The digital transformation that has taken place during the course of the pandemic has made consumers savvier than ever when transacting online. In fact, findings from Experian’s 2022 Global Identity and Fraud Report show that over half of consumers have increased online spending and transactions globally in the past three months. While they spend an increasing amount of time and money online, they are also more aware of the fraud risks that come with online transactions and have higher expectations for businesses to protect their information without hindering their online experience.
This new digital ecosystem makes it imperative that businesses leverage data and technology, including artificial intelligence and machine learning, to take a targeted approach to fraud prevention. This helps build customer trust and loyalty through secure, frictionless and supported processes that prioritize the consumer experience while mitigating fraud risk.
Consumers Care About Security and Data Protection
New norms in the payment industry have driven the rapid increase in digital transactions, changing how consumers engage with digital payments and making it crucial for businesses to accommodate methods such as mobile wallets, online banking and buy now, pay later options.
The challenge for businesses lies in balancing privacy and security with convenience. While convenience is increasingly important, it isn’t impactful unless privacy and security are addressed. In fact, 79% of U.S. consumers say privacy is the most important factor of their online experience, while 78% rank security as the most important.
Consumers prefer seamless recognition and security approaches but also reassurance that their information is secure during and after a transaction. While over 70% of businesses say that preventing fraud is their top concern — the highest point that figure has ever been — only 23% of consumers are very confident that companies are taking steps to secure them online.
Meanwhile, consumers recognize the value of sharing their data with businesses, but they also have higher expectations for businesses to protect their data online using innovative methods. Sixty-six percent of U.S. consumers say they’ll share their data to ensure greater security online, but 75% feel that businesses should be able to repeatedly identify them online using secure authentication methods like physical biometrics, security questions, payment or identity data from mobile wallets and PIN codes.
To address these concerns, businesses need to turn to innovative technology to improve decisions and incorporate more digital operations and automation to strengthen their digital channels.
The Importance of Leveraging Data and Technology
It’s more important than ever for businesses to provide a secure and seamless digital journey and implement processes that meet consumer expectations and prevent fraud. Not all approaches are created equal but leveraging the right tools and strategies will make all the difference.
For instance, many businesses are struggling to prioritize their digital efforts. Experian found that businesses aren’t pursuing a single strategy for improving or securing their online customer experience. Instead, most are trying to tackle multiple initiatives at once. Companies surveyed gave nearly equal weight to 20 strategic priorities that touched on automation, ransomware protection, open banking, e-commerce, AI, security, fraud prevention, authentication, and more.
Instead, businesses should take a targeted, multilayered approach to fraud prevention that detects and treats each type of fraud while maintaining a positive and seamless consumer experience. To achieve this, businesses should:
- Use fraud prevention tools and platforms: Businesses can offer consumers ways to securely log in and protect their information by implementing identity and fraud detection platforms and solutions that harness the power of data to help identify risk while still enabling a frictionless customer experience.
- Leverage new technologies, artificial intelligence (AI) and machine learning: Collaborating with technology partners can help companies identify opportunities to incorporate new, innovative authentication methods into their customer experience. Moreover, integrating AI models and machine learning into their systems to help break down siloed approaches and create an agile, automated process.
- Prioritize trust and transparency: Educating consumers about ways to keep their data safe, like using strong passwords, avoiding clicking on malicious links in emails and text messages and refusing to give out personal information to unknown parties over the phone, can build consumer trust and prevent fraud for both consumers and businesses.
Consumers continue to embrace digital transactions, driving the need for businesses to stay ahead of the ever-changing digital experience. With the right tools and processes in place, businesses can provide consumers with a secure and convenient digital experience while mitigating fraud risks.