Credit unions have been more likely than other financial sectors to lose a chunk of their money to fraudsters.

According to recent research, 75 percent of credit unions have reported significant losses to fraud (upwards of $500K). That’s a ton of money wasted to fraudsters.  

Financial fraud continues to increase in sophistication and credit unions face mounting challenges in safeguarding their customers' assets and personal information.

As traditional security measures prove limitations against evolving threats, credit unions must explore innovative solutions to stay ahead of fraudsters.

How can the financial sector combat fraud? The simple solution is they need better digital data.

What exactly does that mean?

Credit unions tend to struggle with data that’s full of gaps, incomplete, old or inaccurate due to manual entry errors, outdated data or insufficient data validation procedures. This can lead to poor decision-making and hinder the ability to provide personalized services to customers.

Many credit unions still rely on legacy systems that were implemented years ago, and these systems are typically ill-equipped to handle the volume and complexity of data generated in today's digital age. 

They struggle to understand who their customers are. Data within credit unions may be stored in separate silos across different departments or systems. This fragmented data landscape makes it challenging to get a comprehensive view of customers, transactions, and other important metrics.

One of the biggest challenges I help credit unions address is how to help them solve the digital identity gap, to gain a full view of the customer across channels (even if they are anonymous visitors).

Credit unions have built their business on customer relationships. As interactions continue to be digitally focused, the use of rule-based systems, limited solutions expose risk to customers and the credit unions.

You, as a credit union, must recognize the identity of the entire customer and their journey – across channels, devices, and interactions.

That’s the only way you can truly know your customer and identify evolving threats before they become a serious problem.

How do you protect your consumers from fraud in real-time?

Today’s consumers expect digital experiences that are fast, seamless and frictionless. When it comes to fraud, creating a level of security without causing friction to the customer experience can be challenging at first.

To stay ahead of potential fraud, credit unions should invest in robust security measures, regularly update their fraud detection systems, and include behavioral biometrics and analytics to their existing prevention systems. Collaborating with industry experts and sharing threat intelligence proactively addresses evolving fraud risks.

Let’s talk a bit more about behavioral biometrics.

Behavioral biometrics data is one tool that can help combat fraud while establishing and maintaining a seamless customer experience.

Behavioral biometrics helps to identify measurable patterns in human activities and behavior. It leverages the unique behavioral patterns and characteristics of individuals, such as their typing patterns, mouse movements, touchscreen interactions, and other digital behavior (unlike with traditional authentication methods that rely on static credentials). These patterns are specific to each individual and can be used to detect unusual or fraudulent behavior.

By continuously monitoring these behavioural risk indicators, credit unions can establish a baseline profile for each user and detect deviations that may indicate fraudulent activity.

Conclusion

As fraud schemes continue to evolve in sophistication and scale, credit unions must remain vigilant and proactive in their approach to fraud prevention. By harnessing the power of better data analytics and behavioural biometrics, credit unions can strengthen their defenses against emerging threats while delivering seamless member experiences.

Moreover, as technology advances and new innovations emerge, credit unions must continually evolve their fraud prevention strategies. Better data and the use of behavioural biometrics can help credit unions stay ahead of fraudsters in an era where these fraudsters continue to stay creative and seek to wreak havoc on credit unions’ bottom line.

About the Author

Serpil Hall, Head of Fraud Prevention, Celebrus.

Serpil is a proven financial crime and fraud management professional with 20 years of commercial experience across many industries and sectors with deep expertise in fraud operations, fraud prevention systems, fraud biometrics, and internal fraud controls. She has worked with some of the world’s largest global banks, airlines, and merchants on strategic and tactical improvements to greatly reduce both internal and external fraud. She was recently named one of the top 25 cybersecurity executives for 2024. She has also been quoted in The Guardian, BBC and other outlets regarding financial/cyber fraud topics.