Since the Great Recession, banks have found it increasingly difficult to regain the trust of their customers, comply with confusing regulations and avoid cyber attacks. These challenges are likely to linger in 2017, but there are strategies for rising to them.
Building Back and Restoring Consumer Trust
According to a June 2016 Gallup Poll, Americans trust banks only slightly more than they trust the media. That’s not saying much. The result of that survey and others prompted one prominent institution to hire more than 10,000 additional compliance officers. That was a good start, but it takes more than compliance to convince customers that you have their best interests at heart.
The word benevolence is not tossed around much in the finance industry, but it should be. As banking becomes more automated and streamlined, clients feel less valued. Without the human touch, it’s impossible to establish long-term, meaningful relationships with customers. They want to know that banks are competent. They want to know that banks operate with integrity. Most of all, they want to know that banks care.
Interaction on a personal level with bankers is the only means of assuring them. Simply talking about benevolence isn’t likely to convince them; warmth, empathy and genuine care must be proactively demonstrated. Longtime trust and loyalty doesn’t come about by way of phone apps.
Keeping on top of the latest regulations is no easy task. Laws governing the collection process are increasingly complex and often seem to conflict. Even small mistakes can result in legal hassles, heavy fines or an inability to collect on delinquent accounts.
Surprisingly, most official consumer complaints are filed by people who simply don’t understand that they are obligated to repay credit card debt, student loans or other bills. The second most common complaint is that a bank didn’t follow the legal protocols for communication.
Organization and thorough documentation are essential. The terms of a legal collection process must be thoroughly clear to the customer and agreed to in writing. Clients must be made aware of all their rights as consumers. Paper records must be securely stored, and electronic copies must be maintained.
Technology is a valuable resource for staying compliant. Automated systems can complete and document calls to debtors. They can ensure that written correspondence is timely. Software programs can report delinquencies, track collection actions and streamline the reporting process. Automating collection tasks frees up manpower for greater focus on negotiation and recovery of charge-offs.
Leveraging technology helps banks to remain in compliance, avoid fines, protect their assets and optimize productivity.
Keeping Up With Technology and Cyber Threats
These days, getting hacked is a strong likelihood rather than a rarity. It’s estimated that banks are subject to around 400 threats every day. Cyber criminals are progressively more clever, and sensitive information is harder to protect.
Some of the most devious and common cyber-crimes against banks are described below:
Short for malicious software, these ordinary-looking downloads disrupt normal computer function to enable the theft or destruction of sensitive data. Malware that goes undetected for even a short time can result in significant financial loss to banks and their customers.
A seemingly benign link to celebrity news or an advertisement may contain malware. Most victims innocently click on a link and find out too late that it was phony.
Anti-virus scans must be run to assess the problem, and security experts should be contacted immediately.
This is just what the name implies. Hackers use some form of malware to restrict users’ access to their computers until a ransom is paid, usually in bitcoins. Bitcoin is a digital currency. It is not subject to oversight, so it’s popular with online traders who want to hide their financial doings. Bitcoins are converted into cash at going rates on online trading platforms.
The FBI reports that users of CryptoWall, a highly effective version of ransomware, demanded and received more than $18 million over one recent year.
Phishing is simply pretending to be a trustworthy entity, such as a victim’s bank, and asking for user IDs, passwords, credit card numbers or bank account information via email.
Distributed Denial of Service
In DDoS, hackers use hundreds of computers to overwhelm a bank’s website and cause a system crash. In 2015, a group of hackers successfully flooded the sites of several institutions with heavy web traffic. The sites were paralyzed, and a ransom was demanded.
Business Email Compromise
In this scheme, someone impersonates the boss and directs an employee to transfer funds or send money overseas. In 2014, BEC heists totaled almost $215 million worldwide.
Banks that identify and address these challenges from the outset have every chance of overcoming them.