How your PFM can keep you and your members safe
There is plenty of talk about cybersecurity both internally and externally. And it’s no surprise that cybersecurity in the financial sector, in particular, is a significant priority.
According to a study from LexisNexis Risk Solutions, credit unions spend $3 on every $1 of fraud. Given the charter of credit unions, this is a significant investment of resources.
In its broadest sense, cybercrime is a $600 billion industry. But the reality is, at some point in all those breached accounts and compromised security, financial institutions will pay either directly or indirectly.
Using every available tool to keep your credit union and your members safe from fraud makes good business sense from whatever side of the issue you’re on.
Empower Your Customer
Obviously, internally credit unions commit a large amount of time and energy making sure they’re internal, as well as external systems, meet all the privacy requirements as well as the highest security standards.
But in all this, it’s easy to overlook one of the most powerful tools available to you – your members.
Your members are your first line of defense against fraud. Robust personal financial management (PFM) solutions have evolved far beyond their humble roots.
By allowing members to aggregate their accounts in your PFM, it allows them to see all their accounts in one place. For example, with aggregated accounts, members don’t have to jump across their various credit card sites or apps, to monitor transactions. They can do it from your PFM.
That’s why it’s crucial in this digital age that CUs offer tools that monitor transactions and allow easy reconciliation of bank and card accounts; it’s no longer just a nice option.
Aggregation = Security
WIth aggregated accounts, all your member’s financial information is in one spot. Checking charges and account activity is much easier than jumping around from site to site.
Aggregation is a very powerful tool because members know where they’re spending their money better than anyone. If something looks fishy, they’ll likely spot it before any algorithm.
It makes fraudulent account activity faster to catch, which certainly helps both the member and the CU since the longer the fraud goes on, the more difficult it is to unwind the transactions and deal with the liability.
And to that point, empowering your members to police their accounts is something most will do happily, and see it as a benefit rather than a CU-imposed obligation. It also makes it cheaper for CUs to address account irregularities since they are likely able to discover the fraud quicker.
That also means FIs can use their ability to provide members with aggregation services as a unique and valuable benefit of an integrated PFM. A quality PFM keeps CUs’ customers closer to them. It also demonstrates the CU’s active interest in keeping its members safe from security threats.
The Added Benefit of Aggregation
Aggregation has the added benefit of allowing CUs to see members’ entire financial picture, who they look to for loans, what credit cards they use, etc. This is a treasure trove of granular marketing information that would have been nearly impossible to discover a decade ago.
All these advantages also apply to integrated PFM platforms focused on businesses as well. The fundamental reasoning is the same, although businesses exposure is that much greater than an individual’s exposure since they handle significantly more transactions on a daily basis. Every $1 of fraud to merchants and businesses costs $2.66 to mitigate on average.
If you can help lower those costs, that only helps your relationship with members.
The point is, aggregating accounts should be seen as a need to have a tool for members rather than a nice to have tool. And its values – ease, efficiencies, and security – should be communicated to the members so they take advantage of it.
The security aspect of your PFM is an empowerment tool for your members, so make sure they know it. Fraud costs everyone money, so awareness and early detection is a great way to mitigate fraud.