Fraud Prevention Is Killing Customer Experience

Fraud Prevention Is Killing
Customer Experience
Akif Khan
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Does your customer
experience look
like this?
2 © 2020 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. and its affiliates.
Strategic Planning Assumption
By 2023, digital businesses that have adaptive

customer experience linked to trust and risk
assessments will earn 15% more revenue
than those who don’t.
Key Issues
1. Organizations think about fraud management and

revenue growth separately
2. All customers are treated as potential criminals
3. Risk assessment of customers is treated as a one-off event
Key Issues

Fraud Risk Considerations Are Incomplete …
Fraud Risk
Financial Risk + Regulatory Risk + Reputation Risk +

Operational
Costs
+
Revenue Impact
… and Revenue Considerations Have Evolved
Revenue Growth
Product + Services + Sales + Marketing
+
Customer Experience
Fraud Team Reporting Lines Don’t Align With CX
32%
15%
11%
6% 4%
Finance Operations Customer Service IT Trust and Safety
Source: 2018 Fraud Operations Study by Card Not Present
Key Issues

Suspicion of Customers Is Hardly Surprising
87% of businesses suffered the same

or higher fraud losses in the last year.
2019 Global Identity and Fraud Report — Experian
1.6% of annual global e-commerce

revenue lost due to payment fraud.
2019 Global E-commerce Fraud Management Report — Visa
In 2018, bad bots accounted for

1 in 5 website requests.
2019 Bad Bot Report — Distil Networks
Convenience Versus Security
Customers tend to Businesses tend

prioritize convenience to prioritize security
over security over convenience
Trust Versus Risk: Getting the Balance Right
Trust Risk Goal is to seek

In reality, vastthe minimal
majority of
How customers are
level of trust
customers areassurance
trustworthy
typically treated today
proportionate to the
and present little or risk of
no risk
the action being attempted
Key Issues

Be Suspicious, but Build Trust
Trust
Identify positive Identify negative Apply intelligent,

signals signals context-based
adaptive access
to customer
interactions
Adopt a CARTA Approach
Predict Prevent
Continuous
Adaptive
Risk & Trust
Assessment
Respond Detect
Prioritize Which Customers to Focus On
Step 1.
Identify bots vs. humans
Step 2.
Identify known humans vs.
unknown humans
Step 3.
Assess intentions of
unknown humans
Example 1 — E-Commerce
Recognized Consistent Low value

device location
Low-friction
transaction
Recognized No suspicious
behavior links
Example 2 — E-Commerce
Unrecognized Consistent High value

device location
3DS
authentication
with
issuing bank
Behavior within Suspicious
good norms links
Example 3 — Banking
Recognized Inconsistent Adding new SMS or push

device location payee
authentication
Voice
Unrecognized Correct login authentication
behavior credentials
Cost Optimization
If And Then
Well considered and

CX is a competitive Fraud management
designed fraud
advantage to reduce the tools and strategies
management is a
cost of lost customers are key to CX
competitive advantage
Recommendations
Treat fraud management as integral to CX.

Don’t treat customers as potential criminals.
Seek positive as well as negative signals from customers.
Apply friction that is in context to the attempted actions.
Recommended Gartner Research
Don’t Treat Your Customer Like a Criminal

Tricia Phillips (G00370348)
Market Guide for Online Fraud Detection
Akif Khan and Jonathan Care (G00719387)
3-D Secure 2 Demands a Place in Your Fraud Prevention Portfolio
Akif Khan, Jonathan Care and Dayna Ford (G00361211)
Take a CARTA Approach to Building a Successful Payment Fraud
Detection Strategy for Digital B2C Channels
Akif Khan (G00385812)
For information, please contact your Gartner representative.


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Fraud Prevention Is Killing

By 2023, digital businesses that have adaptive

1. Organizations think about fraud management and

1. Organizations think about fraud management and

Financial Risk + Regulatory Risk + Reputation Risk +

Product + Services + Sales + Marketing

Finance Operations Customer Service IT Trust and Safety

Source: 2018 Fraud Operations Study by Card Not Present

1. Organizations think about fraud management and

87% of businesses suffered the same

2019 Global Identity and Fraud Report — Experian

1.6% of annual global e-commerce

2019 Global E-commerce Fraud Management Report — Visa

In 2018, bad bots accounted for

2019 Bad Bot Report — Distil Networks

Customers tend to Businesses tend

Trust Risk Goal is to seek

1. Organizations think about fraud management and

Identify positive Identify negative Apply intelligent,

Recognized Consistent Low value

Unrecognized Consistent High value

Recognized Inconsistent Adding new SMS or push

Well considered and

Treat fraud management as integral to CX.

Don’t Treat Your Customer Like a Criminal

For information, please contact your Gartner representative.

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