Fraud is a major problem for businesses. However, it’s also an issue that’s growing, complicated and often very misunderstood.
With fraudsters looking to exploit Covid-19 through pandemic-related scams, it’s only been in the past year or two that I’ve observed the general public and, by extension, the average board member has begun to understand the true impact of fraud on their everyday lives. Nobody is safe from this type of criminal activity.
In fact, my company surveyed more than 2,300 adult smartphone owners in the U.K., France, Germany and Spain in January of this year to create our “State of Digital Identity 2022” report. We found that nearly one in 10 consumers have been victims of identity fraud in the past year. Meanwhile, 92% of consumers said they are concerned they will be hit by fraud in the future. Furthermore, fraud cost consumers more than $5.8 billion in 2021, according to the U.S. Federal Trade Commission. And, hackers are only getting more sophisticated.
Increasingly, businesses do recognize identity fraud as a threat. However, as the CEO of a company that provides digital identity verification solutions, I’ve found that many only see it as exactly that: a risk they need to defend against. In my experience, many boardrooms will only measure the potential monetary cost to the business from fraudulent attempts. What they should be doing is looking at how better protecting consumers from fraud can drive business growth in both the short and long term.
Strong Fraud Prevention: A Brand Differentiator
It is no question that the modern consumer demands convenience, but I’m finding they also expect security. Yet, many companies are struggling to find the right balance between online friction and fraud prevention. When asked how good they are at striking this balance, European businesses only rated themselves at a six out of 10 in my company’s survey. If businesses fail to protect consumers, they could be ditched for a rival that they feel is keeping them safe in the digital world. It could also cause reputational damage to the brand.
Getting fraud prevention right, on the other hand, could be a major factor in fueling growth. By leveraging the right technology and processes, companies can help prevent fraud and reassure customers that they can transact online with confidence. This, in turn, can improve the customer experience.
Delivering a great experience to your customers can also drive customer loyalty. Creating this trust can be a key differentiator for businesses in an increasingly competitive market. It could also be the deciding factor that tips a consumer from choosing one brand over another.
Steps The Board Can Take
So, how can business leaders take the steps needed to stand out from their rivals?
First, CEOs and the rest of the board need to listen to experts on their team, learn about the current risks and understand the threats they could face in the future, as fraud tactics continue to evolve and become more sophisticated.
The business then needs to evaluate what it’s currently doing to prevent fraud and, if necessary, how it can change its posture from purely defensive to becoming more proactive when it comes to fraud prevention.
Finally, the board needs to move away from seeing fraud as just a threat and start treating fraud prevention, when done right, as a potential competitive advantage. Simply measuring fraud losses will no longer cut it. Your board needs to ask itself, “Are we measuring the right things?” New metrics will need to be created to drive success. Understanding how trusted the brand is by consumers and what causes dropout rates will be vital.
The problem of fraud is evident today, but I believe things are only going to get worse. Many consumers think becoming a victim is inevitable. But if companies want to protect their brands, stand out from their rivals and, ultimately, drive business growth, they must start thinking about fraud in a different light.
Courtesy- https://www.forbes.com/sites/forbesbusinesscouncil/2022/04/08/why-boardrooms-should-see-fraud-prevention-as-a-competitive-advantage/?sh=2985c48c4a6c