Why a generational approach to fraud prevention is critical in the financial space
Fraud is an unfortunate constant in the financial space, with some age groups more likely to be targeted than others. At the same time, different generations have varying perspectives on the digital landscape and hold strong preferences for how they choose to interact with their institution. Taking a generational approach to fraud prevention allows institutions to offer greater fraud prevention while creating more positive customer experiences.
Effective fraud prevention to protect consumers
IDology’s 5th Annual Consumer Digital Identity Study shows that online account creation has increased across all age groups, but generations have different preferences for interacting with the digital landscape. Younger generations prioritize ease of use and speed, while older generations prioritize security. The research also found that 52% of those 18-24 reported they used a mobile device when creating an account online. Forty-two percent of those 65-75 cited that as their device of choice when creating an account online.
Gen Z and Millennials are more likely to experience identity theft than other generations. While their high online exposure plays into this element, these generations tend to be less proactive regarding securing their accounts. Roughly 70% of consumers 18-34 reported disliking when a bank required additional security checks to determine a high-risk transaction. Most consumers in this demographic also believe it’s a company’s responsibility to protect their personal information.
On the other hand, Baby Boomers are more likely to fall victim to social engineering scams like romance and fraudulent IT support. Financial institutions shouldn’t take these types of scams lightly either. In 2022, nearly 73,000 people in the US lost more than $1bn to romance scams. The median loss for romance scams was $2,400, but those aged 70 and over saw the highest median loss at $9,000.
A generational approach takes intelligent verification tech
To prevent fraud, institutions need to understand consumers of all ages and their past behavior. Verification techniques involving data documents and biometrics can help, especially for younger generations with limited credit history. This ensures access to quality financial services and reduces drop-off rates. Customizing verification strategies based on different generations’ preferences and behaviors can prevent fraud more effectively. A modern approach to fraud prevention with comprehensive identity verification can engage users and keep fraud at bay.
Knowing consumer preference for digital engagement is essential for understanding how to engage and verify users successfully, but it also plays a vital role in preventing fraud. Since these groups operate differently, institutions should expect different consumers to see different types of fraud. Institutions can’t have a one-size-fits-all strategy for fraud prevention, just like they can’t expect a single digital experience to work for every consumer. A modern approach to fraud prevention takes a comprehensive identity verification strategy.
To learn more about taking a generational approach to fraud prevention, download our white paper on Preventing Fraud & Inclusive Banking: The Importance of a Generational Approach from BAI’s Deep Dive.