how your customer thinks about payments fraud
TRANSCRIPT
Agenda
• About the Speakers
• Research Approach
• Overview of 2012 Research Results
• Key Takeaways
• Recommendations
• Questions & Answers
2
Agenda
• About the Speakers
• Research Approach
• Overview of 2012 Research Results
• Key Takeaways
• Recommendations
• Questions & Answers
3
Today’s Speakers
Confidential 4
Mike Braatz
SVP & Product Line Manager
Shirley Inscoe
Senior Analyst
Agenda
• About the Speakers
• Research Approach
• Overview of 2012 Research Results
• Key Takeaways
• Recommendations
• Questions & Answers
5
Research Methodology
• Q3 2012 survey of 5,223 consumers (over 300 per country)
• The study was conducted in a total of 17 countries across the following
regions:
– The Americas (North and South America): Brazil, Canada, Mexico, and the
United States
– EMEA (Europe, the Middle East, and Africa): France, Germany, Italy, the
Netherlands, South Africa, Sweden, the United Arab Emirates, and the United
Kingdom
– Asia-Pacific: Australia, China, India, Indonesia, and Singapore
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Agenda
• About the Speakers
• Research Approach
• Overview of 2012 Research Results
• Key Takeaways
• Recommendations
• Questions & Answers
7
Global fraud rates by country
12%
12%
13%
18%
20%
24%
25%
25%
26%
31%
33%
34%
36%
36%
37%
42%
44%
Sweden
The Netherlands
Germany
Indonesia
France
Italy
Canada
South Africa
Singapore
Australia
Brazil
United Kingdom
China
The U.A.E.
India
United States
Mexico
Percentage of Respondents Who Have Experienced Card Fraud (N=5,114)
1 in 4 cardholders (27%) experienced fraud in the past five
years.
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
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Credit card fraud rates by country
37%
37%
33%
31%
30%
30%
27%
27%
23%
22%
20%
19%
18%
14%
11%
10%
8%
United States
Mexico
The U.A.E.
United Kingdom
Brazil
Australia
China
India
Singapore
Italy
South Africa
Canada
France
Indonesia
Sweden
Germany
The Netherlands
Q. Have you experienced fraud on your credit card in the past 5 years? (N=5,114)
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
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Debit card fraud rates by country
25%
24%
21%
20%
17%
17%
13%
12%
12%
11%
11%
11%
10%
9%
9%
8%
6%
Mexico
China
India
United States
United Kingdom
Brazil
Canada
France
South Africa
Singapore
The U.A.E.
Sweden
Italy
Australia
The Netherlands
Indonesia
Germany
Q. Have you experienced fraud on your debit card in the past 5 years? (N=5,114)
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
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Country (N=5,114) Experienced fraud during past 5 years
India 19%
China 16%
Mexico 10%
Italy 9%
Brazil 7%
Singapore 6%
The U.A.E. 6%
United States 5%
Indonesia 4%
South Africa 4%
Germany 3%
Sweden 3%
France 3%
Australia 2%
Canada 2%
United Kingdom 1%
The Netherlands 1%
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
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Prepaid card fraud rates by country
Multiple incidents of card fraud
globally
The increase in the percentage of cardholders who experienced
fraud more than one time is statistically significant.
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
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Agenda
• About the Speakers
• Research Approach
• Overview of 2012 Research Results
• Key Takeaways
• Recommendations
• Questions & Answers
13
Research Key Takeaways
1. Financial institutions risk losing customers who
experience fraud
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Satisfaction levels and attrition
