Investing in Fraud Defense: Rethinking the Calculations

Yeah, I know that's a really interesting point.

Back in the day when I worked in precision lender side of the house, we would talk about that in terms of a deal.

Like just, hey, how much is it worth it for you to take an exception or price in order to win an overall relationship? And I guess what I'm thinking about is here is we've seen some of the stats about like, hey, if you don't handle a fraud situation well, you could lose money.

You could lose a certain amount of money for that fraud, but a way bigger amount of money in total relationship walking out the door.

That makes a lot of sense to me.

I actually am kind of curious about that part, about the invisible part of it.

Like when it's working well, you sort of don't...

I know we had a situation where we were talking to a client and they basically said, we almost... turned off a solution because nobody could understand why we were paying for it, but it was because it was working, right? So you didn't see the stuff that was coming through.

And I guess when you go through and you kind of walk them through this, and we should give a partial shout out here to LexisNexis because they've done some good work on that true cost of fraud.

And there's certain elements of this that go into that.

But when you're walking them through this, what sort of... what sort of the reaction you're getting to them are they are they fighting it or are they are they Are light bulbs going off? What's happening exactly?

I think it depends on the financial institution and what they've been hit with.

So if they've been hit with losses, it's more of a recovery reactive.

We need to figure out how to get a solution in place.

Now for others, if they haven't seen a lot of loss, you really have to equate a fraud solution similarly to an insurance policy.

It's like today I pay a monthly fee to protect my automobile, but it's not until I hit the deer that the cost really starts to, you know, reflect the value.

So the same goes with fraud.

It's not until you're hit with that big fraud event that you're like, oh, I have that protection layer in place to help get ahead of a lot of this.

But I think the other piece is that kind of that hidden opportunity cost.

When we start to think about like, Institutions aren't necessarily tracking, like you mentioned, like turning off a feature within digital banking, the impacts of that and the missed revenue, whether it's Zelle, whether it's bill pay.

It could be as simple as turning off the ability for a user to go in and update their email address or their physical address and phone number, and instead having to route that to the call center, and now it's burdensome on the call center.

Anytime that change needs to be made, But then also you're making that call center prone to potentially fraudsters coming in, acting like that individual to make those changes.

So there's a lot more to that equation.

So you really have to, it depends on the position the FI is in, whether they've already been hit with fraud or whether it's more protection layer, the uncertainty of what's to come in the environment that you really have to unpack.

and build the value proposition a little differently.