How businesses are meeting the challenge of fraud and the expectations of the new digital consumer

We are all digital consumers. Even before the Covid-19 pandemic, an ever-growing number of consumers were accessing all manner of services online, with their expectations of a frictionless, seamless experience growing as well.

These growing expectations are central to a successful digital operation. How can businesses and other organisations create this desired seamless journey and, at the same time, make fraud prevention and customer authentication a priority?

Experian has just taken the pulse of more than 600 consumers and 200 businesses in the UK and Ireland including retail banks, digital retailers, and payment providers. Questions related to their online expectations regarding experience and security, and what fraud management strategies are being deployed.

The new digital consumer

Before the pandemic, online spending tended to be the domain of younger demographics. Now, people of all ages - and computer-literacy – are digital consumers. Some 40% of UK consumers have increased their online spending in the last three months but while this has created significant opportunities, the diversity of customers and their varying levels of comfort with technologies also creates new security challenges.

The new digital consumer has big expectations. 41% said they value online security above all else, with 28% saying their security concerns have increased over the last 12 months amid worries over identity theft and the overall surge in fraud in the UK A new report from UK Finance revealed that £1.3billion was stolen by fraudsters.

Conversely, consumers also expect to be recognised by businesses quickly and easily. A significant 92% said it was important they are recognised if they are an existing or repeat customer and authentication should be easier compared to first time interactions and onboarding.

When it comes to preferred security methods, consumers are becoming increasingly familiar and comfortable with new technologies. Trust in advanced authentication technologies is growing across all demographics, with pin codes and physical and behavioural biometrics all now giving confidence and reassurance to consumers.

Interestingly, there is a divide between over who is ultimately is responsible for security. Nearly two-thirds (64%) of consumers expect businesses to take the necessary security steps to protect them, while 69% of businesses say customers should be doing more to protect themselves online.

The business perspective and new technologies

How can businesses square this circle? We’ve seen that consumers, understandably, prioritise security. But, just as clearly, they also want a frictionless experience and be authenticated quickly and easily.

The challenge of fraud detection is compounded by the fact the vast majority of applications and attempts to access sites and services are genuine. This inevitably leads to unnecessary investigation of genuine applicants – which increases admin costs and disrupts the customer experience.

It’s a trickly balance but one which many businesses are succeeding at. No single technology can cover all bases, so we are seeing multi-lateral investments in a wide range of solutions such as AI and automated decisioning processes.

Every business we surveyed (100%) identified AI as a key target for investment going forward, offering major opportunities to improve security based on faster, more accurate customer identification and authentication. AI is also almost universally seen as important for improving customers’ online experiences by companies too.

Consumers are also becoming far more aware of the use of AI, and a majority of consumers (60%) trust organisations who use AI to reduce fraud and improve their experiences online.

The fraud landscape is increasingly complex and always evolving. New technologies are vital for security and it’s positive that businesses are actively investing to ensure their fraud prevention systems are as cutting edge as possible.

By doing that they can ensure their digital experience is secure and seamless, giving confidence to their customers they details are secure.