15%10%
37%
56%
12%7%
27%
15%
United States Canada Mexico Brazil
Q. How happy were you with the treatment from your card provider after experiencing fraud, and did you change providers?
(n=431)
Unhappy with treatment from card provider
Changed card providers after experiencing fraud
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Satisfaction level factors - the
Americas
Q. What is the main factor that influenced how happy you were with your financial institution? (n=431)
Speed with which FI identified the fraud and brought it to my attention
Speed with which FI replaced my card
Speed with which FI reimbursed my money
How easy it was to notify my FI of the issue and get reimbursed
I was happy with all aspects of treatment from my FI
I was not at all happy with the treatment from my FI
Brazil 23% 7% 29% 19% 8% 14%
Canada 43% 14% 10% 10% 20% 3%
Mexico 17% 6% 12% 24% 17% 24%
United States
37% 9% 14% 12% 26% 2%
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
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Back of wallet behavior – the
Americas
Q. After you experienced fraud, did you use cash or an alternate payment method rather than your card? (n=431)
Yes, in all situations
Yes, but only in some situations
Used cash instead of my debit card, but not instead of my credit card
No
Brazil 15% 42% 4% 39%
Canada 3% 31% 5% 61%
Mexico 12% 56% 3% 29%
United States 7% 37% 2% 54%
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
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Replacement cards – the Americas
Q. As a result of the data breach or fraud, did you use the replacement card less than the original card? (n=277)
Yes No
Brazil 56% 44%
Canada 24% 76%
Mexico 63% 37%
United States 33% 67%
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
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Research Key Takeaways
1. Financial institutions risk losing customers who
experience fraud
2. Consumers fear of identity theft is increasing
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Global comparisons to prior year…
• Fear from identity theft is increasing – 26% of 2011
respondents stated that their biggest fear related to fraud
was reclaiming their financial identity if they became
victims of identity theft; in 2012, 49% of respondents state
they are “very concerned” about this issue
• Identity fraud was the top worry in 2012 followed by
online banking fraud and card fraud – identity fraud did
not appear in the top 2 in 2011
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Greatest fraud risks in the Americas
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Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
2%
3%
3%
12%
18%
19%
33%
9%
6%
4%
15%
10%
19%
30%
5%
5%
5%
20%
20%
21%
17%
7%
4%
5%
12%
7%
14%
37%
Using credit card traveling on vacation
Shopping in a store
Using phone or tablet to shop, pay bills
Shopping online
Using card for telephone purchases
Paper forms with card or acct numbers
Theft by computer hacker
Q. Which of the following do you believe represents the greatest fraud risk? (n=1,224)
United States
Mexico
Canada
Brazil
Research Key Takeaways
1. Financial institutions risk losing customers who
experience fraud
2. Consumers fear of identity theft is increasing
3. Some consumers continue to exhibit risky behaviors
which could lead to fraud
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Risky consumer behavior - Americas
Q. Which of these actions have you taken in the past 5 years? (n=1,224)
Brazil Canada Mexico United States
Made a note of PIN and carried it with me or kept it with my card
16% 4% 9% 7%
Thrown bank statements or ATM receipt in the trash 45% 25% 36% 23%
Used online banking or Internet shopping without security software or on a public computer
22% 6% 20% 13%
Responded to emails or calls asking for bank details 8% 3% 7% 6%
Not used the auto lock feature on my mobile phone 21% 11% 17% 18%
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
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Global comparisons to prior year…
• No improvements in risky behavior:
– 12% indicated making a note of their PIN and carrying it with them
or with their card in 2012 maintaining the same 12% rate who did
so in 2011
– 16% shopped on the Internet or used online banking without
security software or on a public computer in 2012, the same rate
in 2011
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Research Key Takeaways
1. Financial institutions risk losing customers who
experience fraud
2. Consumers fear of identity theft is increasing
3. Some consumers continue to exhibit risky behaviors
which could lead to fraud
4. Consumers have a strong desire to partner with
financial institutions for fraud prevention
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Consumer preference concerning alerts
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Q. If you were to receive an alert or notification about fraud activity from your financial institution, which action would you prefer (n=1,224)
Brazil Canada Mexico United States
Bank does not allow any transactions until I respond to alert 85% 75% 89% 63%
Bank continues to allow transactions consistent with my past history
11% 22% 8% 32%
Bank allows all activity unless I notify them otherwise 4% 3% 3% 5%
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
Fraud education – the Americas
Q. Has your financial institution provided any guidance or tips for anti-fraud? (n=1,224)
Brazil Canada Mexico United States
Yes, I've received emails from them with anti-fraud information
15% 15% 14% 19%
Yes, I've received mail from them with anti-fraud information
15% 13% 5% 22%
Yes, I've seen this on my financial institution's website 25% 17% 14% 13%
Don't recall receiving any anti-fraud information from my financial institution
42% 52% 65% 43%
Not applicable 3% 3% 2% 3%
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
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Agenda
• About the Speakers
• Research Approach
• Overview of 2012 Research Results
• Key Takeaways
• Recommendations
• Questions & Answers
30
Recommendations for financial
institutions
• Provide fast, easy recovery processes. Simplify and make fraud
resolution process simple and easy - it may curtail fraud-related
attrition.
