Fraud moves quickly. There isn’t much time to intervene, which means fraud detection needs to happen in real-time. But typical fraud detection solutions are black box, spitting out a basic yes/no or score to base your mitigation decisions on. This means they’re often riddled with false positives and blanket interventions that risk alienating customers. So, what’s the best way for organizations to effectively fight fraud without adding unnecessary friction and harming the customer experience?
Get to know your customer!
Every customer wants a smooth, positive experience. The more you know about your customers, the better experience you can deliver and the less friction you’ll create in the customer journey. This is especially true when it comes to fraud prevention – a loyal customer isn’t going to be too impressed if you block their purchase of a big-ticket item because something hidden in your fraud system’s murky algorithm flagged it as fraudulent. So, how do you REALLY get to know your customer?
Develop comprehensive ID graphs with real-time data
A real-time, inclusive view of each unique customer session, continually developed over time, builds an accurate end-to-end view of the customer journey. Contextual insight from all touchpoints combines relevant first-party customer interaction data across multiple channels and devices, and from all available data sources to create a comprehensive customer identity. This 360-degree view of the customer enables merchants to enhance the customer experience across all channels and build a trusted one-to-one relationship with each individual.
By aligning touchpoints, companies can build a holistic view in real-time of who the customer is, why they’re there, what they’re trying to do, and what they’ve done before. This detailed customer identity facilitates understanding customer behavior patterns so organizations can intervene appropriately when required. Behavioral biometrics, such as typing speed or swipe direction, enhance this identity to power scoring models that detect and prevent fraud in real-time.
By applying a proactive approach to gauge at-risk customer responses and behavior, merchants and fraud prevention teams can also determine which interventions create the best reactions from customers and replicate these actions for similar at-risk customers in the future.
Merchants who understand their customers’ navigation patterns, timing and frequency of engagement, where they’re located, how they end their sessions, and so on can better personalize their service, reduce friction, and more accurately identify and prevent fraud in real-time.
Persist identities with a first-party fraud solution
To provide a consistent and seamless customer experience, merchants must be able to persist identities across devices and touchpoints to have an end-to-end view of their customers, with no data gaps. The ability to connect and stitch multiple identities associated with that individual presents a complete view of them across digital channels and devices.
Identity stitching and identity graphs are important components of identity resolution and fraud prevention. Since today’s technology allows one individual to have multiple identities across multiple devices (cookies, email, login ID, etc.) it’s essential for merchants to be able to connect different identities into an accurate, singular view.
Activate anomaly detection
As part of a comprehensive fraud prevention strategy, merchants should introduce anomaly detection to facilitate automated identification of outliers in their customer data. Anomaly detection enables merchants to trigger an event when something ‘unusual’ happens. All those signals can be used for fraud analytics, decisioning, triggers, audits, and more.
Most fraud solutions only include an alerting system that lets a merchant know if an anomaly was detected. A fraud prevention solution on the other hand takes detection a step further and acts on the anomaly in real-time, stopping the fraudulent transaction or action before it harms the merchant or the customer. Tying the real-time insights of a fraud data platform (FDP) to existing authentication and fraud management systems greatly expands their capabilities. That's why real-time fraud prevention solutions are the best weapon to fight fraud.
Enrich profiles with behavioral biometrics
Finally, first-party behavioral biometrics provide a superior alternative to help identify behavioral anomalies and better protect against fraud. Behavioral biometrics uses multiple data points, such as how someone holds, touches, or taps their device, to guard against known and unknown attack types. This insight is woven into the identity graph for a deeper, contextual understanding of each customer. This falls directly in line with knowing your customer – when you know who someone is, you also know who they’re not. And that is the key to real-time fraud prevention.
With the evolution of fraud increasing, merchants and financial institutions must take steps to proactively detect and prevent fraud. The best way do this, without harming the customer experience, is by getting to know your customers and developing comprehensive identity graphs with real-time, first-party data.