Illustration demonstrating how digital trust is built

Listen to The 4 Key Elements of Digital Trust (7mins):

Digital trust is a mechanism for companies to measure confidence in their clients. It involves identifying safe and secure elements such as transactions and customer behavior patterns. In today’s connected environment it is essential for banks to build lasting relationships with their connected customers.

In a world where everything is digital and instantaneous, the banking industry faces the challenge of fulfilling customers’ expectations and answering their needs for digital-first services. The problem isn’t technological. Instead, the real challenge for banks is how to build and secure trust with their clients. Trust is every business’ basis for success and it is more difficult to establish trust through digital interactions than in the traditional physical world.

Online banking isn’t new but is newly popular. A long time before the pandemic, these customers’ demands led to digital solutions such as mobile banking and instant transfers. However, the massive adoption of these systems in recent times and the development of sophisticated fraudulent mechanisms led to unprecedented rates of Account Takeover (ATO) and impersonation scams.

A study made by Feedzai states that ATO scams skyrocketed by 650% while impersonation scams grew 600% in Q4 2020 compared to Q1 2020.

Statistics on rise of ATO and impersonation scams

At the same time, there has been a 200% increase in mobile banking usage, and fraudsters worked to blend in among legitimate bank customers. Online banking experienced a 250% increase in attempted fraud, surpassing the fraud rates experienced via traditional physical branches and telephone channels.

Fraud volume in banking chart showing patterns in online, telephone and branch banking

These insights show how important it has become for banks to determine if the person transacting behind the device is who they claim to be. In other words, if banks can trust the customer.

To handle the rapid increase in fraud attacks, banks are forced to step up in the customer journeys with authentication mechanisms such as:

  • Multi-Factor Authentications
  • Face ID Verifications
  • Fingerprint Scans
  • One-Time Passwords
  • Limited Login Attempts
  • Manual Review Verifications

However, all these mechanisms add friction and frustration to the process, preventing customers from having a great banking experience. In order to create a more streamlined customer experience, banks can rely on digital trust to assess the trustworthiness of their clients. By looking at their customers’ identities and behavioral digital activities banks can detect abnormal patterns as an indicator of potential fraud or high risk.

Traditional ways of assessing trustworthiness frequently fail to meet most digital banking systems’ speed and scalability requirements. A powerful platform such as Feedzai can help to evaluate multi-dimensional aspects of customers. Using machine learning algorithms and highly accurate profiling, our platform can help banks understand a customers’ digital trustworthiness.

Identity

The ability to identify the true identity of the customer. Particular events can help us to determine if ATO attempts are in progress.

Examples include:

  • A spike in the customer’s password changes
  • The customer disables Multi-Factor Authentication settings
  • The account experiences biometric changes such as Face ID or fingerprint settings
  • The customer changes their primary email address

Behavior

The ability to identify patterns in the customer’s normal activities.

Examples include:

  • Transfers or activities are made outside the customer’s usual hours
  • A significant number of login attempts are made outside usual login hours
  • The number of payments deviates from the customer’s average ratio
  • The velocity between a login and a payment is much faster compared to the average velocity between events

Device

Data elements related to the customer’s device information.

Examples include:

  • Changes in screen resolution and device language settings
  • Unknown device type — for example, switching to a different device from Android, iOS, or Windows Mobile
  • Risky activity with a rooted device
  • Phishing or Malware activity detected

IP

Data elements are derived from the customer’s IP address.

Examples include:

  • Unusual location for monetary and non-monetary transactions
  • Risky activity with a Proxy server or Tor connection
  • Limit transaction amounts for first seen IP locations.

Based on the previous four key elements of digital trust, banks can rely on monitoring mechanisms to analyze the customer journey. As clients interact more often with banks’ websites and mobile Apps, banking institutions receive more data than ever before. Not only do they receive monetary transactions but also every digital activity performed by the client.

All these monitoring mechanisms must be carried out with ethics and transparency for the business to succeed based on mutual trust with their customers.

Digital trust is the foundation of today’s connected economy. But how can banks feel secure and confident as they transact with their clients in the digital age? Tune in to The 4 Key Elements of Digital Trust Webinar on July 29 to learn banks can ensure trust across the customer journey.