• Share your fraud policy. Make consumers aware of how you work
with them after a fraud incident - consumers care about fraud
resolution.
• Reassure your customers. Instilling confidence in your process will
minimize risk of non-use of replacement cards or using cash
alternatives.
• Educate consumers about fraud. The messages are still not being
heard. In most countries, a large % of consumers do not recall ever
having their institution providing information related to fraud.
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Recommendations for financial
institutions
• Telephone and text. By a large majority, customers indicate they
prefer to be contacted about a fraud alert via their mobile phone by a
call or text message or via their home phone.
• Regularly update customer data. Institutions should update their
records of consumers’ email addresses and mobile numbers to
facilitate communication. A simple process will encourage customers
to participate.
• Enlist consumers in combating fraud. There is a willingness for
active participation when fraud is detected . Engage them in the fight.
• Proactively prevent fraud. Consumers know fraud schemes are
pervasive. Customer satisfaction rates with FI’s are highest when the
company detects fraud and notifies the consumer of it.
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Agenda
• About the Speakers
• Research Approach
• Overview of 2012 Research Results
• Key Takeaways
• Recommendations
• Questions & Answers
33
Satisfaction levels and attrition -
EMEA
57%
45%
37%
28% 26%21% 20%
13%15%
27% 26%
13%9% 10% 12%
9%
Italy The U.A.E. Germany S. Africa The Netherlands
U.K. France Sweden
Q. How happy were you with the treatment from your card provider after experiencing fraud, and did you change providers?
(n=519)
Were unhappy with treatment from card provider
Changed fraud providers after experiencing fraud
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Satisfaction level factors - EMEA
Q. What is the main factor that influenced how happy you were with your financial institution? (n=533)
Speed with which FI identified the fraud and brought it to my attention
Speed with which FI reimbursed my money
Speed with which FI replaced my card
How easy it was to notify my FI of the issue and get reimbursed
I was happy with all aspects of treatment from my FI
I was not at all happy with the treatment from my FI
France 32% 18% 13% 17% 13% 7%
Germany 24% 13% 29% 10% 16% 8%
Italy 32% 23% 11% 9% 3% 22%
The Netherlands 31%t 26% 9% 11% 14% 9%
South Africa 19% 20% 8% 17% 27% 9%
Sweden 30% 22% 11% 16% 16% 5%
The U.A.E. 27% 21% 17% 11% 8% 16%
United Kingdom 37% 30% 9% 10% 13% 1%
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
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Back of wallet behavior - EMEA
Q. After you experienced fraud, did you use cash or an alternate payment method rather than your card? (n=533)
Yes, in all situations
Yes, in some situations
No Used cash instead of debit card, but not credit card
France 13% 25% 60% 2%
Germany 18% 32% 45% 5%
Italy 15% 35% 44% 6%
The Netherlands 3% 14% 83% 0%
South Africa 15% 36% 45% 4%
Sweden 5% 33% 62%. 0%
The U.A.E. 12% 45% 41% 2%
United Kingdom 9% 30% 58% 3%
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
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Replacement cards - EMEA
Q. As a result of the data breach or fraud, did you use the replacement card less than the original card? (n=322)
Yes No
France 25% 75%
Germany 36% 64%
Italy 34% 66%
The Netherlands 33% 67%
South Africa 51% 49%
Sweden 26% 74%
The U.A.E. 40% 60%
United Kingdom 38% 62%
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
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Risky consumer behaviors – EMEA
Q. Which of the following have you done in the past 5 years? (n=2,442)
France Germany Italy The Nether-lands
South Africa
Swe-den
The U.A.E.
U.K.
