SAN FRANCISCO--(BUSINESS WIRE)--Javelin Strategy & Research’s latest banking identity safety scorecard found financial institutions (FIs) aren’t keeping up with growing security demands. As fraud is growing more troublesome, Javelin has had to strengthen the criteria it uses to evaluate FIs and found that prevention, detection, and resolution scores have all eroded. Most importantly, prevention of fraud - which offers the greatest ROI to both consumers and FIs - has fallen precipitously, from 2009 with 79% of FIs meeting Javelin’s criteria to only 54% of FIs in 2011. To improve prevention capabilities, Javelin recommends that FIs prioritize authentication and diversify their authentication offerings.
A key form of lapses in authentication stem from using partial or full social security numbers (SSN), which have become synonymous with the consumer’s identity. None of the FIs included in this scorecard prohibited the use of SSN for phone, mail or Internet authentication. Instead they focused other areas of increasing authentication security measures such as 40% of FIs provided browser security applications and 24% partnering with security vendors to combat fraud.
“FIs need to end their drug-like dependency on using full or truncated SSNs for authentication purposes,” said Phil Blank, Managing Director, Security, Risk, and Fraud at Javelin. “SSN has become a popular security question these days and is a commonly phished item by fraudsters. While a bank may think it is making a transaction more secure by asking for an SSN, it is actually compromising the value of this security question by continually asking for the same information. Consumers become comfortable with providing this highly personal information whenever asked. We recommend a number of other authentication methods in our report.”
Javelin’s 7th Annual Banking Identity Safety Scorecard: Prevention Falls Precipitously as FIs Struggle to Stay Ahead of Fraud assesses how well financial institutions (FIs) are meeting Javelin’s evolving security criteria to address threats. Using its Prevention, Detection, and Resolution model, Javelin evaluated the consumer-facing security features of the top 25 FIs by deposit size and awarded top honors to Bank of America for Best in Class-Overall for the seventh consecutive year and Best in Prevention. Citibank and Navy FCU were both awarded Best in Resolution, and Huntington and U.S. Bank tied for Best in Detection. The report provides details on FIs’ consumer-facing security features, current and future threats facing FIs and consumers, and the resulting gaps that FIs and vendors can fill in all three areas.
Javelin forecasts that as the economy continues to face turbulent times, fraud incidents and costs will rise. While FIs are contending with constrained revenues and may be tempted to cut back on security, Javelin warns that now, more than ever, FIs need to jump on fraud prevention, detection and resolution and apply appropriate measures. In fact, having robust security involving the consumer can result in lower costs to the FI and lower customer churn.
“FIs need to protect their customers, or customers will stop using more cost-effective online and mobile banking or - worse - defect to other banks,” said James Van Dyke, President, Javelin. “Our 2011 Banking Safety Scorecard will direct FIs to those security practices they need to adopt in order to combat fraud.”
The report profiles the following FIs: Bank of America, Bank of the West, BB&T, BBVA Compass, BMO Harris Bank, Capital One, Citibank, Citizens Bank, Comerica, Fifth Third Bank, HSBC, Huntington Bank, JPMorgan Chase, KeyBank, M&T Bank, Navy FCU, PNC Bank, Regions Bank, Sovereign Bank, SunTrust Bank, TD Bank, U.S. Bank, Union Bank, Wells Fargo, and Zions Bank.
Related Javelin Research:
- 7th Annual Authentication Report: Weakening of Knowledge Based Authentication Provides New Opportunities for Customer Acquisition and Retention
- Online and Mobile Device Identification: Is Your Online Authentication Security Strategy Ready to Go Mobile?
- 2011 Identity Fraud Survey Report: Identity Fraud Decreases – but Remaining Frauds Cost Consumers More Time & Money
- Seventh Annual Card Issuer’s Safety Scorecard: Sophistication of Hacker Attacks Threaten Traditional Security Models
About Javelin Strategy & Research:
Javelin Strategy & Research is the leading provider of quantitative and qualitative research focused on the global financial services industry. Our extensive quantitative data and deep analyst experience enable us to forecast the direction of the financial services market and make recommendations that empower you and your business to succeed.