Managing Fraud at Credit Unions in an Increasingly Digital World

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To remain competitive, credit unions are increasingly adopting digital offerings. However, digital growth can lead to increased application fraud. Legacy systems primarily intended to ensure compliance with Know Your Customer (KYC) and Customer Identification Programs are no longer effective. With so much personally identifiable information available, both real and synthetic, newer and more dynamic technologies are required to stop fraud.

What’s at stake: The ability to keep up with banks and fintechs increasingly able to provide a seamless digital onboarding experience and access to new products and money right away. Getting it wrong not only means higher losses, but reduced growth in the long term.

In the face of this increasingly digital world, it’s not realistic to manually review everything. Newer types of fraud such as synthetic identities often go undetected and can account for up to 10% of chargeoffs.

Evaluating the identities of potential new members at onboarding has to be done in an automated fashion using technology that includes phone and email intelligence, as well as other signals to flag high risk applications so they can be more fully vetted. Understanding how to incorporate new technology at account opening and knowing what verification strategies to pursue when you suspect fraud can help credit unions ensure predictable growth with minimal losses.

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