Traditionally, fraud losses are measured by looking at fraud transaction dollar losses and operational costs. But institutions should begin to pay more attention to reputation and loss of confidence—often the “hidden” costs of fraud.
While it's true that these costs are less obvious and harder to measure, that doesn't mean they should be ignored. In our recent fraud survey, 37% of financial institutions suffer from loss of customer confidence and 18% from attrition. Let's face it; you don’t want to be the topic of conversation at a local business meeting where a customer complains about losing a significant amount of money from their commercial account at your institution. Let alone be pulled into court or chronicled in the press.
At the end of the day, the reason people put their money into a financial institution is trust. The image they have in their head is of their money sitting in a vault. We have to think about the way we secure their money like it is in a vault. Only today, protecting electronic banking data has a different set of requirements than physical cash and teller windows. Central among those requirements is the need to always take a proactive approach with fraud management—my ongoing call to action here on this blog.