Tips to a Better Customer Experience (CX) in Fraud

The Digital Banking Report for 2020 discusses trends in the digital transformation of the financial sector. One of the key areas that the report focuses on is how to maintain innovation in a highly competitive sector, like banking. The report states:”Done well, (digital) transformation will have the opportunity to increase revenues and decrease costs, positively impacting the customer experience and providing differentiation in the marketplace”

The banking sector, perhaps more than any other, is constrained by the needs of regulatory compliance and security. In protecting customers, they must also challenge these same customers. Anti-Money Laundering (AML) and other fraud checks can add hurdles to an otherwise seamless customer experience (CX). In an industry where exceptional CX is an important competitive differentiator, how can a financial institution keep customers and regulators both happy?

Hitting the Right Notes in Balancing CX and Fraud Checks

Customer experience is important. Survey after survey points out that without a great CX, customers will go elsewhere for their services and products. In a Salesforce survey from 2019, on the intersection of customer experience, technology, and trust, they found that 84% of customers said the experience provided by an organization is as important as its products. Perhaps as important as this figure, is that competitive edge offered via a great CX is self-perpetuating: Over 70% of those surveyed said that “an extraordinary experience with one company raises their expectations of others.” In other words, if your competitors do it, you better make sure you do it better.

Customer experience (CX) is a challenge for any industry to excel in. But in the financial sector, the hurdles to seamless on-boarding of customers and transaction processing can cause major friction. The level of checks for Anti-Money Laundering (AML), sanction lists, behavioral dynamics, and so on, add multiple levels of delays, queries, user input, and so on, that lengthens a user journey, adds clicks, and generally challenges the patience of the customer.

Financial institutions spend enormous amounts of money on AML, sanction checking, etc. The World Economic Forum outlined in a blog post in 2019, that the cost of AML compliance, in the US alone, was around $23.5 billion per year; in Europe, banks spend about $20 billion annually. This is a high financial burden on banks and the wider sector. Add in the costs of remaining competitive in an industry where contender banks are popping up regularly, and the whole area of balancing CX with compliance becomes onerous.

However, the balance between a great CX and the right level of fraud checks must be achieved to stay at the forefront of the industry and meet compliance.

Three Tips to a Better CX Whilst Keeping Regulators Happy

How do you meet this tricky balancing act of CX vs. fraud prevention? The key is in the design of a system. Choosing the right tools for the right job is a good starting point to help meet both compliance and customer expectations. If you design for a reduced friction user journey you must look at the fraud prevention solutions, such as sanction screening technologies, that can help you achieve this. Below are listed three key areas that are part of a design plan for reducing friction in a customer journey, whilst performing fraud prevention.

Tip one: Reducing friction in the CX and making it personal

The frictionless user journey has long been held up as the golden chalice of online CX. However, the reality of this is much harder to achieve. Even so, the goal of reduced friction for user journeys is a MUST have when designing an online service.

Designing friction reduced user journeys is a discipline that begins at the start of any project. It should also, ultimately, tie in every part of the extended ecosystem. A design remit of reducing friction must integrate the functionality of the ecosystem components as well as the user interface (UI) and user experience (UX).

The challenges inherent in designing friction-reduced customer experiences include:

  • Support for a wide demographic of users. Often, financial services will provide products for a very wide demographic, covering young people through to seniors. These demographics often have widely varying expectations of a service. One way to help deliver to a wide-demographic is by supporting omni-channels for delivery of this service. That is, offer registration and transaction processing on mobile devices, laptops, and potentially even digital assistants.
  • Personalized journeys. Accenture’s “2019 Global Financial Services Consumer Study” found that customers want personalized services from financial providers. Also, Global Consumer Pulse found that 33% of consumers abandoned a company because personalization was lacking. Making the CX personal to a user can be facilitated using data from user journeys and A/B testing. Getting this part of a journey right can help to moderate how a user might react to a more complex part of a journey that may require additional information to process.

Tip two: Use best-of-breed sanction screening and AML checks

Sanction screening is a vital part of any business that processes payments, not just banks and financial institutions. It is a heavily regulated area of finance, and as such, several requirements must be met to avoid large fines and to reduce fraud and cybercrime. Financial cybercrime is an increasing problem. In the UK, for example, Suspicious Activity Reports (SARs) Annual Report for 2019 shows fraudulent activity increasing by 154% over the previous year.

Checks against sanction lists must be made, by law, for certain financial transactions. In doing so, the customer experience can be materially impacted. This is especially the case if false positives are generated. The issue of false positives is a serious one. Researchers at Microsoft found that false positive generation during AML checks could be as high as 90%+. From a customer perspective, the end result of a false positive is a broken journey, perhaps countless phone calls, and ultimately a failed transaction.

To avoid this worst-case scenario, the use of intelligent next-generation sanction screening tools, that are based on Machine Learning and advanced analytics, helps to massively reduce false positives. Machine Learning can spot patterns and trends, accurately.  This decreases the number of alerts generated, which, in turn, decreases alert fatigue on behalf of the security analyst reviewing each alert. However, importantly for customer experience, this also reduces the number of falsely stopped transactions. 

For a better customer experience, the key is to automate and streamline AML checks and sanction screening.

Tip three: Keep identity checks and transaction authorization as pain-free as possible

Another barrier to a seamless online experience in banking is in identity checks during registration and during transactions.

Synthetic identity is becoming a very serious concern in the financial sector. Identity fraud plagues financial transactions. Javelin Strategy & Research identified a 15% increase in fraud losses in 2019, amounting to almost $17 billion in the industry with a loss for customers of $3.5 billion.  To counter this, banks perform various checks, including behavioral monitoring, KYC, and further AML checks during customer transactions in real-time and at specified times. This level of checking is vital in curbing the onslaught of synthetic identity as well as other cybercrimes, including credential stuffing (automated account login attempts using stolen credentials). The latter is increasingly impacting the financial sector. A report by Akamai found that in the 18 month period to July 2019, there were 61 billion credential stuffing attacks, 6% of these targeted financial services customers.  

As security is impacted, fraud check requirements increase, and customer usability, experience, and tolerance decreases. Whilst it is vital to maintain robust security, it should be done using intelligent tools that can utilize technologies including Machine Learning; tools that are designed to minimize the impact on a user journey can be incorporated into your overall service design.


Our customers are the lifeblood of our business. We need to nurture and develop the relationships we have with existing customers and entice new ones in, by offering an exceptional CX. But the financial sector also must work to reduce transaction fraud. The methods available to perform sanction screening and AML checks can have a negative impact on the customer experience, slowing transactions down and adding friction to the user journey. By emphasizing on the customer experience during the design of online services in the financial sector you can help to reduce friction and improve the CX. Best-of-breed tools that help to reduce false positives and that make the checks fast and seamless should be used. Often these tools will be next-generation solutions that utilize the power of Machine Learning.

Great customer experiences come with attention to detail. In the case of the financial sector, this has to balance security with usability. Building services with a great CX must be done at the design stage. This includes choosing ecosystem services that perform AML and sanction screening checks designed for an exceptional CX.

Have questions? We’re here to help.

For more information on how EastNets can help protect your organization from financial fraud and cyber attacks contact us: 




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