Javelin Ranks Top U.S. Banks’ Identity Safety Measures for Customers

SAN FRANCISCO--(BUSINESS WIRE)--Javelin Strategy & Research (www.javelinstrategy.com), the leading independent provider of quantitative and qualitative research focused exclusively on financial services, today announced findings from its annual Banking Identity Safety Scorecard, which measures 25 leading U.S. financial institutions’ customer-facing identity fraud capabilities. The Javelin model measures Prevention, Detection and Resolution™ features to track performance throughout the fraud cycle. Information about the study can be found at: http://www.javelinstrategy.com/2008BankingIdentitySafetyScorecard.html.

“By continuing to increase efforts to provide robust account protection measures across all channels, institutions can make the most significant impact in driving down the cost of fraud”

Scorecard Criteria Provides Metrics and Guidance to Financial Institutions

Based on 4 years of longitudinal research about identity fraud, Javelin developed a measurement system around Prevention, Detection and Resolution™ for its annual banking scorecard report. Each year Javelin updates the criteria to demonstrate ways that financial institutions can increase customer safety and fight identity fraud — a $45 billion crime. Consistent with previous years, Javelin awarded the greatest majority of points to features that prevent crime, followed by the areas of detection and resolution.

Banks Excel at Resolution, But Greater Emphasis on Detection and Prevention are Necessary to Lower the Cost of Fraud

The impact of identity fraud on financial institutions includes hard costs associated with the crime, as well as potential customer attrition. Javelin research shows that the average identity fraud case costs the industry $5,574 per victim and takes 26 hours to resolve. One in every five ID fraud victims leaves their bank, and one in every six changes card issuer.

Overall, the study finds that banks and credit unions excel in identity fraud Resolution, making significant progress since 2007. While this helps restore customer confidence and mitigate the risk of attrition, it does not lower the cost of fraud. Compared to Resolution, Javelin places the greatest scoring emphasis on Prevention, followed by Detection, as these measures directly contribute to reducing fraud. Javelin’s 2008 Scorecard shows that financial institutions made solid improvements in preventing the crime, while detection measures were essentially flat in comparison to 2007.

“By continuing to increase efforts to provide robust account protection measures across all channels, institutions can make the most significant impact in driving down the cost of fraud,” said James Van Dyke, Javelin Founder and President. “Account holders want to play a greater role in protecting the safety of their identities, and financial institutions that actively partner with their customers to fight fraud will have the most impact on the crime.”

Top-Ranked Banks Partner With Customers to Protect Against Identity Fraud

Bank of America once again earned top overall honors in Javelin’s Scorecard, demonstrating excellence in its efforts to partner with customers against a crime that uniquely targets both the financial institution and the consumer. National City Bank (acquired by PNC) and Wells Fargo shared second position with equivalent scores followed closely by US Bank and Wachovia (acquired by Wells Fargo).

Key Findings and Recommendations:

• All of the banks scored by Javelin have implemented multi-factor authentication (MFA) in the online channel, yet less than half maximize this account protection measure in the mobile channel and only 28% do so through the phone channel.
• With criminals taking advantage of Web site vulnerabilities to download malware, financial institutions should apply extended-validation SSL certification to the online channel — and educate customers how to use the SSL certificate to confirm that they are visiting a legitimate site by using their browser to detect the SSL certificate.
• Customers want to play an active role in protecting their accounts against fraud. Allow customers to specify and set-up their own user-defined limits, alerts or prohibitions on certain account activities.
• Promote the benefits of the mobile-banking channel and use SMS alerts to keep customers informed about the status of their accounts.
• Expand alert capabilities to include changes to personal account information, such as physical address or email address and phone numbers to help reduce new-account fraud.
• Improve debit card resolution standards by offering next-day card replacement, zero liability for fraud on all types of transactions and next-day access to compromised funds.

Learn More About Javelin’s Services and the 2008 Banking Identity Safety Scorecard

Subscribers to Javelin’s Security, Risk, Fraud and Compliance research coverage automatically received this report.

Javelin offers consulting services to help risk management professionals at financial institutions address compliance mandates and implement greater security measures to lower the cost of fraud. Those interested in learning more about Javelin’s services may call +1.610.450.5909, email sales@javelinstrategy.com.

To request a ‘media version’ of the research or to arrange an interview with James Van Dyke, please contact Kathleen McCabe at +1.925.225.9100 extension 15 or k.mccabe@javelinstrategy.com.

Research Methodology

The study measures financial institutions based on customer-involved ID fraud capabilities that were selected based on Javelin’s annual Identity Fraud Survey Report, other consumer surveys that assess consumer propensity to adopt particular safety features, and ongoing dialog with industry experts. Using a combination of mystery-shopper (averaging 5.8 calls per institution) and web site research to score 25 leading U.S. providers against relevant Prevention, Detection and Resolution™ criteria, collectively this study represents 50% of the U.S. market in 2008 by dollar value of deposits, according to the FDIC. The data was collected during August and September 2008. Due to the timing of the scoring, Washington Mutual, Wachovia, and National City are treated as independent entities for the purposes of this Scorecard, despite announced acquisitions by JPMorgan Chase, Wells Fargo, and PNC respectively.

Companies Mentioned in Javelin’s Online Retail Payments Forecast Report

Companies mentioned or analyzed by Javelin in the report, include Apple (iPhone), Banco Popular, Bank of America, Bank of the West, BB&T, ChoicePoint, Citibank, Citizens (RBS), Comerica, Entrust, Equifax, Experian, Fair Isaac, Federal Trade Commission, Fift Third Bank, First Data, GeoTrust, Golden 1, HSBC, IBM, Identity Theft Assistance, ING Direct, JPMorgan Chase, Kaspersky, M&I, MasterCard, McAfee, National City Bank, Navy Federal Credit Union, PNC, Regions, RSA, Sovereign, SunTrust, Symantec, TD Bank, T-Mobile (G-Phone), TransUnion, Trend Micro, Union Bank of California, US Bank, VeriSign, Visa, Wachovia, Washington Mutual and Wells Fargo.

About Javelin Strategy & Research

Javelin is the leading independent provider of quantitative and qualitative research focused exclusively on financial services topics. Based on the most rigorous statistical methodologies, Javelin conducts in-depth primary research studies to pinpoint dynamic risks and opportunities. Javelin helps its clients achieve their initiatives through three service offerings, including syndicated research subscriptions, custom research projects and strategic consulting. Javelin’s client list includes some of the largest banks, credit unions, card issuers, and technology enterprises in the financial services industry.