5 Ways fraud prevention can reduce call center operational costs

Digital transformation Banking Security
This article by Frank Moreno, Entersekt's Chief Marketing Office, was originally published on PaymentsJournal on April 5th, 2024.
Financial fraud is reaching epidemic proportions across financial institutions, with scams, account takeover, authorized push payment, and first-party fraud running rampant globally. However, many opt to keep their head in the sand and not take preventive action. Most financial institutions today still plan for—and budget for—fraud losses and therefore accept the fact that they will lose money every year to fraud.

What most FIs fail to realize is that the call center may hold the key to improving fraud prevention across the digital and mobile banking channels. Although FIs may anticipate and plan for fraud losses, they are constantly challenged with controlling operational costs to improve profitability. At most financial institutions, the call center is typically a cost center. Further, it’s a separate business unit from the fraud, consumer, commercial, and digital banking teams and isn’t necessarily considered an ally in the fight against fraud.

Banks and credit unions receive thousands of calls per week from their customers, each of which costs as much as $5.60 per call. Any way to reduce the duration of a call, or the overall call volume, can have a dramatic impact on the overall operational cost of the call center at an FI. Fortunately, the same authentication technology that is used to protect digital banking channels upon a customer login can be leveraged by the call center, saving hundreds of thousands of dollars in operational costs for FIs.

Here are five ways modern authentication solutions can reduce call center costs at financial institutions:

Replacing knowledge-based authentication with push notifications

Traditional authentication of a customer who calls into an FI’s call center (regardless of the reason) will often require an agent to ask a series of questions that supposedly only the customer can answer correctly. For example: What is your mother’s maiden name? What was your high school mascot? Unfortunately, this approach leaves the customer susceptible to social engineering and man-in-the-middle attacks, and each question also takes time to answer, making each call longer and more expensive.

However, when biometric authentication is built into the browser or mobile application of a digital banking solution, a call center agent can simply send a push notification to a registered device, authenticating a customer instantly and providing a personalized, frictionless experience.

Enabling self-service password resets

Call center agents provide valuable services to their members and customers. Unfortunately, they also must field menial, monotonous requests such as a password reset when a user gets locked out of an account.

Password resets make up a high percentage of calls to an FI’s call center each month, and most of those can now be prevented. With biometric authentication, FIs can enable users to reset their password on their own, combining the possession factor of the registered device with the individual’s biometrics. Self-service password resets can have an instant and substantial impact on reducing call center call volumes.

Context Aware™ Authentication to reduce false declines

As FIs continue to fight digital payment fraud, consumer transactions will inevitably be declined for various reasons. When a transaction is declined, consumers often instantly call the FI’s call center to ask why a transaction failed. Many times, there are valid reasons that a transaction fails or is declined. A card may be reported stolen, a transaction may be unusually large, there may be insufficient funds available. However, false declines also occur, meaning a legitimate online transaction is rejected or declined when it should be approved.

False declines can be triggered when a card is used in an unusual location, when a large-volume purchase or expensive purchase is being made, or perhaps when the shipping information is inconsistent. When a card issuer has a context-aware authentication solution in place, the context of the consumer, their history, location, and behaviors can be analyzed in real time, reducing false declines and the follow-up call center contacts.

Eliminate outbound calls for payment (ACH and wire) verification

Although most call center activity involves responding to inbound customer and member calls, many FIs also need to manage high volumes of outbound calls to customers. A common practice among FIs, particularly those with many commercial and small-business customers, is to call a customer whenever an ACH or wire payment is initiated to verify that the payment is legitimate.

Depending on the customer mix, some FIs could be making thousands of calls every month to verify payments. When authentication is built into a mobile application or browser, a message with a push notification can replace all outbound calls, yielding a strong return and significant cost savings.

Prevent fraud attacks before they happen

Last, and perhaps most obvious, is the imperative to fight off more fraud attacks and avoid the frantic calls from customers who have been victimized by financial fraud. By removing the dependence on email and SMS one-time passcodes, weak username-password combinations, and knowledge-based authentication, FIs can not only reduce call center call volumes but also have a significant impact on overall fraud losses.

Unfortunately, the customer impact (consumer, small business, and commercial) as well as the reputational damage when an FI is hit with fraud attacks is often immeasurable. Although customer churn is always a concern for FIs, they often don’t realize the impact of losing some share of wallet and the primary banking relationship with their customers when fraud attacks occur.

Call center operations can be one of the most substantial areas of positive impact and cost savings when financial institutions implement modern authentication and fraud prevention solutions and best practices.

Further reading

  • Blog: 3 Problems with password resets, and how biometric authentication can help. Read more.
  • Case study: How African Bank partnered with Entersekt to simplify call center verification. Read more.
  • Solution spotlight: Offer consistent, secure, personalized authentication experiences with Context™ Aware Authentication. Read more.