Banks face many issues in their journey to digital transformation. Based on the report provided, the most critical facing banks in their journey to digital transformation include fraud, cybercrime, and lack of enough technical ability of employees to implement the new systems. Organizations need to deal with these issues to avoid losing customers as they transform their financial services and products.
Fraud is a crime carried out to gain financial advantage. Organizations undergoing digital transformation may expose their customers’ funds to fraud. People can hack the organization’s systems and steal money from the organization. During the creation of opportunities to lower the costs due to increased efficiency and experience of customers, banks may create inroads for the fraudsters. The fraudsters use technology to steal credit and debit card information allowing them to access the customers’ debit accounts and create fraudulent accounts using the stolen identity. This affects the image of the banks and, as a result, increases the attrition rate. For instance, in Australia, the data provided shows that the fraudsters compromised 67 % of customers’ credit/debit card information. The fraudsters use the data from the comprised accounts mainly to make online purchases as well as make purchases in stores. In all the Australian accounts compromised, 46% was used to make online purchases, while 34% was used to make purchases in the store. Fraud increases the attrition rate, with 6% of customers in Australia who experienced fraud living the banking institution.
Another issue that faces banks in digital transformation is the customers increased demand for online services and a better experience. In the last few years, customers’ engagement through mobile devices. For instance, according to the report provided, 89% and 49% of respondents made purchases online and made a purchase online using a mobile phone. 88%, 60%, 73%, and 55% used online banking, mobile phone, mobile bill pay, and payment via mobile devices to access their bank accounts. Although increased engagement is beneficial to banks due to reduced costs and increased engagement, it increases the risks of cybercrime as fraudsters hack customers’ information and use it opportunistically to show the vulnerability of a bank.
During the digital organization transformation, there is a change in consumer behaviors that results from cybercrimes. The changes may include customers shifting banks decreasing the bank’s revenue in the process. The customers may also reduce their online activities for fear of experiencing fraud again. The change of behavior to not engage in online purchases or accessing the banks through mobile devices affects the banks’ negative as it means there decreased efficiency, which increases the cost of services. Fraud and cybercrime are the leading causes of all the issues banks experience during digital transformation.
Dealing with cybercrime and fraud is vital in dealing with fraud and cybercrimes cases. The issues of fraud can be dealt with by taking a holistic approach to digital channels implemented to detect fraud. The banks should also leverage real-time technology and network solutions to identify and respond to fraud. During digital transformation, banks also need to evaluate digital security solutions by considering the ability of the solution to prevent fraud and identify legitimate consumers without creating friction.
In conclusion, although digital transformation improves customers’ experiences and lowers the cost of services delivered by banks, care should be taken to prevent fraud and cybercrime. Taking a holistic approach, leveraging real-time technology and network solutions, and identifying legitimate consumers without creating friction are some of the main solutions that banks can take to reduce fraud and its issues during digital transformation.