If banks viewed data breaches as nothing more than a costly driver of fraud, no one could argue with accuracy of that sentiment. With an estimated impact of $40 billion in 2019, data breaches present a critical threat to every financial institution.
But what if there was another side to the coin, one that pivots to a relationship and loyalty-building opportunity? With an assist from advanced technology, it’s now possible for banks to serve as an important partner to their breached customers (which is basically all of them), offering proactive and highly personalized protective recommendations.
Customer inaction is not “customer apathy”
Data breaches make the news daily, and most banking customers have their personal information breached about twice a year. Almost always, the victims receive generic, ineffective direction on how to protect themselves – things like signing up for free credit monitoring. As a result, they tune it out. Data breaches become an ominous background noise they can’t do much about.
The banking industry has taken to referring to this as “customer apathy,” where consumers are blamed for their inaction. But if we’re being honest, consumers are actually wise to turn away from one-size-fits-all safety advice. In certain cases, credit monitoring should be a high priority action, but it doesn’t apply to every breach and, based on the information that was compromised, it may not help at all. More sophisticated forms of fraud, such as medical identity theft, often don’t show up on a credit report.
We expect medical professionals to prescribe personalized advice, so why are financial services leaders still surprised when customers ignore a one-size-fits-none approach to identity safety?
The reality is that every data breach has a unique pattern of risks, based on the information that was compromised. Each breached person will face different threats, based how every breach adds to the caches of their personal information for sale on the dark web. This data remains valuable to crooks, scammers and fraudsters for a very long time, and cybercriminals will continue to acquire and layer pieces bits and bytes of personal data to purport a variety of fraud and scams.
Research indicates that consumers want data breach information that is highly personalized to their individual risk. Eventually, this approach could become as popular and commonplace as free credit scores. Consumers are much more likely to take action based on a tailored data security prescription. It’s akin to a doctor offering medical advice specific to an individual’s personal health history, instead of advising to “stay healthy” and expecting them to take the right actions.
Hyper-personalized service via AI and ML
Thanks to artificial intelligence, machine learning, advanced algorithms and dark-web surveillance, the complex challenge of delivering personalized data breach protection is now easily solvable.
Let’s say a healthcare provider serving a regional segment of bank customers experiences a data breach. The attackers steal sensitive personal information that includes not just protected medical information, but social security numbers, credit card numbers, financial account information and employment information. (A serious breach exposing this type of information happened earlier this summer.) The thousands of victims are now at serious risk for financial and identity crimes, for which their banks will ultimately bear much of the losses.
Using technology that draws intelligence from various sources, including the dark web, the bank is notified in near real-time exactly which customers were impacted by the breach. The fraud team is then empowered with analysis from an AI-driven algorithm predicting the most likely fraud risks for each unique customer, so they correspondingly turn on heightened security controls in a precise way, enhancing protection without unnecessary friction.
Next, the bank communicates with affected customers about the data breach, advising them of the protective actions already taken on their behalf and directing them toward additional controls within the bank’s own digital platform. This interaction creates many wins: increased customer engagement, an enhanced sense of financial well-being, better financial protection for both the customer and the bank, and a deepened sense of trust and loyalty.
Data breaches are rampant, and “breach fatigue” is a real phenomenon. But, what customers are really tired of is feeling helpless, overwhelmed, unsure of what to do and how to do it. Banks that embrace modern technology to overcome breach-related cybercrime may establish a competitive advantage – not only in the fight against fraud losses, but in the battle for customers’ hearts as well.
Jim Van Dyke is the co-founder and CEO of Breach Clarity.