The Perfect Storm: Customers and fraudsters are going mobile

February 3, 2016

Financial Institutions are seeing huge growth in mobile application across products. At this same time, fraudsters are targeting the account opening process. How can financial institutions maximize mobile for new customer acquisition while keeps fraudsters out?

Mobile Account Opening Surges

According to Javelin, the volume of accounts opened on smartphones and tablets surged 60% from 2013 to 2014. Now, mobile accounts for the bulk of applications by the following products:

  • Mortgages: +72%
  • Auto Loans: +69%
  • Major Credit Cards: +64%
  • Checking: +61%

New Account Fraud Spikes

With the surge, Javelin and other analysts anticipate a spike in new-account fraud, “one of the most damaging types of fraud for FIs and consumers alike.” At least 89 of every 10,000 accounts are fraudulent, and 49% of this fraud involved ID fraud - a 32% spike from last year. With the rise of EMV (chip and pin), fraudsters are moving to other targets. After Canada went EMV, they saw application fraud rise by 300%.

Mobile Account Opening Fraudster

Synthetic ID fraud targets account opening

Fraudsters see mobile as a perfect channel to perpetrate synthetic ID fraud that mixes in real elements that look “real enough.” Like farming, fraudsters are creating thousands of fake accounts, letting them pass through security measures, and sitting on them until they mature. Once the bank thinks they’re legitimate, the fraudsters open a card or get a loan and start harvesting.

Luckily there are unique verification technologies for mobile account opening to help financial institutions reduce the risk of fraud.

To be most effective, the ID verification solution must feel like a natural part of the mobile experience; it must look and feel like a native mobile experience; it must be simple and user friendly; and it should use technology customers naturally use every day.

The best way to maintain a seamless user experience is to leverage the camera in their smartphone to take a picture of their ID document to be immediately verified either by an algorithm or by a trained analyst in real-time.

Proactively integrating mobile ID verification into your mobile platform is the best way to securely meet the customer’s need for speed, real-time authentication, and an enjoyable user experience without running the risk of sending good customers to your pended queue.

Customers of tomorrow and fraudsters of today are simultaneously shifting to the mobile channel. It’s a perfect storm that is more promising than threatening. With mobile ID verification, you can weather the storm and say “yes” to more good customers and “no” to fraudsters.

Read more about maximizing mobile while reducing fraud in the Aite Group's new whitepaper by Julie Conroy: Mobile Capture and Identity Verification for More Acquisitions, More Securely 

Read Whitepaper