The Relationship Between Bank Security And Customer Loyalty: What You Need to Know

Are you fully prepared for the many types of fraud perpetrated by hackers and thieves? From phishing to social engineering to malware, fraudsters have a wide arsenal of attack methods that financial institutions (FIs) must stay ahead of. They often use these techniques to harvest users’ credit card numbers or bank account credentials on a large scale. In the short term, it can cause big problems for FIs – stock prices may suffer, and there is extensive internal work required to clean up the mess of an attack.

But even more challenging is the long-term problem: fraud can have a catastrophic effect on your relationship with your customers, and it may even cause them to leave the bank entirely.

In fact, a recent study conducted by Carnegie Mellon University confirms there is a clear relationship between security breaches and loss of consumer trust and loyalty. According to results from the study, consumers affected by unauthorized fraudulent transactions may hold the bank responsible and terminate their relationship – even when the bank has fully compensated the customer’s financial loss.

Many forms of attacks target customer assets and data directly, such as cash trapping, card trapping, skimming and related attacks on ATMs and POS devices. Cash trapping is the physical attack with the lowest “entry cost” for an attacker: a device is used that covers the cash slot and traps the cash when it is dispensed; the customer is led to believe the ATM has malfunctioned and leaves, after which the criminal can retrieve the cash.

The biggest issue for FIs, however, is still skimming: The European ATM Security Team (EAST) found skimming losses increased by 16% from 2014 to 2015[1], and through the first half of 2016, that number had risen by another 11%[2]. In a nutshell, skimming means illegally copying the data stored on a bank card’s magnetic stripe. Skimming devices have constantly evolved to overcome new countermeasures, getting more and more sophisticated in the process. 

How to protect your customers’ assets and retain consumer trust

To offer your customers the best protection, you should make sure that your ATMs are able to detect and deter potential attacks (depending on the type of attack, different countermeasures will be more effective than others). Your security approach should include:

  • Mechanical and/or optical sensors that can detect cash or card trapping devices.
  • Solutions to thwart skimming.
  • Regular review of ATM and network security to ensure emerging threats are recognized and your organization is prepared to defend against them.
  • An EMV implementation plan. Only the shift to a fully EMV-enabled ecosystem, without magnetic stripes, will be able to put an end to skimming.

By defending your customers from attacks, you can …

  • Retain customer loyalty and trust for the long term.
  • Lower the incurred costs of handling and compensation of customer fraud cases.
  • Protect your brand reputation.

For more information on solutions that fully protect your customers’ assets, contact us today before fraud occurs. With best-of-breed security technology and expertise, we are the right partner to help protect your customers’ assets 24 hours a day, 365 days a year.

[1] EAST – European Crime Report 2015
[2] EAST – European Crime Report 2016 (January to June)