The Financial Brand Insights - Winter 2021

Linked Analysis , for example, combines monitoring, prevention, recovery and consulting to identify and stop fraud before it occurs. A key element of these types of solutions are AI-powered tools that link events across different platforms, individuals across different institutions and merchants across any cards. Ideally, all of these then also point to each other to find a common thread. This enables the institution or its partner to reach out to the consumer and proactively identify and stop the incident. Other risk management initiatives include next-generation delinquency management solutions. These cloud-based collection and recovery platforms enable omnichannel management, and use integrated web portals for customer or member self-service collection. New fraud alert platforms enable branded communications, so cardholders can be confident the alert is coming from their financial institution. Such platforms’ intelligent phone recognition means outreach will be tailored depending on whether the communication is going to a cell phone, digital message or email. To address the increased challenge of disputes, financial institutions can rely on partners with this capability. For example, PSCU has a new disputes operations center that enables one-call resolution for new disputes via phone, as well as real-time updates regarding existing disputes and fraud claims. Such capabilities eliminate the help desk voicemail process, which means cardholders will get answers in real time. Clearly digital channels will continue to grow. As an industry, it is imperative that we have the right tools and technologies in place to stop fraudsters regardless of where and how they are entering, while simultaneously ensuring a better experience, both on the fraud side and the consumer experience side. ▪ About the author Jack Lynch leads PSCU ’s Fraud and Risk Management Operations area and is President of CU Recovery, a PSCU company specializing in delinquency management.

Banks and credit unions spend plenty working to protect customers from fraud. However, it’s imperative that institutions also do more to educate people to help reduce the risk. Mitigating Disaster:

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fourfold, and the number of reports nearly tripled when it comes to romance scams. Consumers are becoming more vulnerable to attack as scammers move from targeting the financial institution as a whole to also going directly after consumers. The more we can educate cardholders, the better. Another growing challenge is synthetic identity fraud, one of the fastest-growing types of financial crime in the U.S., costing financial institutions billions of losses annually. To help better identify and mitigate this type of fraud, the Federal Reserve announced an industry- recommended definition of synthetic identity fraud. In brief it is: “The use of a combination of personally identifiable information (PII) to fabricate a person or entity in order to commit a dishonest act for personal or financial gain.” The definition was developed by a payments industry focus group of fraud experts of which PSCU is a part. The Federal Reserve envisions that a consistent definition for synthetic identity fraud will help the industry understand what constitutes this type of fraud and its impact on consumers, financial institutions and the overall U.S. payments system. The Path Forward Given the current landscape and expected future trajectory, what can financial institutions do to combat fraud? Unfortunately, it is not as easy as simply stopping the fraud. Achieving a balance between risk management and the consumer experience is the sweet spot in combating fraud. Banks and credit unions should consider using solutions that can help identify fraudulent activities and halt them in their tracks. PSCU’s

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