Made a note of PIN and carried it with you or kept it with your card
3% 10% 17% 2% 12% 9% 14% 12%
Thrown bank statements or ATM receipt in the trash
33% 15% 32% 14% 58% 43% 41% 16%
Used online banking or Internet shopping without security software or on a public computer
10% 14% 19% 3% 17% 14% 24% 8%
Responded to emails or calls asking for bank details
4% 5% 4% 3% 5% 4% 12% 3%
Not used the auto lock feature on my mobile phone.
13% 16% 19% 16% 27% 25% 24% 23%
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
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Fraud education - EMEA
Q. Has your financial institution provided any guidance or tips for anti-fraud? (n=2,442)
France Germany Italy The Nether-lands
South Africa
Swe-den
The U.A.E.
U.K.
Yes, I've received email from them with anti-fraud information
11% 11% 14% 17% 43% 6% 47% 18%
Yes, I've received mail from them with anti-fraud information
12% 20% 13% 14% 7% 6% 10% 20%
Yes, I've seen this on my financial institution's website
19% 19% 16% 30% 30% 40% 19% 21%
Don't recall receiving any anti-fraud information from my financial institution
53% 39% 54% 31% 19% 43% 22% 38%
Not applicable 5% 11% 3% 8% 1% 5% 2% 3%
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
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Satisfaction levels and attrition -
APAC
63% 60%55%
50%
14%
45%41% 40%
45%
3%
Indonesia India Singapore China Australia
Q. How happy were you with the treatment from your card provider after experiencing fraud, and did you change providers?
(n=445)
Unhappy with treatment from card provider Changed card providers after experiencing fraud
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Satisfaction level factors - APAC
Q. What is the main factor that influenced how happy you were with your financial institution? (n=445)
Speed with which FI identified the fraud and brought it to my attention
Speed with which FI replaced my card
Speed with which FI reimbursed my money
How easy it was to notify my FI of the issue and get reimbursed
I was happy with all aspects of treatment from my FI
I was not at all happy with the treatment from my FI
Australia 29% 19% 9% 15% 25% 3%
China 25% 17% 12% 27% 8% 11%
India 31% 19% 26% 3% 8% 13%
Indonesia 34% 12% 12% 26% 14% 2%
Singapore 29% 35% 8% 9% 9% 10%
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
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Back of wallet behavior - APAC
Q. After you experienced fraud, did you use cash or an alternate payment method rather than your card? (n=445)
Yes, in all situations
Yes, in some situations
No
Used cash instead of debit card, but not credit card
Australia 6% 34% 58% 2%
China 16% 50% 27% 7%
India 25% 52% 17% 6%
Indonesia 12% 68% 14% 6%
Singapore 8% 45% 45% 2%
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
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Replacement cards - APAC
Q. As a result of the data breach or fraud, did you use the replacement card less than the original card? (n=259)
Yes No
Australia 37% 63%
China 73% 27%
India 73% 27%
Indonesia 78% 22%
Singapore 51% 49%
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
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Risky consumer behaviors - APAC
Q. Which of the following have you done in the past 5 years? (n=1,557)
Australia China India Indonesia Singapore
Made a note of PIN and carried it with me or kept it with my card
6% 21% 26% 17% 11%
Thrown bank statements or ATM receipt in the trash
28% 51% 45% 39% 50%
Used online banking or Internet shopping without security software or on a public computer
10% 30% 32% 20% 22%
Responded to emails or calls asking for bank details
4% 13% 23% 16% 13%
Not used the auto lock feature on my mobile phone
19% 26% 24% 23% 23%
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
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Fraud education - APAC
Q. Has your financial institution provided any guidance or tips for anti-fraud? (n=1,557)
Australia China India Indonesia Singapore
Yes, via email 14% 17% 51% 22% 23%
Yes, via mail 29% 10% 11% 16% 18%
Yes, via their website 17% 26% 13% 19% 16%
Don't recall receiving any anti-fraud information from my financial institution.
39% 39% 18% 36% 38%
Not applicable 1% 8% 7% 7% 5%
Source: Aite Group, ACI Worldwide study of 5,223 consumers in 17 countries, Q3 2012
49 Confidential