By Ray Birch
CHICAGO—Consumers want to be involved in the fraud fight, but financial institutions are doing a poor job of helping them by providing only the lowest levels of education and then expecting people to be effective, according to TransUnion.
“In this instance, financial institutions are providing consumers with a poor, kindergarten-level education on how to protect themselves,” said Jim Van Dyke, senior innovation principal at TransUnion. “And then they are expecting people to do the equivalent of rocket science.”
VanDyke recalled that when he was CEO at Javelin Strategy & Research, he learned consumers have a desire for self-protection and are willing to work with their PFI.
‘Very Motivated’
“Nothing matters more to a consumer in the financial realm than cyber security and identity safety—hands down,” he said. “People are actually very motivated to take action—they just need a trusted source and personalized guidance for what to do.”
In fact, TransUnion data show more than three in four Americans consistently express concerns over having their identities stolen. Yet, when surveyed, most admit to not taking any action at all.
But action is just what is needed, as the severity of data breach risks rose to the highest level in two years during the first quarter of 2024, increasing 31% from the same period last year, VanDyke noted.
“So, if there's nothing they care about more than cyber security and identity safety, why is it they often don't take action?” he asked.
What Study Found
In its recent study, TransUnion provided 2,300 respondents with a variety of multiple-choice responses to questions about cyber security, with most answers reflecting that people are simply confused about how they can help in the fraud fight.
“About 50% said they were confused about what to do and had no idea where to start. And then another 16% or 17% said they were overwhelmed by information. That totals about two-thirds of our consumers we polled. The rest of the answers were just a bunch of miscellaneous responses,” he said.
VanDyke conducted research to determine what kind of education financial institutions are providing and found that most lessons haven’t worked
“It quickly became clear to me that we've got junior marketing interns—and I am speculating just based on what I have seen—creating this content for consumers about cyber safety and identity protection,” he said.
Jim Van Dyke
A Fundamental Problem
VanDyke further stated he has reviewed information from financial institutions that in his opinion makes little sense.
“Sometimes the information would change for no reason, from quarter to quarter. And this information is from the most trusted and sought-after organizations,” he said. “There's a fundamental problem that needs addressing.”
VanDyke added that not enough specific examples are given in educational materials and that information provided is often too generic.
“Not only are the recommendations generic, they are often bad and inconsistent,” he suggested.
Need to be Clear
Financial institutions must get better at providing clear recommendations that are actionable, VanDyke insisted.
“And they need to personalize those recommendations, speak to each consumer's unique pattern of risk, which is hard to do,” he acknowledged. “But if you say, look, consumer, you were informed that your Social Security number was exposed and we’re going provide you with information on the risks that type of breach brings to you, such as new credit account fraud, tax refund fraud…Now, that gets complicated in a hurry, because there are 60 different identity credentials that are commonly breached. But, still, that's where we need to evolve to.”
Despite those complications, those are the conversations credit unions need to be having with consumers via their websites, mobile apps, through their materials and with call center reps, he said.
“Credit unions could certainly train their member service teams and branches. Tell them to tailor their advice they give to people to be practical, no nonsense and simple, but also tailored to the consumers’ security incident history,” VanDyke said.
A Role for AI
VanDyke contends AI tools are emerging that can help credit unions personalize security recommendations to members, and tht those tools are most effective when they can receive feeds of all data breaches in which an individual has been involved.
“Then, the AI algorithm identifies the person’s risk patterns and converts that breach information into some straightforward advice and actions steps that can really get the individual involved in the fraud fight,” VanDyke said.