to monitor transactions. It’s crucial that FIs offer tools that monitor transactions and allow easy reconciliation of bank and card accounts; it’s no longer just a nice option.
Aggregation: An Added Layer of Security
WIth aggregated accounts, it’s all there.
Aggregation is a very powerful tool since customers know where they’re spending their money better than anyone. If something looks fishy, they’ll likely spot it before any algorithm.
It makes fraudulent account activity faster to catch, which certainly helps both the customer and the FI since the longer the fraud goes on, the more difficult it is to unwind the transactions and deal with the liability.
To that point, empowering your customers to police their accounts is something most will do happily, and see it as a benefit rather than an FI-imposed obligation. It also makes it cheaper for FIs to address since they are likely able to discover the fraud quicker.
Do You Have an Aggregation Solution?
That also means FIs can use their ability to provide customers with aggregation services as a unique and valuable benefit of an integrated PFM. A quality PFM keeps FIs’ customers closer to them. It also demonstrates the FI’s active interest in keeping their customers safe from security threats.
Aggregation has the added benefit of letting customers see their entire financial picture in one place. It also provides valuable insights that a financial institution can leverage to assure they remain relevant with their product offer. This is a treasure trove of granular marketing information that would have been nearly impossible to tease out just a decade ago.
All these advantages also apply to integrated PFM platforms focused on businesses as well. The fundamental reasoning is the same, although businesses exposure is that much greater than an individual’s exposure since they handle significantly more transactions on a daily basis.
Every $1 of fraud to merchants and businesses costs $2.66 to mitigate on average.
The point is, aggregating accounts should be seen as a need to have a tool for customers rather than a nice to have tool. And its values - ease, efficiencies, and security - should be communicated to the customers so they take advantage of it.
The security aspect of your PFM is an empowerment tool for your customers, so make sure they know it. Fraud costs everyone money, so awareness and early detection are powerful tools to help mitigate fraud. And your PFM can help.