Fraud protection and resolution are becoming essential components of the customer experience in banking, particularly as financial fraud rates continue to rise.
The inaugural J.D. Power U.S. Financial Protection Satisfaction Study highlights that more than one in four bank customers (29%) and over one in five credit card customers (22%) have encountered fraudulent activity on their accounts in the past year. As financial institutions strive to support customers in safeguarding their accounts and responding effectively to fraud, their role in protection has grown central to customer satisfaction and loyalty.
The study, which benchmarks customer experiences with fraud protection services across major retail banks and credit card issuers, emphasises the influence of fraud resolution on customer loyalty.
Jennifer White, senior director for banking and payments intelligence at J.D. Power, explained, “Financial fraud is a big problem for banks and credit card issuers, but it also presents an opportunity from a customer experience perspective when it is handled well.
“In fact, customer likelihood to reuse their bank or credit card company and then recommend that entity to friends is actually higher after an institution helps prevent or resolves a fraud incident than when there is no fraud incident at all. However, many institutions still have a lot of work to do when it comes to educating customers on how to protect themselves.”
Key findings from the study indicate a widespread impact of fraud, especially among younger customers. A notable 42% of bank customers below 40 encountered fraud in the past 12 months, highlighting a demographic in need of greater protection and education around preventative measures.
Banks and credit card issuers that effectively address fraud incidents are often rewarded with stronger customer loyalty. Nearly half of affected bank and credit card customers reported a more positive view of their institution following fraud resolution, and a significant 92% of bank customers indicated they would continue using their bank after a fraud case was satisfactorily resolved.
Despite the positive impact of fraud resolution, many customers are still uncertain about how to safeguard their accounts proactively. Around a quarter (26%) of bank customers and nearly a third (31%) of credit card customers admit to taking no recent actions to protect their accounts. While some review transactions for suspicious activity, preventative actions like enabling two-factor authentication or setting up account alerts remain underutilised, with fewer than 20% of customers employing these measures.
The study also highlights a gap in proactive measures taken by banks and credit card issuers. Only 46% of bank customers and 40% of credit card customers report receiving prompts from their financial institution to adopt fraud prevention strategies in the past three months, suggesting there is room for financial institutions to better guide their customers in security practices.
The study did not provide individual rankings of institutions but included evaluations of experiences from customers across leading banks and credit card issuers, including American Express, Bank of America, Barclays, Chase, Citi, and Wells Fargo, among others.
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